February 2005

Is WiFi Telephony All Grown Up?

BY Ben Guderian

The WiFi telephony market continues to gain momentum with announcements coming almost daily about some new product or player looking to capitalize on the convergence of wireless and VoIP. Does this mean WiFi telephony is all grown up?

The enterprise market is welcoming the technology. WiFi telephony (also referred to as voice over WiFi) is garnering more attention from the consumer market, which represents a much larger opportunity but not without its own challenges. Requirements differ significantly between residential and enterprise markets. In the home, low cost, ease of use, and aesthetics are key. In the enterprise, PBX integration, reliability, and total cost of ownership are much more important. WiFi telephony is still in its early adoption stage, but enormous opportunities exist in both the home and workplace markets as the technology and standards mature.

Bringing WiFi Telephony Home
In the residential market, the ubiquitous mobile telephony solution is the good old cordless phone. It’s cheap, literally a snap to install, and comes in a plethora of colors, form factors, and features. We’ve seen the home cordless market tout the virtues of 900 MHz, then 2.4 GHz, and now 5 GHz radio technology. Interference — from consumer wireless devices such as baby monitors, home WiFi networks, wireless speakers, your neighbor’s cordless phone — has been the primary challenge for the cordless phone market.

Using a WiFi telephone at home seems to make sense. You can leverage a single WiFi access point for both your wireless data devices and your cordless phone. All you need is a way to get your telephone calls onto your WiFi network, and now with consumer VoIP services such as Vonage and ATT CallVantage, the pieces are falling into place for residential WiFi telephony. In fact, Net2Phone has already announced the availability of a WiFi telephone compatible with their VoIP service.

Most people that are willing — and able — to make WiFi telephony work at home today can probably be categorized as early-adopters. Combining the two nascent technologies of VoIP and WiFi is still too complex today for widespread adoption, and WiFi handsets still cost several times the cost of a typical cordless phone. But it won’t be too long before integrated, plug-and-play residential WiFi telephony solutions hit home with enhanced features and capabilities to make them competitive with the common cordless phone.

Before There Was WiFi
The enterprise market is where WiFi telephony continues to proliferate, where improvements in employee productivity and responsiveness drive the ROI and skilled IT staff can deal with implementation issues. But just as cordless phones preceded WiFi telephony in homes, other wireless voice technologies have been used in enterprise applications with various degrees of success.

Enterprise telephone systems providers have had limited success selling wireless telephony solutions to their mainstream customers due to the high cost of the available solutions. In North America, adoption of enterprise wireless telephony has been limited to markets with a strong need for mobile communication in the workplace, predominantly in healthcare, retail, and industrial applications. In contrast, the adoption rate of enterprise wireless telephony in Europe and some parts of Asia has been much higher thanks to having a standards-based wireless voice technology. The Digital Enhanced Cordless Telephone (DECT) standard is used for both business and residential applications, allowing broad industry support and lower equipment costs. About 2.5 million DECT handsets were sold into enterprise applications in 2003, with more than 25 million sold as residential cordless phones. But DECT has not been available in North America due to different radio spectrum allocations, although some DECT-based products have been modified to use the unlicensed 2.4 GHz band used by 802.11b/g devices. More DECT-based products are expected to hit the U.S. shores next year as additional unlicensed spectrum becomes available.

The WiFi Versus DECT Debate
So is DECT a viable alternative to WiFi for enterprise telephony? It depends on a few factors such as cost, network integration, and long-term convergence objectives. The lower cost of DECT solutions can be attributed to DECT’s technology and market maturity. DECT has been around for more than a decade with standards that have driven down the cost of DECT components. In most cases today’s WiFi solutions are more expensive due to the rapid pace of innovation and continuing enhancements to WiFi standards. But WiFi component and equipment costs have already seen drastic reductions due to widespread adoption in both enterprise and residential markets. WiFi technology also has the advantage of supporting both voice and data applications, whereas DECT is not an IP-based technology and therefore has very limited use as a wireless data network.

Enterprises that deploy WiFi networks to support data applications can leverage that investment to support WiFi telephony as well with little or no additional infrastructure cost.
Just as consumer VoIP services are a primary driver for WiFi telephony in the home, enterprise VoIP adoption is also a driver for WiFi adoption in the office. VoIP and WiFi are a perfect match, both sharing IP-based protocols. DECT is a time division multiplex (TDM) technology with fixed, dedicated channels for each wireless phone call. While TDM technology is very efficient for voice-only applications, it doesn’t work well for packet-based data transport. On the other hand, IP network technology is not the most efficient transport for fixed bandwidth, real-time applications like voice, but the amount of bandwidth available and the benefits of a single, converged network more than makes up for the inefficiency.

It is clear that VoIP technology will replace traditional circuit-switched telephony in the enterprise. It is no longer a question of if, but when enterprises will migrate to IP-based telephony solutions. This is where WiFi holds a clear advantage over DECT, or any other proprietary TDM-based wireless solution. WiFi allows for end-to-end IP telephony making it the most elegant — and cost-effective — technology for enterprise wireless in the long run.

We’ll probably see both traditional and WiFi-based wireless solutions deployed in the home and office for the next few years. Traditional wireless technologies like home cordless and DECT will continue to be attractive in markets where VoIP adoption will be slower, such as SOHO and smaller enterprises. WiFi telephony market growth will continue to build on the success in vertical markets, but will really start to take off along with general enterprise WiFi adoption.

Ben Guderian is director of marketing at SpectraLink Corp. For more information, please visit the company online at www.spectralink.com.

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