Down to the wire

Traditional telephony providers are right to be worried by the advent of wifi and WiMAX, as it will blow fixed-line services out of the water. By Simon Rendell

It may seem remarkable, but it is less than 15 years since mobile phone technology started to become affordable to the masses. Back then, in the days when a 10-minute call to India cost as much as a round of drinks, the current state of communications was beyond the realm of most people’s imagination.

If you are one of those people who has just started to understand where we are today, do not get too comfortable, because things are about to change again. Convergence is once again the hot topic being discussed at wifi-enabled coffee shops across the country.

Convergence is the coming together of fixed, mobile and satellite telecommunications, IT and broadcasting to fuse voice telephony, data, internet and multimedia applications into a single product. It is appearing both in the office and home environments.

In the office, Voice over Internet Protocol (VoIP) is rapidly becoming a major cost-saving centre for businesses with developed IT infrastructures, which are now routing many of their calls between different sites over the internet or their dedicated data lines, as opposed to over voice transmission lines. The reason for the cost saving is that the business requirement for relatively expensive voice bandwidth is considerably reduced as more voice calls are sent down data pipes, which can carry the voice calls at a lower overall cost.

Outside the office, we are also seeing a proliferation of Voice over Broadband (VoBB) and VoIP suppliers, which are offering an alternative to fixed-line calls. In the US, companies such as Vonage are offering unlimited calling to the US and Canada and a host of added services for a flat fee, while Skype is currently offering free calls between Skype users.

However, a few words of caution before running down the corridor to your IT department and asking it to shift all such calls to VoIP.

First, it is worth spending a few moments checking the terms of your contract with your existing telecoms supplier before you pull the jack point on it. Second, in the UK, VoIP is not yet fully regulated; therefore, you may have to change your existing phone and fax numbers, you may not be able to call all numbers in the world, it may be expensive for people to call you, and finally your new service may not provide you with access to the emergency services, directory enquiries or operator assistance. Equally, you must establish what contingency plan the VoIP provider will offer you if you or they lose internet connectivity.

VoIP is currently the subject of consultation focusing on whether suppliers are providers of a ‘publicly available telephone service’ (Pats). If they are then they must comply with certain Pats conditions (including providing free reliable access to the emergency numbers 112 and 999 and being accessible to the disabled), which their voice provider counterparts currently adhere to. The issue is that the requirement for VoIP suppliers to provide the same features as those offered by traditional services may pose a barrier to entry. Therefore the right balance must be struck between creating competition while protecting the consumer.

A user of VoIP is currently limited to being either connected to a data cable or being within 30 metres of a wireless router. While at the moment it may be possible to take your wifi-enabled laptop or PDA (personal digital assistant) out of your home or office and head down to the local hotspot for coffee and cake, it is likely that if you were on a VoIP call when you left the building then you would lose your connection quicker than you can say “two skinny lattes, please”. The reason is that wifi roaming is not all that reliable. However, this is all about to change as WiMAX (worldwide interoperability for microwave access) – labelled by some sources as ‘wifi on steroids’ – is unleashed.

WiMAX will provide a wireless high-speed broadband service across a distance of up to 30 miles from the WiMAX transmitter. With enough WiMAX transmitters erected nationwide, whole areas of the country could soon offer wireless broadband, which in turn should offer seamless roaming.

This April, Intel officially launched its broadband wireless WiMAX chipset, and it is rumoured that BT could be offering WiMAX connections within 18 months. Think of how mobile phones work and then apply that concept to broadband and you will understand the potential of WiMAX. Not only will WiMAX connect people to high-speed broadband access in areas that do not currently have cable access, or which are too far from the local telephone exchange for a digital subscriber line, but it is likely to kick-start a migration from relatively expensive fixed-line providers to the cheaper wireless providers, which is a real concern for traditional providers.

The main economic and regulatory hurdle, especially in the UK, will be finding a suitable frequency range within the spectrum on which WiMAX can operate; although with analogue TV signals being gradually switched off, more frequency will soon become available.

Finally, if you do make it to the coffee shop before realising that all your money is in the jacket you left on the back of your chair, do not worry, as you will soon be able to pay with your mobile phone. Mobile payments, already introduced in Austria, allow the phone account holder to pay for goods without the need for cash or cards, with transactions being routed through the mobile phone.

This technology is sure to have a wide appeal. With a million youngsters in the UK between the ages of five and nine now owning mobile phones and the number of under-16s owning mobiles set to rise to 5.5 million by the end of this year, pocket money may soon become a mobile phone credit. Equally, mobile payments will appeal to those who cannot or do not have a bank account, as well as to those of us who like using pre-pay cards.

Simon Rendell is apartner at Osborne Clarke. He was assited in this article by assitant Richard Finer