Sunday, September 14, 2014

Competitive Implications of Seamless Call Handoff Between Wi-Fi and Mobile

Perhaps oddly, the ability to initiate a phone call from a Wi-Fi hotspot, with seamless handoff to the mobile network, is in the U.S. market, less about reducing the cost of calling (at least for domestic calls, and often calls to some high-volume international destinations) and more about signal quality and network coverage.

In other words, where voice over Internet Protocol arguably has had the greatest value and impact in the high-cost international calling market, Wi-Fi calling arguably provides the greatest value as an antidote for weak signal coverage inside buildings and homes.

Sprint added Wi-Fi calling early in 2014. And the value proposition was very clear: “With Wi-Fi Calling, Sprint customers will experience improved voice, data and messaging services in locations that previously had limited or no mobile network coverage,” Sprint said at the time.

T-Mobile US in September 2014 launched seamless handoff between calls initiated on either its mobile network or a Wi-Fi hotspot.  

AT&T says it now will add that seamless handoff feature as well. Most expect that will happen only after AT&T has launched Voice over Long Term Evolution service on its 4G network.

It is only a matter of time before Verizon Wireless does so as well.

That new feature illustrates two long-standing trends, first, that Internet Protocol tends to undermine the existing business and revenue model for virtually any business it reaches, sooner or later.

VoIP, for example, has undermined the profitability of international calling.

The other trend is that IP also enables new competition, and market entry by new competitors, in virtually every business. Consider the latest feature--seamless call handoff between Wi-Fi and the mobile network.

A mobile service provider with coverage issues--either limitations of its mobile network based on location of towers or in-building coverage based on frequency limitations--can use the technique to vastly improve user experience.

On the other hand, since widespread mobile wholesale business arrangements exist, seamless call initiation also makes it possible for new competitors to enter the market.

This especially is true for contestants using a “Wi-Fi-first” access method, where devices attempt to connect first to Wi-Fi, then defaulting to the mobile network only when that is not possible.

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