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VoIP Over Wi-Fi Helps, Hurts Service Providers

A new report warns mobile phone service providers that VoIP over Wi-Fi could cut into profits.

W. David Gardner

June 29, 2006

1 Min Read

VoIP over Wi-Fi represents a double-edged sword for mobile phone service providers: it can be a powerful tool to generate sales, but it can cut into profits. That dilemma is outlined in a report on mobile roaming released Thursday by market research firm Visiongain.

The research firm noted that roaming over Wi-Fi typically carries a cost of just two cents a minute while calling over mobile phone roaming can cost $1.25 a minute.

"Roaming provides a significant proportion of operator revenues " up to 17 percent," said Adam Walkden, Visiongain analyst, in a statement. "To protect these revenues, it is important that operators take the threat of VoIP seriously."

Service providers are gradually beginning to provide Wi-Fi on handsets and Visiongain cited that recent introduction of the Nokia 6136 GSM/Wi-Fi handset as a significant development "because it legitimizes the technology's entry into the mobile handset market." Other handset makers including Samsung and i-Mate have introduced mobile phone devices with Wi-Fi capability.

Service providers, Visiongain observed, are seeking to boost roaming usage to counter the drop in voice revenues. The analyst firm said 95 percent of subscribers do not currently use roaming services while traveling abroad.

The market research firm noted that the proliferation of Wi-Fi hotspots around the world is creating opportunities for service providers to attract more business travelers. Walkden said: "The difference in cost of a roaming call through mobile and VoIP is significant enough to attract the attention of business travelers, the main staple of roaming revenues."

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