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Hybrid phones hold promise of cellular, VoIP

Wireless telecommunications is still hot. Internet telephony is even hotter.

Put them together, a growing number of industry insiders think, and you could have the hottest thing in telecom since touch tones: a cellphone that becomes a cordless phone for super-cheap Internet phone service when you get within range of a wireless Internet connection.

Don't expect to ever see this acronym smashup in a television advertisement, but it's a cellphone that can also do ''VoIP over WiFi" -- voice over Internet protocol, using a ''wireless fidelity" high-speed Internet connection.

The promise of combining the personal mobility of cellphones with the deeply discounted, rich-featured Net phone service of home is what leads executives like David W. Dorman, CEO of AT&T Corp., to call the hybrid phone concept ''a big, big deal."

Early versions of the hybrid cellular-VoIP phone have already hit the market in Japan. And at least one WiFi-enabled cellphone offered by top US carrier Cingular Wireless can have a voice-over-Internet application installed for use at hot spots.

However, most industry observers expect it will take another year or more before the hybrid phones really hit the US market. And because they will probably cost $800 or $1,000 per unit, the first models are most likely to be marketed to Fortune 500 companies, said Richard Webb, a market analyst at Infonetics Research. But by 2009, Webb said, one of every 20 cellphones sold worldwide will have WiFi voice capability.

Big corporate or institutional customers are promising candidates, because many work in office buildings or campuses with extensive WiFi coverage. Cisco Systems Inc., the top vendor of Internet gear, has sold thousands of cordless Internet phones, and future models are certain to include cellular coverage someday.

US carriers are closely evaluating the technology.

''This would be a very powerful tool for businesses, in particular," said Anne Vincent, a spokeswoman for SBC Communications Inc., which owns the second-biggest local phone company and 60 percent of Cingular. ''This holds a lot of promise for the consumer market, as well."

Bill Elliott, a Sprint marketing director who oversees so-called integrated solutions, agreed: ''We certainly see opportunity." Sprint finds that 25 to 40 percent of the minutes its subscribers use are on calls they make from their homes.

Carriers like Sprint could benefit by ''offloading users from their radio networks onto broadband networks, so they can free up system capacity, eliminate bottlenecks, and improve the user experience," said Mike Twomey, vice president of product marketing with Excel Switching Corp., a Hyannis maker of Internet gear.

But others predict cellphone companies will be loath to let people making 8-cent-a-minute wireless calls from home switch to 1-cent-a-minute Internet calls, unless the alternative is losing them to another company.

''At some point you might as well cannibalize yourself," said Steve Nicolle, chief executive of Tatara Systems Inc., an Acton wireless Internet company. ''They'll be looking around and saying, 'If I don't do this, people are going to go to my competitor who's doing this.' "

Or they will be switching their home-based wireless calling to an Internet service like Vonage Holdings Corp. or the free Skype. For millions of consumers, a key selling point could be having a much more interesting home phone.

''Today's cordless phones are generally really, really terrible phones," said Rich Tehrani, who runs an Internet phone weblog and trade show. Letting people use cellphones with full-color video screens, text messaging, and access to games and music might be a key way to sell hybrid service, even before issues of saving money come in.

At least initially, hybrid cellular-Internet phones would operate as either-or phones, until better systems emerge to integrate the two kinds of service.

''The real benefit will come once you can have the seamless handoff between the two technologies," said Martin Fichter, a vice president with the big German telecom supplier Siemens AG. ''The end user will not accept something where they have to end the call in one technology, and then continue in a new one."

While hybrid cellular-voice over WiFi phones are poised to become a next big thing, Verizon Communications predecessor GTE Corp. actually manufactured and sold a device that achieved the same basic concept in 1993.

GTE developed a cordless phone that switched over to cellular service when users left their homes and signed up several thousand customers in the Tampa, Fla., area. But the company concluded the product was ahead of its time and too expensive to support, Verizon's converged networks director, Michael Weintraub, said.

One reason: Some customers complained about having all of their home-number calls diverted to their cellphones when they were out, a problem for families and multi-person households.

GTE also got scattered complaints from consumers who rolled up large phone bills when the device hopped over to the cellular network while users were still at home but and thought they were talking through their land-line number.

Peter J. Howe can be reached at

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