VoIP Expected to Disrupt Wireless Industry

While offering opportunities, VoIP also is rattling the wireless industry, some said. T-Mobile has concerns “in the area of stand-alone DSL,” Ham said: “If you have the ability to use VoIP in a home content, broadband connection could be very important and we talked about that” with the FCC. Port blocking is another issue T- Mobile is scrutinizing, Ham said: “We don’t have a wire, we are purely wireless in the U.S. and that gives us a different position on some policy issues than our competitors.”

“VoIP has potential to be disruptive for wireless,” said Sprint Nextel Senior Counsel Ross Vincenti: “I am a little concerned about it in terms of potential impact.” Vincenti stressed he wasn’t speaking for Sprint Nextel, now spinning off its wireline business because of the merger.

“VoIP disruption is going to affect wireless a lot more than wireline because wireline companies are already moving away from voice toward data,” an onlooker said: “The wireless industry does need to develop broadband capability, does need to encourage applications because the voice feature will be taken away.”

“Give us enough time and we will figure out a way to make money off VoIP,” Vincenti said. The service has to charge because it needs an underlying architecture and backbone, he said. “Someone is going to come up with a [business] model that actually works and doesn’t end up with the legacy telcos and wireless carriers going out of business or going into significant financial distress,” Vincenti said. “I haven’t seen it yet, but I think it’s coming.”

“The U.S. is doing very well” in the broadband race, with its deregulatory approach to the wireless industry spurring “extraordinary investment,” said Robert Griffen, Verizon vp & assoc. gen. counsel-strategic wireless projects. He said the FCC “got it right” when it recently deregulated wireline broadband, because the old policy “really impeded” broadband. Wireline broadband growth flowing from that decision helped spur Wi-Fi deployment, he said.

An area where the U.S. does lag is rollout of broadband content applications through wireless distribution, said BET.com Co-Founder Mark Martin. “Obviously, it’s a spectrum infrastructure issue, but there needs to be more focus within the U.S. around content and applications,” he said. With wireless “clearly becoming a broadband distribution channel,” Martin said, “people are going to need a reason to pay the extra money for wireless broadband… If more content is put out there, consumers will say that it sounds worthwhile.”

“The most important thing the government can do in the wireless broadband area is make more spectrum available,” said Ham: “If the constraints on some of these new applications are for lack of spectrum rather than customer demand, then we have a problem and the government needs to address that.” T-Mobile, which unlike most of its competitors hasn’t undergone a merger, needs more spectrum, Ham said. T-Mobile on average has about 27 MHz of spectrum in markets where it operates, compared to Verizon with about 40 MHz, Sprint Nextel with 50 MHz and Cingular with 58 MHz.

“When you need spectrum, you find ways to use it more efficiently,” Ham said: “We launched Wi-Fi largely because it could leverage unlicensed spectrum with licensed spectrum.” T-Mobile is pushing phone makers to design handsets that allow more efficient spectrum use, plus multiband handsets, she said: “In the next 6 months, we plan to substantially increase our footprint though roaming agreements on the GSM side.”

Due to its experience with Wi-Fi, T-Mobile sees “the benefit and complement of using licensed and unlicensed spectrum together in different settings,” Ham said: “We also recognize the strong need for additional licensed spectrum to be put in the marketplace.” T-Mobile is “looking forward” to the AWS spectrum auction, Ham said: “The 90 MHz of spectrum [to be auctioned] will increase the amount of mobile spectrum by 50%, which is pretty dramatic.” Griffen said “having a defined set of property rights is very important” to his firm and its customers. “Most of the consumer surplus has been generated in licensed commercial wireless bands, and that’s something we should continue to improve upon,” he said.

Panel moderator Harold Furchtgott-Roth, a former FCC Comr., asked what the panelists would tell a teenager who had come to the U.S. from S. Korea or Japan with wireless devices still not available in the U.S. “It depends on what the product is,” Ham said: “We'll see if those devices will sell in the U.S. Some of those products may not.” Ham called it “a mistake to necessarily translate what’s going on in Korea and Japan to the United States.” She said the U.S. market is “very different and we need to respond to what the customer wants.” “Where is the demand?” Vincenti asked: “That’s one of the big question marks that I personally have. Is the demand coming from the consumer side mostly or from the business side mostly? Or are we just talking about handsets?”

The demand is coming from youth, Martin said. For example, he said instant messaging is “only now taking off here but it has been very popular elsewhere for some time… If we look at what is going on in South Korea and elsewhere, in many cases the early adoption is coming from younger folks and it radiates from there. We've seen that with the Internet and I think that’s going to be the same kind of path with wireless.”