The Future of the Phone: The End of the Cell

The Future of the Phone: The End of the Cell
by Douglas Wolk | See Archive
Wired.com reports: Soon "anytime minutes," "roll-over minutes," and even your mobile-phone contract will seem as quaint as the corner pay phone.
ost Americans now have mobile phones, and a Nielsen Mobile report last year found that nearly one in five of us have cut the cord, abandoning our landline service entirely. Danny Kessler of Tempe, Arizona, is one of those people, except he has gone the next step: He recently gave up his cell-phone contract too. Kessler's no hermit: He's a 27-year-old personal-safety instructor who has to be in touch with his clients. He just does all his telephoning via the internet. Today Kessler is an anomaly, but internet telephony (a.k.a. voice-over-internet-protocol, or VoIP) is in a position to dominate the phone business of the future just as mobile usurped the throne of the hard-wired handset.

It may seem outlandish to imagine the phone networks being supplanted by VoIP, which is currently hobbled by spotty internet access and mobile carriers protecting their interests. But only a few years ago it would have seemed equally unlikely that Americans would jilt stable old Ma Bell in favor of their bulky, glitchy, expensive mobile phones. Yet VoIP has one huge factor in its favor: It is very, very cheap. Kessler pays $18 per month for his phone service, a figure that, in his words, "is a lot less expensive than a traditional phone." In the middle of this economic crunch he's not alone in his thinking, and already VoIP is starting to turn some $40 landlines and even mobile contracts into unnecessary luxuries: According to a recent Yankee Group report, 5.2 percent of Americans already use VoIP as their primary home phone.

What allowed mobiles to decimate the traditional phone market was comprehensive, reliable portability—the assurance that you could make and receive calls basically anywhere you went. Before it can replace them, VoIP will have to be a lot more portable too. At the moment, internet telephony generally works best over wired or WiFi internet connections. Recently, however, VoIP became available for the phone-contract-free iPod Touch, making it functionally as much a phone as the regular iPhone, except without the two-year AT&T contract.

The catch, however, is that to use VoIP from a mobile device like the iPod Touch (or, for that matter, an iPhone) there must be a wireless hotspot handy. Yet, there are a couple of reasons to think that WiFi may become as ubiquitous in the next few years as cell-phone coverage is now. One possibility is that omnipresent wireless internet access may come to be considered a basic public utility—something any modern city provides as part of its infrastructure. Philadelphia, for instance, has been struggling for a few years to set up a citywide WiFi network; Mountain View, California, has cracked the problem by having Google take care of it.

Another possibility is that mobile networks that already exist will open up to VoIP companies like Vonage, Skype, and Google Voice. That's a scary prospect for them, because it effectively redefines them from "the company you pay for mobile-phone service (and maybe get some data over your phone too)" to "the company you pay for your handheld computer to be connected to the internet." In other words, wireless carriers will have to lower their drawbridges and allow two-cent-or-less-a-minute VoIP calls (for which they're not getting paid at all) to compete with their current, much higher rates. Those rates would have to fall, because if one can make calls via VoIP over an internet-enabled handset, there would be no reason to pay a premium for cell-phone minutes. The mobile networks might have to get used to the new financial reality pretty soon, though: the WiMAX data carrier Clearwire is already testing VoIP phones for its network in Portland, Oregon.

In the meantime, Kessler has discovered that today's limited WiFi access already lets him be as mobile as he needs to be. "A lot of places now have free WiFi," he says. "I operate in an office affiliated with Arizona State—it's got a big WiFi hotspot. Any place there's a computer, I can log into Skype and plug in my headphones." So far, he claims, he hasn't run into any situations where he's needed to make a call but hasn't been able to get online. "It hasn't been much of an issue. I respond pretty fast to most communication, but I find after having a cell phone for 10 years I like to shut everything down and have time for reflection."