The Carrier Killer

What if, instead of burning up minutes on your cellphone plan, you could make free or cheap calls over the wireless networks that allow Internet access in many coffee shops, airports and homes?

New phones coming on the market will allow just that.

Instead of relying on standard cellphone networks, the phones will make use of the anarchic global patchwork of so-called Wi-Fi hotspots. Other models will be able to switch easily between the two modes.

The phones, while a potential money-saver for consumers, could cause big problems for cellphone companies. They have invested billions in their nationwide networks of cell towers, and they could find that customers are bypassing them in favor of Wi-Fi connections. The struggling Bell operating companies could also suffer if the new phones accelerate the trend toward cheap Internet-based calling, reducing the need for a standard phone line in homes with wireless networks.

The spottiness of wireless Internet coverage means that for now, the phones will be more of a supplement to, rather than a replacement for, standard cellphone service. But dozens of American cities and towns are either building or considering wide-area wireless networks that would allow Wi-Fi phones to connect and make free or cheap calls.

“It’s a phone that looks, feels and acts like a cell phone, but it actually operates over the Wi-Fi network,” said Steve Howe, vice president of voice for EarthLink, which is building networks in Philadelphia and Anaheim, Calif.

Later this year it plans to introduce Wi-Fi phone service that Mr. Howe said could cost a fifth as much as traditional cell service.

The technology is in its early stages, and it faces some hurdles to widespread use. But it is being promoted by big technology companies like Cisco Systems and giving rise to new competition in the mobile phone business.

A handful of companies are already using Wi-Fi phones to cut costs within offices or on corporate campuses, and the phones will soon be reaching the consumer market.

Is it going to happen... You betcha! But not without a fight from the Cell Phone Service Providers. Wifi is the 800 Pound Gorrila pounding on the door. And despite efforts by Verizon, Sprint and others to keep Wifi off the table, by insisting that manufacturers like Palm deliver units without Wifi, the consumers are winning the battle. There was a roar of outrage when the latest Palm Treo premiered without Wifi, and Palm recently responded by promising Wifi on future models.

Customers are DEMANDING the availability of Wifi in high end phones, and successes like HP's 6900 series , are giving it to them.

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