Could Unlimited Wireless Kill VoIP?

Updated: April 30, 2009

Big U.S. mobile providers including Verizon Wireless , AT&T Inc . and T-Mobile USA Inc . recently announced all-you-can-eat calling plans. These companies' offers have varying bells and whistles, but each boils down to paying around $100 per month for unlimited mobile calling within the U.S.

These providers' moves and new pricing plans will likely have one immediate effect: accelerating phone customers' migration away from home landlines. Anyone without a compelling reason to maintain a landline, such as for a dedicated fax or data line, will likely drop landline service altogether in favor of a mobile phone.

The question is whether those eliminating landlines will simply switch to their landline providers' mobile-phone units or be lured to either cable or pure-play VoIP.

All-in-One Calling Plans

Some phone providers already have all these bases covered. For example, whether you use AT&T landlines, AT&T mobile service on an iPhone or AT&T CallVantage VoIP, your money is headed to Ma Bell's pockets.

However, even if AT&T keeps your business by offering VoIP, it will price that service just low enough so that you stay with AT&T, but not so low that you save all the money you could. So the VoIP prices of mobile telcos are likely to stay high relative to VoIP pure-plays — just not high enough to make you switch to a pure-play.

The true appeal of the unlimited calling plan is that it eliminates uncertainty. For years, the mobile industry has been suspect for its tendency toward petty nickel-and-diming — where every call you make that's not to someone you know, at midnight on a Thursday, has a few extra cents of "fees" attached to it. In addition, many callers live in dread of going over their allotted minutes toward the end of each month.

The unlimited calling plans streamline the fee structure for mobile calling, but they don't necessarily make it cheaper, except for heavy users who don't have to care (such as real-estate agents and business road warriors for whom giant phone bills are necessary and accepted). The new unlimited calling plans are relatively expensive, and price-sensitive consumers are going to notice — $1,200 per year is a lot for many individuals and families used to cracking out maybe $50 per month for landline service plus some long distance.

The Opportunity

This leaves an opening for pure-play VoIP providers to appeal to light-to-medium phone users on price. VoIP providers might remind potential home customers that they've had unlimited-calling packages for years, at prices that are far lower than the major mobile providers' much-heralded plans.

As far as mobile phones go, VoIP providers might focus on developing dual-mode devices that switch seamlessly between mobile networks and whatever wireless data networks are nearby (wifi , Bluetooth and so on), so that callers get the lowest price for a given call if they're paying a la carte.

In addition, consumers who are interested in anonymity or one-time-only transactions will continue to use VoIP rather than exchanging their phone numbers online. This audience skews young and includes users of online dating services, which hints at one possible future for VoIP: as the official medium of introductions.

This role extends to push-to-talk applications on commercial Web sites, which are increasingly used by businesses such as investment services and real-estate agents. You simply can't beat the convenience of clicking a button on the page you're already browsing and being connected to someone who has information you want, instantly.

Perhaps this is the future for VoIP in a world of unlimited, yet still pricey, mobile dialing: dual niches as the low-cost, long-distance provider and as the language of online introductions.

Other niches await discovery.

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