Convergence, Not Consolidation, In Cellular Future: Researcher

We'll start to see the convergence of cellular voice and VoIP this year, but we won't see any more industry consolidation, a researcher predicts.

January 17, 2006

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By the end of the year, we'll start seeing services that merge cellular voice and voice-over-IP, according to predictions released today by Pyramid Research. In addition, the research firm said that, contrary to predictions by other researchers and industry ovservers, there won't be much more consolidation in 2006 in the U.S. cellular market.

Converged cellular and VoIP services will start appearing that will enable users to seamlessly switch between cellular and Wi-Fi networks, according to Pyramid. One driving force will be that phone vendors will start including the technology for such convergence in their phones. That technology will primarily be in the form of UMA, which converges GSM-based cellular networks with Wi-Fi networks.

Many of these converged phones will be in the middle price range, according to Pyramid. In addition, cellular operators will start bundling both types of access in 2006, Pyramid predicted. This could lead to what the research firm called a new cycle of price competition for voice service.

In addition, Pyramid predicted that T-Mobile USA and Alltel will not be acquired by other carriers in 2006. Those two carriers, ranked fourth and fifth in terms of their size, have frequently been mentioned as takeover targets.

Pyramid predicted that T-Mobile will acquire new spectrum at a Federal Communications Commission auction this summer, which will enable it to finally launch 3G service. The company predicted that Alltel will acquire rural-focused cellular operators as a way of continuing its growth.

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