China as Early Wireless VoIP Market

Barron’s writes:

Dense cities, with millions of people who can’t afford cars or cellphone service make China a great testbed for wireless VoIP. That could create opportunities for makers of wireless networking chips, like Intel, Broadcom and little Atheros Communications.

Chinese phone operators have a good reason to bankroll voice over Wi-Fi or WiMax: Subscriber growth at China Mobile and China Unicom has been slowed by the availability of a cheap wireless alternative called Personal Handyphone Service. PHS offers limited-range wireless service at a fraction of the cost of cellular, typically about 8 bucks a month. Subscriptions for PHS have grown tenfold in three years, to more than 55 million. It’s been a clever entree into wireless for its sponsors — the fixed-line phone companies, China Telecom and China Netcom. It’s also been a windfall for equipment suppliers like UTStarcom, the fast-growing — if unevenly managed — telecom outfit in Alameda, Calif.

To compete against PHS, China’s mobile operators need a technology that’s cheaper than cellular. Urban Wi-Fi networks would allow them to offer voice and Internet services at a comparable price to PHS, says Colin Macnab, the marketing vice president of Atheros. Sunnyvale, Calif.-based Atheros has competed successfully against Intel and Texas Instruments with chips that are cheaper, yet more powerful. With a reception range of more than 800 meters, Atheros Wi-Fi chips can reach twice the distance of competing products. Wi-Fi makers are also adding power management features, to conserve battery life in devices like a handheld phone. So Wi-Fi voice technology has attracted the attention of China’s phone firms, Macnab suggests.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.