February 24, 2010, 12:13 PM — Cell phone users plagued by hefty overage charges can rest easy -- help is on the way, at least in a few years.
Your white knight in this case is the rise of 4G wireless technologies such as WiMAX and LTE, both of which will eventually be able to deliver high-quality voice calls over an IP network rather than a traditional cellular network. This means that users won't have any monthly limit on the number of minutes they can talk on their phones; instead, they'll pay a flat rate for monthly data plan that will encompass both voice and Internet services.
"If you look at the wired world in the enterprise, voice has mostly moved to IP already," says Gartner analyst Phil Redman. "In terms of wireless, cellular carriers don't have enough dedicated bandwidth right now to support IP-based voice. But in future developments of LTE, it will all be over IP."
Redman notes that carriers are still likely to rely upon minute-based voice plans during the initial stages of LTE and WiMAX deployment, since it will take some time to make those technologies ubiquitous. Thus, users who don't live in major urban areas will likely have to rely on cellular connections for wireless voice service for at least the next three or so years. But once IP-based wireless networks are up and running around the country, it will no longer make sense for users to pay by the minute.
And even if carriers did still want to charge users for voice minutes, they would likely find that the high-bandwidth IP connections over their 4G networks would more easily allow users to switch over to third-party mobile applications such as Skype and TruPhone that would let them make inexpensive calls over VoIP regardless. In other words, wireless carriers are eventually switching to all-VoIP services whether they like it or not.
"We're already seeing carriers' revenue for voice go down while revenue for data goes up," says ABI Research Philip Solis. "Smartphones are becoming less high end and are more mass market now and data plans are becoming more common for people to have. Carriers have already started relying less on voice revenues anyway."
This poses a separate problem for carriers that have long feared being relegated to the status of "dumb pipes" that only transmit data and don't provide any value-added services for their customers. Carriers have long fretted about the possibility that their only major source of revenue in the future will come from fees for users to access their networks. While carriers could still make money doing this, it would be a far cry relative to the sums they haul in today. This has led to some speculation that carriers may offer more advertising-based services in the future, where users downloading an app onto their mobile phone would have to watch a 30-second ad while waiting for the download to finish, for example.
But regardless of how carriers make money in the future, it's pretty clear that it won't be on voice overage fees."What it comes down to economically is that it's cheaper to do voice over IP," Redman says.
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