Selling Wi-Fi Phones with a Difference

Countless companies have written a blizzard of press releases on the nexus of Wi-Fi and inexpensive telephone calls. One of the most intriguing comes from the tiny Florida firm Y-Tel International. How does a three-man firm “catapult itself into the for front [sic] of the emerging VoIP industry,” according to its press release? Wi-Fi Planet just had to know.

Since 2004, Y-Tel’s income has come from selling long-distance minutes from places such as the Caribbean or South America. The company saw those minutes dropping, so it went into the Wi-Fi and VoIP business. It is now pinning its future on a Wi-Fi handset, but one with a difference.

Everyone from BroadVoice to Vonage is going after the VoWi-Fi market, which is expected to reach its stride in the next year or two. The market for Wi-Fi phones amounted to $54 million in 2004, according to Infonetics Research. The firm sees a three-year window of opportunity for Wi-Fi phones between 2006 and 2009.

The difference between Y-Tel and others is that while relative giants in the industry such as Vonage concentrate on North America and Western Europe, Y-Tel is focusing on the Caribbean, South America and Russia.

For international travelers, using Wi-Fi to phone home is a money-saving method increasing in favor. However, outside of North America and Europe, Wi-Fi — let alone VoWi-Fi —is a rarity. For making calls via Wi-Fi hotspots to work, the number of public hotspots available must grow. But the disparity is striking between the number of hotspots in the U.S. and Europe, and the number of hotspots in developing countries. New York City boasts nearly 600 public hotspots, while just 19 hotspots are available to the entire nation of Panama (according to JiWire). London has more than 1,300 public Wi-Fi hotspots, while the entire Russian Federation offers its 143 million citizens only about 150 hotspots.

“There are not many Wi-Fi phones in the Caribbean,” says Steve Lipman, Y-Tel’s president. “You can’t sell a Wi-Fi phone in these areas.” Although the countries are fast adopting high-speed broadband, few have yet to make the leap to wireless in any great numbers.

Cable & Wireless Jamaica, the Caribbean’s main broadband provider, says just three percent of the island nation’s population have broadband connections. While the telecom provider expects to increase broadband adoption rates to 10 percent by next year, the figure is still well below Europe’s more than 30 percent broadband usage numbers.

Seeing a virgin market, Y-Tel is hawking a Wi-Fi phone with an integrated access point, removing the need for a hotspot.

“By providing a hotspot with every phone, we have eliminated the need to search for a Wi-Fi hotspot,” said Lipman. In July, Y-Tel announced that it had patented the phone-and-hotspot combination.

Details in the Air

Few details are available surrounding Y-Tel’s promised phone. Lipman suggests more information will be released in the next 90 days. While he couldn’t say who will make the AP/phone, Y-Tel is currently selling Zyxel’s “Prestige 200W” SIP-compatible 802.11b phone with 128-bit WEP encryption.

The company hopes to sell the phones for under $100 each. They will feature 3-4 hours of talk time and an unspecified amount of standby time. Of course, users will be required to use Y-Tel’s network. Although a monthly fee hasn’t been settled on, per-minute prices will range between 2-3 cents for calls to the U.S., according to Lipman.

Phil Solis, VoIP analyst at ABI Research, sees the Y-Tel phone as a product that will possibly be handy in homes, but “is not an optimal solution” for the enterprise. Particularly troublesome, he says, is the low talk time.

Y-Tel plans to market the phone to distributors who will offer the handset to airlines, hotel and car rental outfits in the Caribbean. An initial roll-out will target the Bahamas, according to reports.

Prior to announcing that it had patented a Wi-Fi phone with integrated hotspot, Todd Wallace, the company’s new Chief Technology Officer, reported, “Y-Tel is now ready to begin deploying the first true Wi-Fi Mesh Network for VoIP.”

Although the phone’s native range is 246 feet indoors and 984 feet outdoors, Wallace claimed he had talked “on a Wi-Fi phone while standing a half mile from the closest repeater.”

Wallace didn’t say if that phone was the one Y-Tel is touting.

How do the repeaters work? Lipman tells Wi-Fi Planet he doesn’t know how it works, and refuses to identify the maker of the new Wi-Fi signal repeater.

Y-Tel claims its integrated mesh network employs new “high powered, long range repeaters,” reducing the number needed per square mile from 20 to 6. According to the company’s press release, Y-Tel plans to deploy the repeaters “here in the U.S. and outside of the U.S. where international calling is still very expense [sic].”

As a Wi-Fi VoIP contender, Y-Tel now believes “the money is in international” calls. Lipman says that’s why he is concentrating on areas outside North America.

Y-Tel is teaming up with Digicel, a GSM cellular provider in the region. Digicel provides Y-Tel’s backbone for that area. This week, Y-Tel was picked by SmartZone USA as the VoIP provider for the Smart Communications Wireless Broadband Network that SmartZone will install in September in the U.S. Virgin Islands, covering 8,000 homes and businesses.

While questions remain on the ultimate viability of Y-Tel’s plans, Lipman is confident. “It’s a big world out there,” he says. “Give me a couple countries and I’m a happy camper.”

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