Cell Phones Embrace Wi-Fi

T-Mobile's 'dual-mode' phones work on both cellular and Wi-Fi.

By Michal Lev-Ram, Business 2.0 Magazine

(Business 2.0 Magazine) -- Top-of-the-line cell phones may offer Internet access, but not even the do-it-all Apple (Charts) iPhone comes with the ability to make calls over Wi-Fi.

Later this year, however, two T-Mobile phones will.

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OPPORTUNITY CALLS: The rise of dual-mode is also a boon to startups like Divitas, which lets business users make calls via corporate Wi-Fi networks, and iSkoot, which forwards cell-phone calls to Skype.

The carrier is rolling out a service called HotSpotAtHome, featuring the Nokia 6136 and Samsung t709, "dual-mode" phones that make calls via a Wi-Fi signal when possible, then switch seamlessly to a cellular network when out of Wi-Fi range.

For $20 a month (on top of a regular cell plan), users get unlimited talk time in range of the 8,300 T-Mobile Wi-Fi hotspots across the country. They also get a T-Mobile router for making Wi-Fi calls at home, which is where 30 percent of cell-phone calls are made.

The move is a clever bid by T-Mobile, the fourth-largest U.S. carrier, to vault ahead of rivals in voice services by leveraging its extensive Wi-Fi network. But AT&T (Charts) and Sprint (Charts) are likely to launch similar plans within a year, and dual-mode shipments will top 300 million worldwide by 2011, according to ABI Research.

"Eventually it won't matter what network you're on," says ABI analyst Philip Solis. "You'll just get service when and where you want it."

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.