There's a cold, hard inevitability about the integration of wireless LAN with mobile cellular services. They're both cool, right? So why not "converge" them and throw in some VOIP and multimedia?

Put like that, it's hard to continue the long-running argument that wireless LAN and 3G are somehow diametrically opposed, as this month's Unstrung Insider report, "Converge This! WLAN-3G Mobility," discovers.

Amazingly, the wireless industry as a whole now seems to be on board, at least philosophically, with the vendor mantra of "always best connected" – whereby the user gets the best possible connection to the network at all times. And industry initiatives such as the Unlicensed Mobile Access (UMA) and MobileIgnite have emerged to create a service and technology framework for convergence, with the formal telecom and networking standards bodies also playing their part (see Convergence Specs Emerge).

But it's not quite that straightforward, and convergence is not yet a done deal. The standout issue is how the industry deals with VOIP services over wireless LAN, running alongside regular mobile voice services.

Some parts of the industry want wireless LAN so users can make "free" or low-cost VOIP calls from their mobile phone (hey, it beats using a laptop). Players here include upstart vendors such as Cicero Networks Ltd., as well as service providers such as Skype Technologies SA, which has developed a VOIP client for Pocket PC devices and is rumoured to be working on a "Skype Lite" for less-powerful mobile phones (see Mobile Skype: Quality Issues? and Skype Teams With Motorola).

For now, this kind of mobile, wireless VOIP is still more or less restricted to hobbyists, but the long-term implication of technology that allows users to bypass cellular networks is disturbing for the world's mobile operators. The result is that they're not hugely enthusiastic about the idea and are unwilling to subsidize the cost of dual-mode handsets.

Realizing this, vendors and a smattering of service providers are developing a kind of "third way of convergence" that integrates VOIP into the mobile network call services model. The logic is that mobile operators can take control of VOIP, integrate it into a service package, and then make some money off it.

This approach was spearheaded by Kineto Wireless Inc. back in 2003, and the concept has since been picked up by the UMA and 3rd Generation Partnership Project (3GPP), as well as by major network vendors such as Alcatel (NYSE: ALA; Paris: CGEP:PA), Motorola Inc. (NYSE: MOT), Nokia Corp. (NYSE: NOK), Ericsson AB (Nasdaq: ERICY), and others (see Kineto Does MoWLAN and 3GPP Includes UMA Spec).

In a parallel development, work on IP Multimedia Subsystems (IMS) specifications within the 3GPP (and the resultant products from all the large vendors) offers a more sophisticated way to integrate wireless LAN and cellular – although evidence that mobile operators will use IMS for wireless VOIP convergence is scant. This technology will more likely be used for blended, rich-call services (see IMS Tops 3GSM Agenda, IP Multimedia Subsystems: Easy Does It, and O2 Breaks Cover on IMS).

And that's the big sticking point: The majority of mobile operators are simply not very interested in VOIP and/or wireless LAN at the moment.

Sure, some operators make the odd token gesture towards wireless LAN from time to time; and sure, it may play a role in filling coverage holes in an operator's network; and yes, it could provide a low-cost source of access-network capacity to be used to support ongoing mobile substitution. But for most providers, this is not even close to being a priority for their mass-market consumer businesses – it's a project that's maybe three to five years out.

This leaves the corporate market, mobile virtual network operators (MVNOs), and forward-thinking integrated operators (that own both fixed and mobile properties) as the main drivers for integration of wireless LAN and mobile. These are interesting markets in themselves, and certainly they have enough potential to convince someone to front up enough cash to subsidize dual-mode phones, but it would be a surprise to see millions of users Skyping on their mobys anytime soon.

— Gabriel Brown, Chief Analyst, Unstrung Insider

The report, Converge This! WLAN-3G Mobility, is available as part of an annual subscription (12 monthly issues) to Unstrung Insider, priced at $1,350. Individual reports are available for $900. To subscribe, please visit: www.unstrung.com/insider.