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Kineto Phones It In

Fixed/mobile convergence (FMC) firm Kineto Wireless Inc. has announced two new cellphone software deals with LG Electronics Inc. (London: LGLD; Korea: 6657.KS) and Samsung Corp., which means that the startup has now licensed its client code to three of the world's largest mobile manufacturers.

Motorola Inc. (NYSE: MOT) and Nokia Corp. (NYSE: NOK) have also licensed Kineto's software. The vendors are using Kineto's unlicensed mobile access software to create handsets that can make calls over both cellular and WiFi networks. The general availability of inexpensive dual-mode phones is crucial to the success -- or failure -- of fixed/mobile convergence services (see Report Eyes Convergence Glitch).

In case you skipped your last convergence class, UMA technology allows a user, equipped with a dual-mode handset, to make calls across any generic wireless LAN and IP network, with the call and signaling data encapsulated in IP tunnels. These tunnels terminate on an access gateway, which processes and passes call data to the circuit-switched or packet-switched mobile core network.

Mark Powell, head of Kineto's cellphone business unit and a founder of the company, isn't putting a definite timescale on when vendors will introduce product, but his comments suggest that 2006 is probably the first big year for convergence mobiles.

"There are mid-tier camera phones... nicely priced... coming out in the first half of next year," says Powell.

Motorola, for one, has said publicly that it plans to launch dual-mode cellular-WiFi handsets by the end of this year. The firm is already supplying cellular-Bluetooth handsets for BT Group plc's (NYSE: BT; London: BTA) "Fusion" (a.k.a. "Bluephone") project (see BT Unveils FMC Service).

The interest from cellphone vendors and infrastructure providers in Kineto's UMA technology appears to put the startup in a good position against the other young lions in the convergence game (see The Convergence Contenders). As well as Motorola and Nokia, Alcatel (NYSE: ALA; Paris: CGEP:PA) is working on convergence infrastructure equipment (see UMA Gains Ground).

As well as European operators like BT, Kineto's Powell says that Kineto is also talking to "the major GSM guys in the U.S." These would be Cingular Wireless LLC and T-Mobile USA. One of these operators has an FMC plan in place already, Powell says. The other... not so much.

Industry chatter suggests that Cingular is busy working on its FMC options, but there's been no official word on that yet.

— Dan Jones, Site Editor, Unstrung

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