Product offerings are more sophisticated, streamlined, and rugged than ever before.
After ruggedized data-collection terminals, inbuilding wireless phones were arguably the first digital wireless communications devices to achieve a real success in the business market. Now, after a seven-year product lifespan, these phone systems appear to be the first enterprise-class wireless communications device to have finally matured as a category, presenting the customer with well-defined and relatively fixed functionalities and feature sets and thus a clear basis for product comparisons.
Interestingly, the very maturity of the category has convinced some analysts that the excitement formerly associated with the phones has largely dissipated. "I wouldn't say the category has stagnated exactly," says Shelley Tyler, an analyst with Philips Infotech (Parsippany, NJ). "But let's just say it has reached a certain point in its evolution. The industry is waiting for the next step."
And yet Philips Infotech, which publishes studies on inbuilding phone systems, reports steady growth and encroachment into the horizontal business markets that have always largely eluded the category in the past. The rush of diversified communications companies to enter the wireless inbuilding telephony market has certainly halted, and indeed a number of companies formerly active in the market—notably Mitsubishi, Panasonic, Harris, and Vodavi—have recently elected to abandon it. But the companies with a commanding presence in the past, namely Spectralink, Lucent, and Nortel, continue to report good business within the category and refine the products themselves. Product offerings are more capable and varied than in the past, and the value to the enterprise customer is greater than ever before. Wireless voice may be mature, but it isn't going away.
Inbuilding wireless phone systems basically function much like cellular networks. The phones communicate with base stations connected to a switch—generally a private branch exchange (PBX) or key telephone—and channels are assigned to callers on a temporary basis as they are available. Most systems effect seamless handoffs from one base station to another, letting an individual user roam about the premises.
Inbuilding phones today look very much like cellular phones of contemporary design, but as recently as two years ago, most were about two generations behind in terms of form factor and were quite bulky. Today, almost all of them can be considered pocket phones. They differ physically from their cellular brethren in the way the casing is constructed. "People want ruggedized phones in this market," explains Carol Barnett, director of enterprise wireless and mobility for Lucent Technologies. "In the retail setting, which is where most of the phones get sold, phones get dropped from ladders and forklifts. If it can't survive an eight-foot fall, it's not going to make it in that environment."
Most inbuilding wireless telephone systems provide seamless handoffs from one base station to another, permitting the user to roam about the premises.
Like current public cellular and personal communication services (PCS) networks, inbuilding wireless systems are overwhelmingly digital (only Hughes continues to make a product with an analog AMPS capability indoors), but these private systems differ from cellular and PCS in that they always have been digital for the most part. Spectralink, which essentially defined the category back in 1993, used a slow frequency-hopping modulation scheme from the start, and all subsequent systems operating over unlicensed bands have used variations of that same basic modulation technique.
Initially, wireless inbuilding systems operated only over unlicensed ISM and PCS bands, 900 MHz and 1.9 GHz, respectively, and AMPS analog cellular. Today, systems are available in the licensed PCS band and in the unlicensed data band at 2.4 GHz. Furthermore, all of those systems currently operating in the cellular frequencies now use digital modulation schemes. A potentially revolutionary trend, discussed below, is the substitution of Internet protocol (IP) packet voice for circuit voice within the digital systems, a trend that marks the first use of IP telephony within a mobile context.
Subcategories and system differentiation
Says Infotech's Tyler, who produces an ongoing summary of market performance in the category, "inbuilding systems now fall into three distinct categories—unlicensed, licensed, and convergence. The third didn't really exist until last year."
Unlicensed systems are by far the most prevalent. Most are designed as adjuncts to a PBX system. Nortel's Companion series represents a typical example of the approach, linked as it is to Nortel's Companion PBX products. The wireless phones will incorporate most if not all of the special calling features provided by the PBX with which they are associated, including call forwarding and call conferencing, and will represent a means of extending the coverage of the internal phone system. Some have programmable soft keys for customized calling features. Phone directories, special-ringing options, and caller ID have also begun to appear.
If the phones are used with a different brand of PBX than that of the phones themselves, some capabilities may be sacrificed, though most manufacturers offer toolkits for integrating their phones with the PBX offerings of other manufacturers. For example, Spectralink does not make a PBX but includes an extensive amount of preprogramming in its controller for ease of integration with leading PBX platforms.
Incidentally, the unlicensed wireless phone category does not have interoperability standards, at least in regard to the United States. Although most manufacturers use similar technology, it is not standards-based. Although a standard known as DECT exists in Europe, that standard does not conform to U.S. spectral allocations, and DECT equipment is not sold here. NEC markets an unlicensed product based on the PAX protocol in this country, but the company is the only one doing so. Therefore, PAX, at least in regard to the United States, can hardly be considered a standard.
Unlicensed systems themselves may be subdivided according to frequency of transmission and dimensions. The majority of the systems operate in the unlicensed PCS band at 1.9 GHz, but Spectralink, which claims to be the largest manufacturer, continues to favor the older ISM band at 900 MHz. MobiCEL and Lucent also make 900-MHz products.
The other subdivision concerns the size and complexity of the unlicensed systems. The majority of unlicensed systems on the market, including products from such manufacturers as Spectralink, ECI Telecommunications Business Systems (formerly Tadiran), NEC, and Nortel, uses multicell architectures where a multitude of base stations may be distributed about the work space, with each base station reusing a certain number of channels. But a number of systems are available with only one or two base stations and will support anywhere from a few dozen users to fewer than 10. Such products include the MobiCEL Cordless Communication System, Lucent's well-established TransTalk, and Siemens' popular Gigaset, introduced last year. Typically such systems are much less expensive than the former subcategory on a per-line basis, and both Siemens and MobiCEL quote prices of about $400 per station, which is less than half the individual pricing for the larger, multizone systems.
The second major grouping—the licensed subcategory—has existed since the mid-1990s but has never achieved more than single-digit market share according to most analyst reports (Philips Infotech's latest study indicates a 7% market share for the subcategory.) Normally such products use ordinary cellular and PCS handsets and special base station/switches, which are often the property of the carrier rather than the subscriber.
All of these systems require the participation of a local carrier and involve the establishment of inbuilding or intramural picocells. Airtime charges for the service are set by the participating carrier and are normally well below rates in the general service area.
The singular advantage of such systems is they present the user with a universal telephone instrument that may be used inbuilding or out. A secondary advantage is the enormous capacity of such systems, with scores of channels assigned to a cell as opposed to a handful in the case of the unlicensed systems. Nevertheless, these two benefits must be balanced against a host of drawbacks, some of which, admittedly, have been reduced or eliminated in the latest generation of licensed products.
All licensed systems initially used AMPS, which offered poor performance inbuilding compared to the fade- and interference-resistant frequency-hopping unlicensed systems. Calling features were comparatively limited as well in the licensed segment even after digital systems began to appear. "You generally lost the PBX functionality and were left with POTS [plain old telephone service]," notes Ben Guderian, director of marketing for Spectralink. Finally, the larger cellular or PCS network tended to pose a problem for such systems. "You couldn't stop the signals from outside cellular users from penetrating into the picocells," says Arunas Slekys, a product manager for Hughes Network Systems AIReach Office phone systems, which use licensed spectrum. "The problem got really bad in the upper stories of high-rises. We've addressed this problem with special algorithms in our new controllers."
Slekys also claims that the Hughes controllers also address another limitation of the older systems: the lack of special calling features. "We have more features than most PBXs," he says.
The third category, the convergent or IP packet systems, use the pre-existing structure of a wireless local area network (LAN) to provide the physical, transport, and media access layers for the voice service. All such systems to date have been designed to integrate with IEEE 802.11-compliant inbuilding LANs. In such implementations voice shares the network with other forms of data and is transmitted as packets.
Only two manufacturers, Spectralink and Symbol Technologies, currently market packet phones, but Lucent is working on a system. Other companies will certainly follow suit. According to Philips Infotech's Tyler, third-quarter figures for 1999 show converged voice/data wireless systems accounted for 5% of the total market—a phenomenal growth for a subcategory that was nonexistent in 1998.
Curiously, the major thrust behind packet voice appears to be coming from the purveyors of wireless LANs rather than manufacturers of the phones themselves. In addition to Symbol, such firms as Aironet, Intermec, Telxon, BreezeCom, Teklogix, and Proxim now have provisions for integrating phones into their wireless networks. All except Symbol employ Spectralink handsets and have forged agreements with that company for use of the phones.
The appeal of packet voice is obvious. One network does double duty, thus reducing equipment and installation costs. The problem is that IP itself lacks standards for prioritization or control of latency, though a number of protocols have been proposed for addressing such problems. Consequently, the industry has fallen back on proprietary solutions, at least three of which are in use today, developed respectively by Spectralink, Telxon, and Symbol.
Packet voice in inbuilding systems mirrors and to some extent anticipates a move toward packet in cellular and PCS networks—a development which is still only in the experimental stage due to the entrenched nature of circuit voice services, but one which is generally anticipated by the major equipment manufacturers. The promotion of packet in public wireless networks is primarily based upon the belief that data will eventually predominate in such networks and therefore, they should be designed to facilitate data transmissions. Increased network efficiency is often cited as a secondary justification.
In the inbuilding realm, the issues seem to be a little different. "I don't think anyone is buying packet phones if all he wants is voice," says Guderian. "There's more compression on IP, and the voice quality isn't as good. We've worked for years to achieve toll quality with 24-kbit vocoders, and this is frankly a step down. It's where people already have the wireless LAN in place that they look for this solution. That's what's driving it."
However, other manufacturers are going slowly in bringing out IP phones. Donna Dilley, product marketing manager for NEC, expressing her company's position on the matter, says "convergence is still a way off. There has to be more acceptance of voice over IP in the wireline area first." Given the fact that NEC already offers integrated messaging, Dilley's skepticism forms an interesting counterpoint to the confident predictions of other manufacturers.
But if IP wireless phones are indeed linked to the growth of wireless LANs rather than IP telephony in general, then the prospects for the third subcategory would appear bright in the midterm. With prices falling, speeds increasing, and PCs increasingly equipped with integral wireless network interface cards, the wireless LAN category is poised for tremendous expansion in the coming year. If only a fraction of buyers opts for a voice capability, the IP phones will proliferate in the marketplace.
A fourth category of wireless inbuilding phone exists in Europe but not yet in the United States: the dual-mode phone, which uses licensed spectrum outside and unlicensed inbuilding. Whether it will ever exist here is doubtful. Nortel announced a project to develop such phones two years ago, but failed to deliver product. Lucent's Barnett says, "Dual mode is an area we're looking at closely now," but indicates nothing more definite. Building a dual- or even triple-mode phone is certainly feasible, but with three rival digital air interfaces in the United States, settling on an outside mode is difficult.
As with most categories of wireless business terminals, inbuilding wireless phones have been historically confined to a handful of vertical markets. The overall market is changing, with horizontal applications finally coming to the fore. But most manufacturers admit their sales and marketing efforts remain focused on the established verticals.
Retail sales has proven the most successful vertical market for the phones, particularly within the category of megastores where staff are required to patrol sales floors covering hundreds of thousands of square feet. Hospitals and large manufacturing areas have also been good markets. Within the manufacturing sector, cleanrooms particularly have adopted the phones on a wide scale due to the difficulty of installing wired phones.
A recent development impinging upon the healthcare market is the integration of the phones with nurse call paging systems. Spectralink, Lucent, and Hughes Network Systems have all developed healthcare solutions along these lines, with Lucent partnering with Roland-Borg, the leading manufacturer of nurse call hardware.
Market of the moment
Education is considered to be the market of the moment by many manufacturers, including Spectralink, NEC, Hughes, and Lucent. "It started with custodial and maintenance staff," says Lucent's Barnett, "but now some of the schools are equipping everyone with the phones." Slekys of Hughes Network Systems sees it a little differently. "Internet connection through smart phones is ultimately where it's going in education."
Within all markets, whether vertical or horizontal, prices remain a major inhibitor. Per-line cost approaches $1,000 by most estimates, though in very large enterprise-wide systems some economies of scale are achieved. "Prices of the unlicensed systems need to come down," says Tyler, "and the fact that they haven't that much will spur the growth of converged systems. They're simply much less expensive."
Wireless business phones have not achieved the market penetration predicted by some analysts a few years back and relatively high prices appear to represent the biggest obstacle to general acceptance. The volumes simply are not in place to stimulate dramatic price reductions but without such reductions the volumes won't come. A midterm solution may be software-defined radios where the frequency and modulation system are simply programmed into a general-purpose instrument that could serve equally for cellular or PCS, but that won't come immediately. In the next year, expect to see the phones remain for the most part in niche markets and applications. Universal acceptance would appear to lie much further in the future.
David Sweeney is a technical columnist for Wireless Integration, a sister publication.
This article originally appeared in the March-April 2000 issue of Wireless Integration.
Inbuilding smart phones
As recently as two years ago, many analysts dismissed the notion of an inbuilding smart phone as ludicrous. Conventional inbuilding phones were expensive as it was—typically several times the cost of a cell phone—and the idea of endowing them with intelligence and driving up the price still further seemed ill-advised. Add to that the fact that the currently acceptable notion of converged voice/data systems had not really won a hearing, and inbuilding smart phones seemed impossibly far off.
Not anymore. Symbol now makes a phone with the full functionality of a ruggedized data terminal, the DataPhone, and Spectralink and NEC both make phones that permit short messaging. Indeed, Ben Guderian of Spectralink speculates that the day is not far off when voice-enabled PDAs will become commonplace inbuilding. Lucent's Carol Barnett suggests yet more radical developments: "We're getting a lot of requests for small wireless fax machines."
But if, as Philips Infotech's Shelley Tyler suggests, inbuilding wireless is ultimately driven by trends in the cellular world, wireless smart phones aren't likely to become ubiquitous indoors until Third Generation is well under way.
With prices falling, speeds increasing, and PCs increasingly equipped with integral wireless network interface cards, the wireless LAN category is poised for tremendous explosion.
Today, almost all inbuilding phones can be considered pocket phones.