Peter Howe, one of my favorite technology writers in the Boston area, had an interesting interview with Sprint's CEO Gary D. Forsee that appeared in the Boston Globe last week (Mr. Forsee was in Beantown to give a speech at the Boston CEO Club, among other things).  One of the key highlights of the interview was about dual mode phones (i.e. handsets that can allow seamless roaming between 802.11 and 2.5G/3G networks), a topic that I have discussed at length here at TF and in other publications as well (such as the IPCC January 2005 newsletter). 

Mr. Forsee believes dual mode handsets will hit the US market in 2006, and I would tend to agree with that.  Now that most technological challenges have been overcome (e.g. the handoff and battery power issue, the latter thanks to 802.11e and smart solutions such as Motorola "deep sleep" strategy), the key hurdle that needs to be overcome is the million dollar market issue.  Some wireless operators will probably reject the technology (at least initially) as a threat to their margins because it will cause a big reduction in the amount of 2.5/3G minutes of usage, that will be shifted to cheap (sometimes even unlimited) calls via 802.11 WLANs. 

This narrow-minded vision might end up costing wireless carriers even more than the small loss of minutes of use.  Savvy service providers (tier 2 wireless, MVNOs such as Virgin, or MSOs such as Comcast, Cox and Time Warner) will see this as an opportunity, not a threat.  Because most of them will gain - for MSOs, anything is gravy, as they fight the competitive threat of the RBOCs "quad play" (triple play of voice, video and data plus wireless); for tier 2 wireless players, the increase in ARPU due to extra pull-through data revenues will make this a worthwhile play; for MVNOs comes the opportunity to get more revenues from customers looking to get extra value. 

But, more importantly, how significant is the amount of lost revenues due to fewer minutes spent on the 2.5/3G wireless networks?  The prevalent modus operandi is for cell phone users to hang up their calls as they enter their offices or get closer to another fixed line phone.  I know I do that - and not only to save money off my wireless plan, but also because the still unknown effects of too much talk time on my cellular handset.  Again, wireless operators are failing to see that most of those minutes were not really there to begin with (e.g. even on the wireline side, enterprises use a PBX, which can be thought of a big multiplexor, to save them money).  In the end, for fear of cannibalization of revenues, they might miss on the bigger picture.  But in time, they might realize that if they do not forego some of those minutes, their competitors (tier 2 players, MVNOs and MSOs) will certainly do so.

Update: Obviously, Sprint is astutely leveraging the opportunity by enabling MSOs (and potentially MVNOs in the future) to provide the wireless part of the "quad" play to these players.  It would not surprise me to see Sprint also play a key role in enabling the seamless roaming play.  The wireless operators I was referring to above were just the big incumbents.