Panic In The Cell World: Nokia Relases WiFi Phone

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Nokia (NOK) is launching a new phone on which "users can make calls over the Internet when they are in range of an unlicensed wireless network, such as Bluetooth or Wi-Fi," according to Reuters. That could mean a lot less minutes used on the cellular networks that usually sell Nokia phones.

When the new Nokia 6301 gets within range of a GSM, GPRS or UMTS mobile phone network, it switches to a standard cellular mode.

But, bad news is bad news. Big cellular network providers like AT&T (T) and Sprint (S) rarely make much money on handsets, except the Apple (AAPL) iPhone. Most phones are offered cheap in exchange for sign-ups to multi-year calling plans. These lock in revenue for the carriers.

The biggest enemy of the current cell revenue model is the upcoming ability of the consumer to use free internet service to make calls, transfer data, or access audio and video files.

Now that the world’s largest handset provider is a champion of the internet-enabled handset, cell carriers need to ask what they should do next.

Douglas A. McIntyre