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United we Gab

They're here: cell phones that work on both cell and Wi-Fi networks.

It looks like the era of soft handoffs between cellular and Wi-Fi networks has arrived. T-Mobile and AT&T are providing the necessary network infrastructure, and by November, there could be more than 100 new cell phone models able to seamlessly switch mid-call to the clearest network, says In-Stat principal analyst Allen Nogee.

T-Mobile was the first to introduce dual-mode service with a great incentive to try it out: cheap long distance. T-Mobile's HotSpot @Home plan routes cellular calls over the internet via your Wi-Fi network at home or at any of T-Mobile's 8,500 hot spots in North America. You can make unlimited calls in North America without burning precious daytime cell minutes for an introductory price of $10 a month for one line or $20 for five (on top of your cell plan). AT&T's offering features the new dual-mode 8820 model of RIM's popular BlackBerry, but plan specifics weren't finalized at press time.

HotSpot @Home hardware is less expensive, initially, and includes the $50 Samsung t409, Nokia 6086 Wi-Fi-enabled phones and a free (after a $50 mail-in

rebate) Linksys or D-Link router. Other Wi-Fi phones and routers will work, but battery life takes a hit on phones without Unlicensed Mobile Access, or UMA--the secret sauce that manages network handoffs, says a T-Mobile representative. You also continue to burn cell minutes after a handoff. But with UMA, a Wi-Fi call started at home is still free even when you switch to cell service.

Another benefit of dual modes is improved call coverage. Modern Wi-Fi routers can reach where local cell towers can't. That's becoming more important, according to Gartner Inc., now that a quarter of all cell minutes are used at home. Ten percent of Americans--and 30 percent of Gen Xers and Gen Yers--don't have landlines.

Carriers partly owned by landline providers may not jump on Wi-Fi/cellular as quickly as T-Mobile and AT&T, says Nogee. But expect 190 million hands worldwide to be holding Wi-Fi/cellular phones by 2011.

This story appears in the October 2007 issue of Entrepreneur. Subscribe »