This week's announcement of the world's largest fixed-mobile convergence project marks the moment when the technology became real.

This is a production voice over Wi-Fi network, not a pilot. And its a multi-site installation. Over the next eighteen months, Osaka Gas will fit out 50 offices with Wi-Fi, and use voice on Wi-Fi within those offices. Staff will have NEC Wi-Fi/cell handsets from NTT DoCoMo. It's not clear how many will get converged handsets, but in the long run, it could be up to 10,000 of them.

The same handsets will make calls on Osaka Gas's Meru-based Wi-Fi network, or on NTT DoCoMo's FOMA cellular network. They will not be able to roam between the two, but they will get the benefits of true voice over IP.

A vote of confidence
Meru is keen to present this deal as an endorsement of its single-channel WLAN architecture (discussed in more depth here). It has partnerships with three of the four top VoIP integrators in Japan: Oki, Hitachi and Fujitsu I-Networks.

But it's also a big vote of confidence in fixed-mobile convergence, a technology which is still not widely trusted - either by users or operators.

NTT DoCoMo has been actively marketing dual mode phones for some time, seeing them as a way to get into the fixed infrastructure of its enterprise customers. "Voice on Wi-Fi is happening," says Joel Vincent, product marketing director at Meru, a company that wants to be at the centre of VoWiFi. "Are they going to let the enterprises implement their own systems, and let the minutes go there, or are they going to move in and capture more minutes?"

NTT rates SIP, not UMA
NTT's approach is not to use UMA, as featured in BT's Fusion product, which routes calls onto the carriers own backbone, but to use the session initiation protocol (SIP - read more here). This has the drawback that, while calls can use either Wi-Fi or cellular networks, they can't roam between the two. The big benefit is that the Wi-Fi calls can be use all the features of VoIP.

Vincent reckons that's a good trade-off: "They get a hard hand-off, but they can use more VoIP features. The sales force can have single phone numbers and unified voice."

The VoIP features include free calls across the Internet, but the project has been sold on features, rather than cost-savings, says Vincent.

Roaming between the two networks is coming, but he reckons Osaka Gas got the best deal by going now: "The benefits far outweighed having to wait 18 months for seamless hand-off," he says. "Very few calls wander between the two networks - the number of calls where the user has to wander outside is of the order of five percent."

Wi-Fi is a threat to wires, not mobiles
This is all a turnaround for voice on Wi-Fi. Originally, it was envisaged that, as Wi-Fi hotspots bloomed, coverage would be so good, that voice on Wi-Fi could be a threat to mobile providers, as users hopped from cafe to airport, using cheap Wi-Fi calls, much as the failed "Rabbit" phone had envisaged in the UK, some twenty years ago.

The industry is starting to realise that Wi-Fi is actually a way for the mobile operators to capture fixed infrastructure, by offering the converged service themselves. "Selling more indoor phone numbers, means the operator gets more outdoor minutes," says Vincent.

To do this, however, the operator has to really bite the bullet, and offer convergence based on SIP and not the mobile-centric Unlicensed Mobile Access approach, which keeps calls within the operator's network apart from the last few wireless link, instead of allowing them to go across the Internet. The two approaches are contrasted here.

Where else will it happen?
The success of Wi-Fi voice in Japan may have something to do with Japanese willingness to use different paradigms. NTT DoCoMo still has millions of customers for its PHS (personal handy-phone system),very like the Rabbit service which failed in the UK. "Maybe NTT sees Wi-Fi as an upgrade to the PHS system," says Vincent.

In the UK, BT is working on a multi-user business version of its Fusion service, and there are several trials in the rest of Europe. "Outside Japan, it is getting driven into service providers," says Vincent, "whereas in Japan the service providers are driving it."

Consumers will drive better handsets
The big drawback with Wi-Fi handsets has been the power drain. NEC has been building in some power conservation features, says Vincent: "Talk time is still not as good as a cellphone, but there has been a lot of improvement."

This increase in usability is a major factor in a predicted growth of the wireless VoIP market. Infonetics Research reckons the total market for Wi-Fi handsets will grow 224% between 2004 and 2005 and have total revenues of over $3 billion by 2009.

Convergence is also a major feature in growth, as Wi-Fi only phones are not expected to reach much beyond the warehousing and medical markets where they are already entrenched.

Converged phones will be created for the consumer market, which will create enough economy of scale to undercut the single-mode phones, according to Infonetics, as operators make the same move on consumers, as NTT DoCoMo is making on businesses.

"The mobile operator wants to own the phone line and get you to get rid of your landline," says Richard Webb of Infonetics. "You may still have wired broadband into your home, but calls will be VoIP over Wi-Fi at home, and on 3G outside."