This Is Not A Cellphone It's a gadget that sends voice over Wi-Fi. And this hot new technology may soon change the way your company's people communicate.
By Stephanie N. Mehta

(FORTUNE Magazine) – High-speed wireless Internet access, better known as Wi-Fi, keeps cropping up in the most unexpected places. At Group Dekko, a private 1,600-employee manufacturing conglomerate in Kendallville, Ind., wireless access points--beer-can-sized antenna radios--coexist peacefully with tool dies and other heavy machinery used to stamp out such items as metal and plastic parts for office furniture.

As it turns out, Group Dekko has been employing wireless systems for years to transmit data, usually scanned bar codes, to and from its shop floors. What's really surprising is that Group Dekko now uses its Wi-Fi system for telephone calls too--a service so new that technology geeks haven't yet come up with a wonky acronym or nickname for it.

At 27 of Group Dekko's 30 locations around the country, managers and supervisors use special handsets to make and receive voice calls on the same wireless broadband network the company uses for Internet access. The calls are converted to Internet Protocol data "packets." They essentially travel for free as long as they stay on Group Dekko's wireless intranet. That includes calls between plants, in some cases. And though the company had to cough up several hundred dollars per handset, "we didn't have any additional infrastructure costs to put this in place," says information systems vice president Chris Edwards. Indeed, the system will save money over the long term: Edwards says adopting "voice over Wi-Fi" (how's VOW for an acronym?) has shaved a couple thousand dollars off Group Dekko's monthly phone bill.

Wi-Fi, it seems, is finally moving into corporate phone systems. The firms that use it are still pioneers, mind you: Makers of Wi-Fi handsets, including Symbol Technologies and SpectraLink, shipped a measly 30,000 units last year, according to research outfit InStat/MDR in Scottsdale. But the fledgling industry recently got a big boost. Data-networking giant Cisco Systems drew new attention to the technology by announcing its own Wi-Fi phone in late April. And costs for the pricey handsets are coming down. SpectraLink just unveiled a new phone that retails for $400, about $300 less than some of its earlier models.

Voice over Wi-Fi is particularly appealing to companies and institutions whose workers spend most of their time away from their desks, such as nurses and retail managers. Consider BJ's Wholesale Club, which operates 141 warehouse-style stores in the U.S. The stores measure more than 100,000 square feet each, and they used to have only a few wired telephones, usually in the front office. Every time a manager got a phone call from a customer, a supplier, or the boss at headquarters, he or she would have to hustle across the store to get on the line. Voice over Wi-Fi, which the company began implementing three years ago, has changed that. Each store has about four Symbol handsets, enough for every manager on duty (who passes the phone to the manager on the next shift). The time savings have been considerable. "We looked at it more from a productivity standpoint than a cost-savings standpoint," says Tom McMahon, vice president of system services at BJ's.

While systems such as those used by Group Dekko and BJ's can produce long-term savings, there are drawbacks, especially if companies don't already have robust Wi-Fi systems. Besides the handsets, which cost $400 to $700 apiece, some companies have to install additional access points--at up to $500 each--to make sure they have enough bandwidth to handle phone calls. They also have to buy a special system to make sure voice calls get priority over the data traffic on the wireless network. Otherwise the connections can sound like cellular calls circa 1990.

And while the systems usually work just fine in the warehouse or on the company campus, the devices aren't as practical as cellphones when it comes to traveling outside the office. "Roaming" from a corporate Wi-Fi network to a public system technically is possible using the same type of technologies that enable roaming on traditional cellular networks. But the hodgepodge of Wi-Fi networks makes such seamless connections impossible today. A caller would basically need to disconnect her call and log on if she wandered from her corporation's free network to a fee-based network maintained by, say, T-Mobile. And for all the hype about Wi-Fi, access points simply aren't as common as cellular towers, making it tough for globetrotters to be constantly reachable on their Wi-Fi phones.

So why not marry the two technologies? In fact, Motorola, Proxim, and Avaya are jointly developing handsets and gear that will let callers roam between the two types of wireless networks. By the end of the year the companies will begin testing phones that run voice over Wi-Fi in the office and voice over cellular on the go. Sounds like a neat service if they can pull it off. Coming up with a pithy nickname for such dual-mode technology just may be the hard part.