The buzz around the iPhone has grown expectedly as we near its launch next month. Indeed, a recent survey revealed “exceptionally high levels of excitement surround the iPhone’s upcoming release” while PiperJaffray says that Cingular is already experiencing a sales dip in smartphones ahead of the iPhone’s launch.

Will Steve Jobs unveil a Fixed-Mobile Convergence service at the iPhone launch?

Lately, I’ve been studying fixed-mobile convergence services with some interest and it seems to me that Apple has got everything in place to roll out its own FMC service not only in limited markets, but across the entire US this June. So, hang on to your hats, I’m about to pull a rumour — as Merlin Mann would say — right out of my butt.

A FMC service works by allowing handsets to roam between cellular and Wi-Fi coverage. This means that your hybrid phone makes calls over the cellular network when you’re out and about, but when you’re at a Wi-Fi hotspot, the phone automatically switches to Wi-Fi mode and makes VoIP calls. The poster boy of FMC services is currently BT’s Fusion service that was launched in June 2005, but it may lose that spot to Apple if the iPhone maker really rolls out such a service next month.

Apple has now got the trifecta of puzzle pieces to launch a FMC service and this may just be the big ‘One More Thing’ that Steve will pull to deliver his promise at Macworld to “revolutionise telecommunications”. That first piece of that puzzle is the iPhone. In addition to the usual cellular service, it also has WiFi and an advanced operating system that will likely support a VoIP client.

Second puzzle piece — Cingular a.k.a. the new AT&T’s network. A news article last month announced that AT&T now has 15,000 Wi-Fi hotspots around the United States. That article provides a sneaky hint at the end: “The effort to beef up its mobile workforce offerings includes enhanced support for wireless devices used by its Cingular Wireless unit” (emphasis mine). Many observers have wondered if Apple and AT&T will allow the iPhone to make VoIP calls over Wi-Fi. Even if AT&T were to disable VoIP over regular Wi-Fi hotspots they should allow iPhone users to do so over their own Wi-Fi hotspots. With their network of hotspots I think that unlimited calls for a monthly flat fee would make a very attractive proposition to mobile phone users.

Is the AirPort Extreme a
FMC Trojan Horse?

The third piece of the puzzle and the piece that seals this (hypothetical) deal for me is the humble AirPort Extreme. The AirPort would be Apple’s Trojan Horse and the critical piece for a successful FMC service. It would function as the base station at home, allowing the iPhone to make calls over its Wi-Fi network for free and provide great coverage all over your home. I can’t find any numbers online, but I’ve read that a big percentage of calls made from mobile phones are at home anyway. AT&T recently became the largest ISP in the US and their CallVantage VoIP service provides the necessary infrastructure for VoIP services. A FMC service featuring the iPhone would be a logical next step in their plans for world domination.

Apple wouldn’t be the first company to launch a FMC service in the US. T-Mobile launched its own Hotspot@Home trial FMC service back in mid 2006. However, this wouldn’t be the first time that Apple entered a market late but dominated it. Think the digital music player market.

I’m sure that my theory has lots of holes in it. I’m not from the US after all and I’m not particularly familiar with the US telecommunications market. However this seems like a great ‘One More Thing’ opportunity for Apple. A focus on convergence could also explain why Apple chose to partner AT&T whose high-speed data network has been criticised.

In parting, I admit that the above is total conjecture on my part. But come June 11 and when Steve says “One More Thing”, I’ll be waiting to tell you that you heard it here first.