Wi-Fi: From ‘Poor Cousin’ to Preferred Partner

For much of Wi-Fi’s history, technologists and mobile industry executives viewed it as the “poor cousin” to licensed mobile communications. Today, all that is changing with the explosive demand for mobile data, the proliferation of new and powerful devices, and shifts in customer behavior and usage.  Increasingly, Wi-Fi is seen by technologists and consumers alike as a partner to licensed mobile, enabling expanded wireless access. 

Based on research and engagements with leading operators throughout the globe, the Cisco® Internet Business Solutions Group has identified six important trends that we believe are redefining this new world of Wi-Fi:

1.       Predominance of Wi-Fi for Wireless Access

Almost all mobile devices, including smartphones, now have Wi-Fi as their core access technology.  And people are using these mobile devices to access increasingly data-intensive applications.  Recent research by Cisco IBSG found that roughly half of mobile users are now watching video on these mobile devices. Today, mobile is less about walking or driving and more about the convenience of a “nomadic” lifestyle—moving, sitting/stopping and connecting, then moving on again. Such nomadic locations are ideal for high-speed Wi-Fi, which easily handles those data-hungry applications.

2.       Proven Ways to Use Wi-Fi to Improve the SP Business

The explosive demand for mobile traffic has left mobile operators scrambling for ways to meet this demand, while overcoming spectrum constraints and managing CapEx expenditures. Offloading some mobile-data traffic to Wi-Fi promises savings to carriers of $2 to $5 per GB in deferred CapEx and lower operating expenses. Providers that bundle access to a public Wi-Fi network with their home broadband service are finding significant improvements in customer retention and acquisition. Privately, SPs report churn improvements of 10 to 15 percent through the strategic use of Wi-Fi, delivering a substantial impact to the bottom line.

3.       Growing Use and Importance of Public Wi-Fi

IBSG’s mobile research found that one-third of mobile users access public Wi-Fi at least weekly.  Many expect to find Wi-Fi in key locations such as airports, stadiums, town squares, coffee shops, and retail sites. Overwhelmingly, they expect this public Wi-Fi to be free or, at least bundled as part of their broadband or mobile service.

4.       “Land Grab” of Key Locations to Deliver Public Wi-Fi

As with retail, public Wi-Fi is all about “location, location, location.” A public Wi-Fi provider needs to provide access in key Tier 1 locations such as airports, cafes, and hotels. Increasingly, people also expect Wi-Fi in the other locations where they spend their time. Tier 2 locations, such as hospitals, schools, sporting venues, and public transportation hubs, are increasingly near the top of network deployment lists of Wi-Fi network providers.

5.       Consolidation of Public Wi-Fi Providers to Deliver SP Wi-Fi

As recently as five years ago, most public Wi-Fi was managed independently, by the venue owner or by a start-up Wi-Fi provider such as Wayport or The Cloud. As SPs begin to see the strategic importance of Wi-Fi, they are acquiring these independently managed Wi-Fi providers and becoming the predominant providers in many markets. At the same time, the venue owners realize that they need to provide much better Wi-Fi service, meet more complex technical and business requirements, and conform to increased regulatory demands. Many are looking to service providers to remove much of this complexity and manage the services for them.

6.       Providers Seeking Ways to Make Money From Wi-Fi

SPs recognize that mobile-data offload and broadband-churn improvement provide very compelling business cases for Wi-Fi investments. Beyond that, they are looking for ways that those investments can deliver new sources of revenue. Research by Cisco IBSG revealed a number of new business models that operators can exploit to profit from the rise of Wi-Fi. Premium access, managed services, business solutions, roaming, and wholesaling are some of the key models that providers are currently experimenting with to deliver new revenue from Wi-Fi. Of particular interest and potential is providing value-added services to enhance core Wi-Fi connectivity. Many retail and venue owners, for example, are looking to combine Wi-Fi capabilities with customer location to provide data analytics, enhanced customer experience, and hyper-targeted and relevant advertising.

As we have seen, Wi-Fi’s days as a “poor cousin” are over. Service providers that ignore the compelling cases for Wi-Fi will risk drop-offs in efficiency, profits, and customer satisfaction. Those who treat Wi-Fi as a preferred partner will thrive.

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Observations from Mobile World Congress 2013

I have just returned from a very interesting and jammed-packed week at Mobile World Congress 2013 in Barcelona. More than 70,000 people were estimated to have attended this year’s MWC, and its fabulous new conference facilities proved a great place to celebrate the industry’s accomplishments and catch a glimpse of its potential future. The mobile industry continues to grow while moving from success to success. And though much has changed since I reported my observations of MWC 2012, I would characterize the process as more evolutionary than revolutionary. 

The following are my personal observations and extrapolations from the show, based on my conversations with operators, customer meetings, analysts, and colleagues, as well as from simply walking the show floor. 

1.       LTE Has Evolved—At previous shows everyone was talking about LTE (Long Term Evolution) as the latest 4G wireless technology. This year you had to look pretty hard to see those letters, and they didn’t seem to be on the tip of most people’s tongues. Though many countries in the world still lack 4G coverage and many others are just beginning to deploy LTE, the industry seems to have moved on and is taking LTE as a given.  This leaves us in a technology trough, awaiting the next new, shiny network technology.

2.       SPs Manning the Booths, Turning the Tables—At one time, service providers were the kings of the show, being courted by vendors and other companies looking to sell them their mobile products and services. The tables seemed to have turned somewhat. I was surprised by the number of prominent service providers from around the world who had their own extensive booths or were part of the GSMA’s “Operator Village.”  Now, it seems that SPs are keen to show off and sell their latest applications, cloud services, gaming and other innovative mobile offerings. These services are seen as new revenue-generating opportunities that will counter similar OTT offerings.

3.       Wi-Fi 2.0, From Legitimacy to Money Maker—Last year Wi-Fi moved from the back corner to become a viable part of the mobile architecture, delivering in-building coverage and offload relief from the exponential consumer demand for mobile data. This was the year of Wi-Fi monetization— moving beyond cost savings to find new sources of revenue from deploying Wi-Fi.  Nearly every operator I spoke with asked the same question, “How do I make money from Wi-Fi?” My recent blog during MWC provides some of the answers.

4.       Small Cells in the Great Indoors—The shift of mobile users to more “nomadic” and indoor usage—and the need to cope with growing demand and limited spectrum—has MNOs scrambling to find ways to provide better in-building coverage and capacity.  Small cells, with much smaller footprints and power output, provide much of the solution. All vendors are now actively promoting licensed small cells as part of their network-access portfolio. Often, these are integrated with Wi-Fi access points for a combined licensed and unlicensed solution. Check out some of the insights from me and my fellow Big Thinkers in Small Cells.

5.       Devices Are All About the Software—Now that all smartphones, tablets and newer mobile devices (Phablet anyone?) look remarkably alike, the real battle for differentiation is in the software.  Windows and Blackberry (remarkably absent from MWC) and the recently announced Firefox OS are battling the Apple and Android mobile-operating-system hegemony. But device manufactures are also adding their own unique applications, software controlled features, and cloud services in an effort to differentiate their iPhone-like devices from competitors. Everything from advanced camera technology, to cloud music and gaming, to Samsung’s reputed eye-movement-controlled scrolling are being jammed into new devices.

6.       Mobile Cloud, Making Smarter Apps—Mobile cloud seems to have moved from a stand-alone topic to something that is increasingly just part of an app or a device.  Many of the cool and exciting new apps—including those for social networking, file sharing, and entertainment—have cloud at their core for storing and retrieving of information, processing, and providing the core functionality.

7.       Big Data, On the Move—The combination of Big Data with location, presence, and other mobile-specific information promises not only cool and useful applications but new ways for operators to monetize their terabytes of customer and network information. Companies were demonstrating how very accurate (2-5m) location tracking from Wi-Fi and small cells could be combined with customer information in a retail store; this will provide hyper-targeted promotions to shoppers on their mobile phone, resulting in increased store purchases.

8.       Enterprise Mobility, the Next Phase—Employees can now readily access their email, calendars, and business information from anywhere. And most companies are beginning to embrace bring-your-own-device (BYOD) policies. Many vendors are helping this trend along through better device management, security, and dual-persona solutions.  However, many in the industry realize that this is just the first phase—enterprises are now looking to understand how they can truly transform their businesses and industries. A number of innovative solution companies and consultancies are beginning to show the way.

9.       From M2M to the Internet of Everything—Pervasive, fast, mobile connectivity is finally creating a real market, not just for machine-to-machine but for everything that can be connected wirelessly.  Next-generation telemetry and entertainment systems for cars, as well as remotely controlled sensors and machines were on display. Operators and vendors alike expounded on the dawn of a new world where all animated and inanimate objects are becoming connected.

10.   Mobile Money,  Again, Again, and Again—At yet another MWC, solutions for  providing mobile payments were on display. Mobile payment solutions from banks, credit-card companies, MNOs and other providers were all competing to create a walletless world. But while lunch and coffee from the convention’s food vendors could be purchsed with mobile Paypal, I think that we still have a long way to go. I suspect that I will be reporting on the future promise of mobile payments again next year.