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Study - The Wi-Fi becomes a strategic asset for operators

Study - The Wi-Fi becomes a strategic asset for operators

By admin - February 14, 2012

Even if mobile data services are still most often used at home, nomadic usages are developing and the traffic is growing significantly with the rise of services such as video.

A survey conducted by Cisco reveals that the amount of time spent using mobile Internet at home accounts for around 40% of total use, compared to 35% nomadic usage and 25% in the workplace. A survey conducted by Cisco reveals that the amount of time spent using mobile Internet at home accounts for around 40% of total use, compared to 35% nomadic usage and 25% in the workplace.

The volume of mobile data around the world almost tripled in 2010, for the third consecutive year. Last year Cisco predicted growth of mobile data traffic of 149% in 2010 and in actual fact it was even higher than expected with a progression of 159%. According to Cisco, video content should represent two thirds of mobile data traffic in 2015. It already accounts for almost half of the traffic and the data volume should double each year in the coming years.

Aware of the limits of mobile broadband and sometimes confronted by data volume ceilings, users make the most of the advantages that Wi-Fi technology offers them. Operators are also embarking upon major deployments of hotspot networks, both for economic reasons and to improve the customer experience.

According to a survey published by the Wireless Broadband Alliance (WBA), and conducted by Informa, over half (58%) of operators consider Wi-Fi hotspots as ‘very important’ and even ‘crucial’ in terms of the customer experience and in terms of reducing the load on the mobile broadband networks and providing value-added services. The WBA’s publication predicts that the number of public Wi-Fi hotspots in the world will rise from 1.3 million in 2011 to 5.8 million in 2015, i.e. an increase of 350%.

More and more players predict or are already seeing significant growth:

- The Japanese operator KDDI expects to go from 10,000 Wi-Fi hotspots to 120,000 by June 2012.

- In January 2011 BSkyB acquired the British Wi-Fi services provider ‘The Cloud’ (22,000 access points at over 8500 sites in 12 European countries).

- AT&T counted 29,000 hotspots in the USA at the end of Q3 2011, compared to 23,000 the previous year. The number of connections to its Wi-Fi network has almost tripled from one year to the next to reach 301.9 million in Q3 2011. Meanwhile, the volume of data has more than doubled.

- While O2 currently only has around 500 Wi-Fi access points, the operator should deploy a network of 15,000 Wi-Fi hotspots in the UK by 2013.

According to a survey commissioned by the Wi-Fi solutions provider Devicescape, 83% of those questioned consider that mobile operators should provide Wi-Fi access as part of a package offer. 74% confirmed that they are aware that certain operators limit mobile data volumes and are not happy about it when they encounter such a policy.

The survey also shows that 88% of those questioned think that Wi-Fi is more suited to certain types of service such as video. Furthermore, the survey reveals that almost 82% of respondents see Wi-Fi as particularly important when using a smartphone or a tablet.

However, there are still numerous constraints that slow down the adoption of public Wi-Fi hotspots: the need to search for accessible hotspots, complex authentication procedures, access costs and security. The standardisation body, industry alliances and operators are addressing the issues of network searches, identification, connection, authentication and security, all of which are crucial for the successful and transparent integration of Wi-Fi into the cellular networks.

The example of AT&T

When AT&T and Apple allowed automatic authentication for customers possessing an iPhone in July 2009, the curve representing the number of connections to hotspots rose sharply.

Thanks to this new function, AT&T has made it much easier for iPhone users to connect to its Wi-Fi hotspots. It enables users to switch from the mobile network to Wi-Fi without having to go through the initial connection steps, i.e. to connect in Wi-Fi mode, open the Internet browser which redirects the user to the hotspot authentication page, and enter a login and password.

The Hotspot 2.0 program

In June 2011, the Wi-Fi Alliance and the Wireless Broadband Alliance, which represent the mobile operators, cable-operators and other players wishing to deploy Wi-Fi networks, have combined their resources to address problems of itinerancy and authentication on the hotspots.

Interoperability between Wi-Fi hotspots and 3G and 4G mobile networks presents advantages for both the operator and the user. The operator can fully control the switchover of traffic from one network to the other with the aim of reducing costs (mobile offload). Therefore Wi-Fi becomes an access technology in the same way as the mobile network and the traffic is redirected towards the operator’s core network.

Meanwhile the customer, having been identified on the operator’s network thanks to his SIM card, benefits from continuity of service even when he switches from 3G/4G to Wi-Fi (no interruption in the service and the user session is maintained). He is also sure that he will not be switched from the mobile network towards a Wi-Fi hotspot when the latter is not to his advantage, for example if the hotspot does not allow him to benefit from higher connection speed.

New economic models are emerging for Wi-Fi. For example, this technology is becoming a platform of professional services monetising the attraction of free connectivity in a sales outlet. Wi-Fi could also finally lead to a boom in roaming data mobile usages by private individuals.

According to a survey conducted in September 2010 by In-Stat, almost 66% of the people questioned consider that free Wi-Fi access plays a part in their choice of venue when going out. For 31% of respondents, free access is likely to influence their choice.

While revenues cannot always be made directly from the offer of access itself, Wi-Fi is very valuable because it encourages users to choose to go to one place rather than another. Therefore it is not surprising that over 150,000 cafés and sales outlets have deployed Wi-Fi hotspots, even if not all are free. Then there are the tens of thousands of hotels and airports with Wi-Fi hotspots all over the world.

O2 in the United Kingdom has gone a step further to exploit this market. The operator’s economic model consists in generating new revenues by monetising the presence of users at sites proposing Wi-Fi access (sales outlets, cafés, etc.).

O2 has chosen to develop its own network of hotspots and to propose a Wi-Fi connection as a value-added service offered free in sales outlets. O2 is paid by the trade names for providing the Wi-Fi access and commercialising a series of advertising and marketing solutions.

The services that O2 offers these Wi-Fi sites include:

- Tailor-made services enabling the trade names to create their own homepage within the Wi-Fi service and advertise their promotions, content and other advantages.

- Reports concerning user behaviour on the Wi-Fi hotspots, segmented by type of device and content viewed.

Therefore there is a triple advantage for the trade names installing O2 hotspots for which they pay the operator: it encourages the users to come to their sales outlet, it allows them to promote their offers and develop their turnover, and it allows them to find out more about their customers.

Wi-Fi also enters into operators’ roaming strategy. In the coming years, it is likely that an imbalance will be created between the typology of travellers and the revenues generated by roaming. Informa predicts that there will be a huge gap between the growth of the volume of itinerant mobile users and that of the revenues generated by them.

The number of mobile users travelling for pleasure will have more than doubled between now and 2015, but despite this increase, mobile usages look likely to remain moderate. Consumers limit their mobile usage when abroad due to high prices, especially for data services.

While Wi-Fi is gaining in importance in operators’ strategies, the latter will clearly have to rethink their roaming strategies and focus on improving the customer experience in terms of the use of mobile services when travelling abroad.

Even if many operators continue to see Wi-Fi as a threat for their roaming revenues because it is cheaper, more and more are seeing it as an opportunity for the very same reason. Indeed, Wi-Fi can contribute to developing mobile usage abroad and partly compensate for the loss of revenues linked to increasing regulatory pressure on roaming prices:

- After an agreement established in November 2010 between KT (Korea) and China Mobile (China), a new partnership was concluded between these two players and NTT Docomo (Japan) at the beginning of 2011. The objective of the three operators is to propose an overall itinerant mobile data offer with unlimited access for their customers in the three countries thanks to their networks of Wi-Fi hotspots.

- This year SK Telecom and China Mobile have signed agreements with the Wi-Fi access provider iPass to allow their customers to benefit from the aggregator’s global network of hotspots.

- Roaming is also one of the development lines of Deutsche Telekom’s 'Wi-fi Mobilize’ initiative in partnership with iPass. Thanks to a network of 500,000 hotspots worldwide, the operator will allow users to develop their data mobile usages abroad while controlling how much they spend.

Customers are increasingly aware of the importance of Wi-Fi connectivity and it has become standard on all new mobile terminals. Aside from the economic aspect, operators are beginning to seize the opportunities that this technology offers them, especially to improve the customer experience. While users already manage their data traffic proactively by switching to their domestic Wi-Fi network, this reflex is not yet widespread for access to public hotspots. For this users must be able to connect to the Wi-Fi networks automatically and to switch from one network to another (3G/WiFi) without a service interruption and without having to follow a switchover procedure.