The Connected Life deals with interesting business issues and opportunities facing the Communication and High Tech industries today and in the future. My postings share well informed, researched and structured analysis from my extensive experience in working on these issues with leading digital companies around the world.
I recently had the honor to speak
at the Wi-Fi Global Congress in San
Francisco. One thing is certain: Wi-Fi’s importance and industry relevance
continues. While not quite the same order of magnitude as the Mobile World
Congress, the event attracted 350 people, a tenfold increase over the last time
the Wi-Fi Broadband Alliance visited San Francisco. The WBA now has 95 corporate
members, reflecting a member base that has doubled over the last 12 months. The
membership includes a mix of leading Wi-Fi, mobile, and broadband network
operators; global service providers and media players; as well as technology
providers and partners.
I took away five key messages
from the conference:
1.Roaming and Integration Are the Next Big
Thing: Everyone is excited by the Next Generation Hotspot (NGH)
initiative that allows users to seamlessly roam across Wi-Fi networks locally
or around the world. The rollout of NGH will also allow mobile devices to
simply roam from the cellular network onto Wi-Fi hotspots using a secure
connection.Recent customer research
from Cisco IBSG confirms the pent-up user demand for this capability. Eighty-five
percent of people stated that seamless transfer between networks was important
to them, and there was an average level of interest of 3.3 out of 5 for Wi-Fi
2.Mobile vs. Wi-Fi Is Dead: The question is no longer which
is better—mobile or Wi-Fi. The future is now seen as a true marriage between
the two access networks. In fact, Korea Telecom talked about how they are
creating an “ABC” solution—“always best connection.” KT, along with other operators, is developing
solutions that select the best network for the location, device, and
application, and make seamless handoffs between LTE and Wi-Fi. KT remarkably
showed how it is currently seamlessly transferring video streaming and file-transfer
sessions with customers between its two networks in South Korea.
3.Small Cells: Smaller
licensed cellular and Wi-Fi cells are now seen as fundamental to the next
generation of mobile networks to significantly increase mobile capacity to meet
explosive customer demand. Unlike macro cells, small cells can also be cost-effectively
deployed in homes, businesses, and key public locations to improve coverage,
ensuring that mobile devices can always be connected to the Internet. In fact,
the 6 million licensed small cells in existence already exceed the total number
of macro cells deployed globally.
4.Monetization—Beyond Offload: As Cisco
IBSG identified in “Profiting from the
Rise of Wi-Fi,” operators are learning that, while mobile data offload is
important, there are lots of other ways to monetize investments in Wi-Fi. MGM
explained how it is deploying Wi-Fi throughout all of its extensive Las Vegas
properties not only to improve the customer experience, but to drive new value
to the bottom line. Location-based services and targeted messaging and coupons
to guests’ mobile devices delivers a higher ROI to MGM than it can get from Internet
advertising. Similarly, Shaw Communications in Canada described how the
extensive public Wi-Fi network it is building helps them differentiate their
core TV and broadband services and increase their pricing power.
5.The Wi-Fi Land Grab: Operators
are quickly recognizing that one of the keys to success in building an
effective Wi-Fi network is, as in retailing, “location, location, location.” A
land grab is going on as companies seek to acquire sites in key areas where
people spend their time. Shaw Communications described creative techniques it
is using to gain access to these key locations. Shaw’s bag of tricks includes
everything from listings on Wi-Fi finders to drive traffic to the retailer; advertising;
location-based services; and integrating with its enterprise IT to convince
retailers and owners to site Shaw’s access points at their location.
Once the exclusive
domain of senior executives, mobile devices are now indispensable to most employees
for conducting both their business and personal lives. The insatiable demand
for smartphones, tablets, and other connected devices is generating staggering
amounts of mobile data. Inparallel, theuseofWi-FiforInternetaccessisexploding asmoremobiledevicesareWi-Fi enabled,thenumberofpublichotspotsexpands,anduseracceptancegrows.Once
shunned by corporate IT departments, Wi-Fi has increasingly made its way into
Businessusersarethemostvaluablecustomersegmentformobileoperators. Changes inmobilebehaviorandusage,particularlywithregard to Wi-Fi,
could have a significant impact on service providers’ (SPs) bottom line.
However, there is little research on how mobile business users are actually
using Wi-Fi, how they want to employ it in the future, and, more specifically,
what is driving them to connect their devices to the Internet using Wi-Fi.
as well asnewformsofmonetization. The study revealed some interesting findings, including home being the most
popular location where business users use mobile devices, far surpassing the
office or other place of work as a preferred location. Business users own an
average of three mobile devices each, one-third more than consumers. And, close
to 30 percent of them own a table. Business users prefer Wi-Fi to mobile to
connect all of their mobile devices. In fact, more than one-half of business
users take advantage of a public
hotspotweekly to access the Internet.
I recently returned from visiting
the world’s Wi-Fi laboratory – the United Kingdom. Everywhere you look in the
United Kingdom, there is a sign promoting the availability of Wi-Fi, and my
mobile device was constantly identifying a long list of available hotspots. The
world’s oldest subway system – affectionately known as The Tube – even allows
you to connect to the Internet as you await your train hundreds of feet below
historical London. Visitors from around the world at the Summer Olympics were
greeted with high-speed Wi-Fi access throughout the Olympic venues, allowing
them to enhance their experience with instant access to additional information,
videos, and communications through their mobile devices.
Our recent Cisco IBSG research, “What
Britons Want from Wi-Fi and Mobile,” reveals that Britain is definitely
leading the way in the availability and use of Wi-Fi. Our study confirms that
Britons seem to be content with coverage in first-tier locations such as coffee
shops, hotels, and restaurants, but are now looking for Wi-Fi to be just as
pervasive in other places where they spend their lives. Hospitals, bus stops,
retail stores, pubs, and the High Street (or city centers) top the list of
additional locations where Britons would like to access Wi-Fi.
The study revealed that mobile
devices are now Wi-Fi-enabled “nomadic” devices. Britons own an average of 2.6
mobile devices, almost all of which are Wi-Fi-enabled. Britons spend an average
of 2.6 hours per day using their mobile devices in their homes, compared with only
0.6 hours per day in a typical “mobile” on-the-go world.
The Cisco IBSG study also
revealed that mobile users are connecting their devices predominantly via
Wi-Fi, including over 80 percent of smartphone owners. In fact, on average,
smartphone owners use Wi-Fi slightly more than one-third of the time to connect
their devices to the Internet. Remarkably, Britons told us that they prefer
Wi-Fi to mobile for connecting their mobile devices. They find Wi-Fi superior
or equal to mobile connectivity across all attributes, including security and
ease of use. Forty-six percent of Britons even find Wi-Fi coverage superior to
mobile and an additional 18 percent consider that they provide equal coverage. And,
this could change even more in Wi-Fi’s favor, as one-third of British mobile
users now use a public hotspot at least weekly. In addition, up to 95 percent
of the time, they access that public Wi-Fi for without paying – either for free
or as part of their home broadband or mobile subscription.
There is definitely a Wi-Fi “land
grab” under way in the United Kingdom today as every major service provider
fights to light up the next tier of prime locations with Wi-Fi access points. BT claims
more than 4 million hotspots in the United Kingdom, including community access
through the FON network for fellow BT home broadband subscribers. In fact,
every major home broadband provider in the United Kingdom now offers free
access to an extensive public hotspot network as a way to retain customers. The
Cisco IBSG research shows that this strategy works.Over two-thirds of respondents said that free
public Wi-Fi was important to them in choosing a broadband provider.
Equally, most of the major U.K.
mobile operators offload some of their data traffic to one of these nearly pervasive
Wi-Fi networks to cope with explosive mobile data traffic and to provide an LTE
experience, in a market that, until very recently, has not had LTE. Mobile
operator O2 has shaken up the market by
creating an extensive network of prime public hotspots and making them available
for free to customers and non-customers alike.
Given this Wi-Fi laboratory,
operators and enterprises are actively experimenting with creating a new world
of mobility. SPs are exploring new Wi-Fi monetization models such as wholesale,
new features, and value-added managed services. Big U.K. retailers such as food
shopping giant Tesco and the John Lewis department store chain are lighting up
their stores with hotspots to create a new high-value, mobile-enabled shopping
experience for their customers. Even the High Street banks are getting in on
the act as they look to add Wi-Fi to their thousands of branches throughout the
United Kingdom. Of all the places in the world, Britain may be the first to
deliver what we term “New
Mobile” – an environment in which Wi-Fi and mobile are seamlessly
integrated and indistinguishable in the mobile user’s mind.
So what does the future hold for British mobility? Here
are five predictions for key changes in the British mobile industry over the
next two years as an outcome of the Cisco IBSG research:
1. Mobile will become
one of the primary ways people access entertainment.
the next two years:
percent of mobile users will access social networks.
than 50 percent of mobile users will watch streamed and recorded videos.
to 50 percent of mobile users will read eBooks.
2. Home will continue to
dominate other locations for mobile device usage.
next two years, more than 50 percent of all mobile device usage will occur in
3. Devices will also get
“out of the house,” with increased usage in public spaces.
next two years, 15 percent of all mobile device usage will occur in retail and
4. Wi-Fi will become the
predominant access technology for smartphones.
Within the next two years:
than 90 percent of smartphones will regularly use Wi-Fi.
owners will use Wi-Fi almost 50 percent of the time to connect to the Internet.
5. While smartphone
penetration will continue to increase, much of the growth of mobile devices
will come from nomadic devices.
next two years:
percent of consumers will have eReaders.
percent will have tablets.
Cisco IBSG conducted an online
survey of 1,095 British mobile users. The study was also undertaken in Brazil,
Mexico, the United Kingdom, and the United States. Full results of the survey
can be downloaded here.
mobile paradox—huge growth and customer demand, yet significant business and market challenges—is causing many companies in the mobile value chain
to question where the industry is heading. They’re struggling to understand the
key drivers that will shape the industry and what this new world will mean for
them in terms of new challenges and opportunities. Most of all, they want to
know the winning strategies for achieving success in this New Mobile World
This paper provides a perspective on the key disruptors and
tipping points that will redefine mobility while producing two plausible
scenarios for the future of the mobile industry. These scenarios and industry
segment assessment provide a framework for mobile industry executives to
evaluate their future and rationally assess strategic options under different conditions.
Until recently, most technologists and mobile
industry executives viewed Wi-Fi as the “poor cousin” to licensed mobile
communications. And they certainly never viewed any role for Wi-Fi in mobile
networks or their business. The explosion of mobile data traffic has changed
all of that. Most mobile operators now realize that offloading data traffic to
Wi-Fi can, and must, play a significant role in helping them avoid clogged networks
and unhappy customers. In addition, service providers (SPs) are struggling to
understand new business models for making money from Wi-Fi.
In all of this strategizing about Wi-Fi,
there is precious little research about how end users are
actually using Wi-Fi, how they want to employ it in the future, and, more
specifically, about what drives a user to connect his or her device to the
Internet with Wi-Fi rather than “mobile.”
learn more, the Cisco® Internet Business Solutions Group (IBSG)
conducted a survey of 1,079 U.S. mobile users to understand their needs and
behaviors, current and future mobile usage, and level of interest in Wi-Fi and
new forms of monetization. The study revealed some interesting findings,
including people’s preference to connect their mobile devices using Wi-Fi, the
predominance of mobile device usage in the home, and the fact that one-third of
mobile users use a public hotspot at least weekly to connect their mobile
devices to the Internet. The research findings are important because they allow
SPs to understand the size of the opportunity, develop strategies for success,
and differentiate their Wi-Fi offerings and initiatives to become more
telecommunications industry is facing a fundamental issue: on the one hand,
increasing requirements for new investments in broadband Internet access and
transport infrastructures that support continuous growth in broadband traffic;
and on the other hand, reduced ability to exercise pricing power with customers
and, thus, increase revenues.
traditional voice and messaging revenues have strongly declined due to
commoditization, and this trend is expected to continue. Therefore, operators
are now relegated to connectivity products. The value that operators once
derived from providing value-added services is migrating to players that
deliver services, applications, and content over their network pipes.
If this is not
enough, Internet access prices are dropping, sales volumes are declining, and
markets are shrinking. The culprit: flat rate “all-you-can-eat” pricing. Such a
model lacks stability—sending service provider pricing into a downward
spiral—because it ignores growth potential and shifts the competition’s focus
from quality and service differentiation to price.
Now is the time for
the telecom industry to consider innovative pricing models for broadband
services to enable a better match between the price customers pay and the value
they derive from services. Successful pricing strategies will be essential to
directly managing profitability for both fixed and mobile broadband operators.