Unlocking Wi-Fi Enabled Value-Added Services

Competing with the virtual, e-commerce world is becoming increasingly challenging for real-world businesses. Traditional retailers have long envied the massive amounts of valuable data that online retailers have available to help them better understand customer behavior and implement winning marketing tactics. Online retailers know valuable information such as how frequently customers return, how long they spend on their sites, what the customers looked at but didn’t buy, and where they went before and after coming to the site. Businesses as diverse as hotels, banks, stadiums, airports, and large public venues are all looking for ways to get similar detailed data on customer activities in their facilities, so they can improve the customer experience and their bottom lines. The data and insights have not been available to bricks-and-mortar facilities, until now.

That situation is changing through the growing availability of Wi-Fi in business locations. Many retailers, hotels, and other businesses are increasingly offering Wi-Fi as a service that allows their customers to connect mobile devices to the Internet. Hidden in this valuable service is a vast amount of information and insight, which retailers and others can use to deliver tangible value to their bottom lines. Hypersensitive location information, device details, identification of returning customers, and sophisticated path analysis are just some of the customer data captured by Wi-Fi networks. Businesses are now realizing that the data and capabilities offer new ways to improve the customer experience and support a range of market-leading monetization models.

For many businesses, these new location-based experiences and monetization models offer new ways to compete with e-commerce. However, very little is currently known about mobile users’ appetite for these new services, their willingness to use them, or their privacy and security concerns surrounding these data-based services.
To learn more, Cisco conducted a survey of 620 U.S. mobile users to understand their needs and behaviors, use of devices, applications and mobile access technologies, and how they have changed since our 2012 mobile consumer survey.

The study revealed that consumers are very interested in new localized services and solutions that are delivered directly to their mobile devices.  Our findings show that consumers would embrace such services to enhance their experiences in retail locations, airports other large public venues, such as stadiums or shopping malls.  In addition to access to free Wi-Fi, mobile users value the convenience and efficiency of the service, the ability to locate themselves in the venue, and being offered personalized deals or coupons.  However, they are concerned about security on their devices and the use of their personal data.   

We explored these personal data concerns in much more detail.  The good news is that consumers are willing to sacrifice some of their privacy and personal data to derive the value of these personalized services, but they want to be in control.  They want to control what data can be used, when and where, and by whom, and they want to control the experience.  Our research revealed that consumers have a “data sharing threshold”.  Beyond this threshold consumers do not feel that the value of the benefit justifies the value, or intimacy, of the personal data that they are being asked to give-up.

Wi-Fi value-added services allow businesses to compete on more equal terms with the data-driven world of e-commerce, and the financial returns more than justify the investment in Wi-Fi infrastructure. Best of all, as our study shows, consumers want these enhanced mobile experiences and the value that they offer.  Of course, consumers have privacy concerns, but these concerns are not insurmountable and incompatible with the new localized services if the insights from the research are incorporated into the design of these services.

The complete results can be found at Unlocking Wi-Fi Enabled Value-Added Services

This white paper is part of a series presenting 2013 Cisco mobile consumer research findings. Previous blogs and white papers have highlighted What Mobile Consumers Want from Public Wi-Fi and Understanding the Changing Mobile User.  

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The Next Generation of Wi-Fi Debuts in Beijing

I recently had the honor to speak at the Wi-Fi Global Congress in Beijing. As evident by the more than 400 people in attendance, the importance and relevance of Wi-Fi continues to grow.  The Wireless Broadband Alliance now has over 100 members, a doubling in less than 2 years.  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 six key messages from this exciting conference:

1.    Next Generation Hotspots is Alive and Well.  One of the most exciting things at the conference was the launch of the live NGH Experience with China Mobile as the host operator and Cisco as the network infrastructure provider.  Attendees with a Samsung Galaxy or iPhone 5 could experience the first ever opportunity to seamlessly and automatically connect to the venue Wi-Fi.  Participants also received valuable conference information and services seamlessly delivered to their mobile device through NGH.  This is just the beginning.  With 15 major carriers (and growing) signed up to deploy NGH, mobile users throughout the world will be able to experience the next generation of Wi-Fi early in 2014.

2.    Wi-Fi Roaming is Becoming a Reality.  Several speakers described roaming as being where cellular roaming was 15 to 20 years ago.  However, with the successful launch and upcoming deployment of NGH, seamless roaming amongst carriers is now becoming a reality.  Indeed, the GSM Association recently approved a Wi-Fi Roaming Annex that will make it easy for mobile operators to support this.  As such, the WBA expects roaming to be fully automated across more than 80% of public Wi-Fi networks by 2018.

3.    Wi-Fi is an Important Part of the Mobile Network.  The world’ largest mobile operator, China Mobile, announced a statistic that made everyone in the audience gasp.  While their extensive Wi-Fi deployment only covers 1% of their geography, traffic over this network accounts for 50% of all of their mobile traffic.  A recent WBA report confirms the importance of Wi-Fi as part of the mobile network, estimating that 22% of all of the network capacity added by Tier 1 MNOs in 2013 will come from W-Fi.

4.    Monetization—Beyond Offload.  As Cisco recently identified in “Wi-Fi: New Business Models Create Real Value for Service Providers” operators are learning that, while mobile data offload is important, there are lots of other ways to monetize investments in Wi-Fi.  Many speakers described exciting new monetization opportunities based on advertising, location-based services and enhanced customer experiences.  Examples include, retailers who are using value-added Wi-Fi services to drive more sales and sporting venues using Wi-Fi to enhance the fan experience.

5.    Enterprises Are Becoming Mobile Operators.  Bob Friday of Cisco made the point that Bring Your Own Device (BYOD) and the consumerization of corporate IT are actually turning enterprises into mobile operators.  They now have to ensure mobile connectivity and services to their employees both inside and outside of the office.  As a result, enterprises are now trying to figure out how their Wi-Fi networks integrate or interact more broadly with the SP’s mobile networks.

6.    A New Mobile Network.  Mike Roudi of Time Warner Cable described how, as a non-mobile operator, Wi-Fi offered TWC the opportunity to build a new form of mobile network.  Through building an extensive public Wi-Fi network TWC could now extend its customer relationship outside of the home.  Customers are definitely happy with this new strategy and TWC has the quantifiable evidence of this in reduced customer churn in its core broadband and video services.

 
The Wi-Fi Alliance predicts that the world will have 7 billion new Wi-Fi enabled devices in the next 3 years.  The Alliance’s CEO summed up the implication of this fact and the phenomenal future of Wi-Fi up best for everyone:  “This is only the dawn.”

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Understanding the Changing Mobile User

The mobile market continues to evolve at a blindingly fast pace. It seems that new faster, sleeker, and more powerful mobile devices are launched every day, with new device categories created almost overnight. The number of available applications to run on these revolutionary new devices is staggering, numbering in the millions. Now you can do everything, from banking and controlling your home thermostat to shopping, entertainment, and printing a boarding pass, all from the palm of your hand. In addition, we now have faster ways to connect these devices to the Internet using 4G/LTE or Wi-Fi technologies.

While service providers are clearly benefiting from the rise of mobility and all the innovations in devices applications they are constantly trying to understand how consumers are using mobility and where the mobile market is heading. To continue to derive business value from mobility, service providers need to better understand mobility from the users’ perspective and translate what they discover into new sources of business value.

To learn more, Cisco conducted a survey of 620 U.S. mobile users to understand their needs and behaviors, use of devices, applications and mobile access technologies, and how they have changed since our 2012 mobile consumer survey.

The study revealed that Americans now own an average of three mobile devices each, up from 2.6 devices in the 2012 Cisco mobile consumer study. Our findings show that the number of smartphone users has grown by 21 percent in just one year to reach 68 percent of the population, at the expense of basic phones. Most remarkable is that the number of tablet owners has expanded by over 90 percent in just one year, with close to four out of ten consumers possessing one of these new devices.  Eighty percent of smartphone owners now use some Wi-Fi to connect to the Internet. In fact, the average smartphone user uses Wi-Fi 44 percent of the time to connect a device to the Internet – a remarkable increase from just one year ago, when one-third of the total smartphone data usage was through a Wi-Fi connection, rather than a mobile network.  Almost all consumers use their mobile devices at home, averaging more than 3.8 hours of usage in a typical day, almost double the time they spend using them at work.  Our research also indicates that LTE and Wi-Fi are not competitive, but that the two access technologies actually appear to be complementary and synergistic. A significant number of LTE smartphone users have actually increased both their total data usage and Wi-Fi usage, after they make the transition to LTE.   Thirty-six percent of LTE smartphone users reported that their total data usage across all devices increased, to some extent or significantly, after they moved to LTE.

The research findings are important, because they can help service providers better understand the rapid changes and emerging trends in the mobile market, identify new business opportunities, and develop robust strategies for winning in mobility.

The complete results can be found at “Understanding the Changing Mobile User?”

This white paper is part of a series presenting 2013 Cisco mobile consumer research findings.  Previous blogs and white papers have highlighted what mobile consumers want from public Wi-Fi.  Future blogs will present insights into opportunities to provide in new localized mobile services.

I look forward to learning more about the changing mobile user and the new world of mobile at the Wireless Broadband Alliance Global Congress in Beijing, November 18^th or 21^st.  Look out for my blog report from the conference.

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What Do Customers Want From Public Wi-Fi?

It seems that the iconic “Wi-Fi Here” badge is turning up everywhere these days. Once found on coffee shop windows to indicate that patrons could connect their mobile devices to the Internet, the symbol can now be seen in countless public venues. Wi-Fi can now be found everywhere from retail stores and hotels to airports, doctor’s offices, and even airplanes.

For many businesses and public locations, providing Wi-Fi to customers has almost become like electricity or water, a cost of doing business. Many service providers are now constructing extensive networks of public Wi-Fi hotspots for use by their mobile or home broadband customers. The intention is to enhance and differentiate their offering, with the goal of retaining their customers’ business. However, very little knowledge is currently available about how consumers are actually using public Wi-Fi and how they view the overall experience.

To learn more, Cisco conducted a survey of 620 U.S. mobile users to understand their needs and behaviors, current and future use of public hotspots, and unmet demands.

The study revealed that 70 percent of mobile users are now using public hotspots, with 57 percent of those users accessing one at least weekly – a significant increase from our 2012 mobile consumer survey.  Smartphones are the predominant mobile device used in public Wi-Fi hotspots.  Almost one-third of smartphone owners are connecting to hotspots in retail stores, outdoors, or other public locations, such as libraries or doctor offices, at least weekly.  Not only do consumers want more hotspots in the traditional public Wi-Fi locations, but they also expect hotspots to be available wherever they spend their lives outside the home, work, or school.  In general, mobile users are satisfied with public Wi-Fi but there is room for improvement in the areas of speed, security, and, of course availability.  Consumers also see room for improvement in the Wi-Fi offered in public outdoors and retail locations. 

The research findings are important, because they can help businesses and service providers understand the size of the opportunity, develop winning strategies, and optimize their Wi-Fi offerings and network deployments to derive greater business value.

The complete results can be found at “What Do Consumers Want fromPublic Wi-Fi?”

This white paper is part of a series presenting 2013 Cisco mobile consumer research findings.  Future blogs will present insights regarding changing mobile usage and consumer behavior, as well as opportunities in new localized mobile services.
 
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Small Cells are Big Things in the Middle East

I recently had the honor to speak at the Small Cells Forum in Dubai. One thing is certain: Wi-Fi and small cells are certainly important throughout the Middle East and Northern Africa.  Operators from throughout the region came together to learn how they could deploy small cells to meet their growing customer demands and improve their own bottom-line in the process. 

I took away six key messages from the conference on the future of mobility in the Middle East:

1.    Small Cells Are the Next Big Thing: Operators from large countries like Saudi Arabia to smaller countries like Qatar all wanted to learn how they could use small cells to help them cope with the huge traffic that they are experiencing on their mobile networks and to  improve mobile coverage, especially indoors and in heavily congested areas. 

2.    Small Cells Are Not an Add-On: SPs realize that future of mobile networks lies in a heterogeneous network (“HetNet”) world where licensed and unlicensed mobile networks coexist and complement each other.  With their unique strengths, Wi-Fi and licensed small cells are quickly becoming important components of an integrated access portfolio complementing the macro mobile access network.

3.    A New Enterprise-SP Partnership: Enterprises have already invested in Wi-Fi in order to bring mobility to the workplace.  However, they now face the rising challenge of BYOD – employees using their own devices to work and expecting the same service and experience that they enjoy outside of the office.  Several speakers explained how enterprises want to partner with service providers to provide a highly reliable integrated Wi-Fi and cellular service to their employees.  A critical first step is using small cells in enterprises to improve the quality and coverage of mobile voice in the workplace.

4.    Vertical Solutions Are Key: Several speakers provided excellent details and case studies of how SPs need to be creating specific vertical solutions to be successful in selling small cell solutions in the enterprise market.  The key verticals that offer the biggest opportunities and have the most unique needs include: education, hospitality, hospitals and retail.

5.    Wi-Fi Offload Comes to the Rescue: Saudi Arabia has the highest mobile growth in the region and some of the highest mobile usage in the world.  The country expects the number of mobile subscribers to increase 5-fold over the next 3 years and mobile broadband data to triple over the same period.  Amro Mohamed Al Buti, Head of Application and Content Design at Saudi Telecom described a fascinating case study of how they are using small cells to intelligently offload up to 7% of their anticipated mobile traffic, saving them $3.6 Billion by 2020.

6.    It’s All About the Data: Operators and vendors alike recognize the value that is waiting to be released from small cell technologies.  Hidden in the technology is an incredible amount of information and insight that providers can exploit to deliver tangible value to their bottom-line.  Data analytics and location-based services offer real opportunities to monetize small cell deployments.  The challenge to all participants was: “stop letting Google extract the information from your network and create value.”

 As I stared down on Dubai from the Burj Khalifa – the tallest manmade structure in the world (2,722'/830 m) – I reflected on the future of small cells in the Middle East.  However, as I connected to the local Wi-Fi at the “Top of the World” to instantaneously send photos of the stomach churning view to my family back home, I realized that much of that future has already arrived.

 

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Wi-Fi Value-Added Services Improve the Retail Bottom-line

Retailing has always been a tough business.  But, the move to online shopping, the challenging economy and changes in shopper’s behavior has placed even more pressure on traditional retail margins.  Retailers are constantly looking for ways to get more people in to their store and to spend more.  Traditional retailers have long envied the massive amounts of valuable data that online retailers have available to help them better understand customer behavior and implement winning marketing tactics.  Online retailers know such valuable information as: how frequently customers return, how long they spend on the site, what they looked at but didn’t buy and where they went before and after coming to the site.  With this information, online retailers are able to rapidly adjust prices, promote certain items, and re-configure the layout of the site in almost real-time in order to increase the probability and value of a sale.  None of these data and insights has been available to bricks-and-mortar retailers - until now.  The increasing availability of Wi-Fi in retail locations is changing all of that.

Shopping malls and retailers are increasingly offering Wi-Fi to their customers as a service to connect their mobile devices to the Internet.  Hidden in this valuable service to the mobile user is an incredible amount of information and insight that retailers can exploit to deliver tangible value to their bottom-line.  In a previous blog, I identified 8 core technical capabilities available in many Wi-Fi networks that allow the collection of massive amounts of useful information that can be turned into key enablers of business value.  Hyper-sensitive location information, device details, identification of returning customers, and sophisticated path analysis are just some of the shopper data that are captured by the Wi-Fi networks.  Best of all, retail venues can now effectively collect valuable information from anyone who enters their store with a Wi-Fi activated mobile device in his pocket.  With over 50 percent of adults carrying Wi-Fi enabled smartphones, and growing, retailers can now capture information on the majority of their shoppers.  However, this does not raise personal privacy issues because only the MAC address of the device is collected and the information is aggregated across all users.

Aggregating the information available from the Wi-Fi access points provides unique insights into where people go, their common paths, and most visited places. Mall owners, for example, are using this detailed data to justify higher rents for stores in high-trafficked areas or to measure the impact of signage on customer traffic patterns. Trend analysis and history comparisons of data can show the effectiveness of changes in marketing programs or store layout. Retail chains are using footfall traffic patterns derived from Wi-Fi connection data to help them better locate new stores in highly trafficked sites of target shoppers.  Shopping malls and large box retailers can use the data to improve operations and security. Real-time shopper traffic flow patterns highlight congestion points and areas demanding more shop assistants, cashiers or security guards. 

Retailers are combining the location and user information from the Wi-Fi access points together with customer relationship management (CRM) and customer loyalty data to provide personalized experiences and offers to shoppers at points of purchase in the stores. Equally, retailers are combining location-based services and shopper services to provide additional product information and help customers navigate throughout the store.  While these Wi-Fi Big Data services may raise privacy concerns, shoppers are typically receptive to the idea if they have control over how their information is used and they are getting real value in return for sharing it with the retailer.  Our mobile user research confirms that shoppers are interested in an enhanced in-store shopping experience (52 percent were either somewhat or very interested) because they think that it will make them more efficient and enhance their shopping experience. Mobile users particularly liked the idea of personalized deals and coupons that would be presented when they were looking to buy something, rather than before or after as is now typically done.  

Despite concerns of show-rooming and loss of in-store sales to online purchases, many leading retailers are embracing mobility and including it as an integral part of their strategies. And many are outfitting their stores with public Wi-Fi access as a cornerstone of those strategies.  Wi-Fi value-added services not only allow retailers to compete on more equal terms against the data-driven world of online retailing but the returns more than justify the investment in the Wi-Fi infrastructure.  Retailers are finding that value-added services and insights are driving up customer spend, store dwell time, and allowing them to run more effective marketing campaigns, resulting in a better overall customer shopping experience.

Further details on how service providers can create new and innovative sources of value from Wi-Fi can be found in our recent white paper:  Wi-Fi: New Business Models Create Real Value for Service Providers

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The Mobile Paradox

Today’s world is characterized by what I call the “mobile explosion”—an environment defined by mobile cloud becoming a platform for delivering everything. It is a world of heterogeneous networks, licensed macro small cell networks, and unlicensed small cell networks (Wi-Fi for example), all seamlessly combined. In this world, however, I believe we are facing a mobile paradox: on the one hand, there is a staggering demand for data from our smartphones, tablets, and other connected devices; on the other hand, the telecommunications industry is grappling with business and monetization challenges around profitability, how to build up these networks fast enough, and competition from over-the-top (OTT) operators.  But, operators are struggling with building the business case and understanding how to make Wi-Fi pay.

The much quoted Cisco Visual Networking Index (VNI) predicts that global mobile data traffic will increase 13-fold from 2012 to 2017, reaching 11.2 exabytes per month. In parallel, the use of unlicensed small cell networks (Wi-Fi) for Internet access is exploding as more mobile devices are Wi-Fi-enabled, the number of public hotspots expands, and user acceptance grows. Until recently, most technologists and mobile industry executives viewed Wi-Fi as the “poor cousin” to licensed mobile communications.  And they most certainly never saw 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 the “Business Models and Monetization Video” in Big Thinkers in Small Cells, my colleagues and I discuss revenue opportunities and challenges mobile operators face today with small cells, both licensed and unlicensed. Mobile operators understand the business case behind offloading data traffic to cheaper Wi-Fi—deferring significant capital expenditures for further build-out of the licensed network.  However, operators around the world are asking if there is more to Wi-Fi than just data offload (the simple answer is “yes”). Or, more appropriately, how do they actually make money from Wi-Fi—turning a cost of doing business into profitable business models?

The Cisco Internet Business Group (IBSG) has identified and built business cases with service providers around additional ways to benefit from Wi-Fi, beyond data offloading. Our recent white paper (Wi-Fi: Service Providers Can Make Money with New Business Models) describes each of these business models in more detail – laying out the economics and providing case studies of success operators. 

As the pervasiveness and customer adoption of Wi-Fi continue to grow exponentially, these new business models provide meaningful opportunities for service providers. For example, we are seeing home broadband providers improve their customer retention by 10 to 15 percent by bundling their broadband service with access to free public Wi-Fi. In addition, we believe that operators can generate $10 to $15 per business user monthly by establishing a Wi-Fi-enabled “Business Anywhere Service.” Or, the could drive an incremental $100-$150 per retail store by delivering enhanced, value-added retail experiences, on top of the $50-$250 that operators charge per wireless access point to run a managed Wi‑Fi service for retailers. 

But, don’t just take my word for it. End users tell us that they want these new Wi‑Fi business models and truly see value in them. Unique Cisco IBSG customer research revealed that mobile users not only appreciate the lower cost and unlimited data usage of Wi-Fi, but also greatly value the flexibility and convenience that it offers. In particular, customers were very interested in the national/international roaming business model and the Wi-Fi value-added retail offering that would make them more efficient, save them money, and enhance their shopping experience. Remarkably, among U.S. broadband subscribers we surveyed who have free public Wi-Fi as part of their subscription, 61 percent said the inclusion of Wi-Fi was “very” or “extremely” important in their choice of broadband provider. Wi-Fi is a good way not only to attract subscribers, but to keep them as well.

Of course, not all business models are attractive to all service provider segments. In addition to aligning the business models to different industry segments, providers need to set priorities and plan where to start. 

We feel that Cisco IBSG’s research, insights, and approach arm SPs with guidelines for setting priorities and determining which approach is best for making real money from all small cell technologies. Click here to learn more about what additional Big Thinkers in Small Cells have to say about Business Model and Monetization Opportunities.

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The Next Generation of the Internet Is Mobile

No one could have imagined the fundamental impact the Internet would have on both society and the economy—changing our lives forever. The Internet has already transformed the way we work, live, play, and learn. And, this is only the beginning.

The extraordinary growth and transformation of the Internet is unprecedented, but what does the future of technology hold, and where is the Internet heading? Business executives, technologists, and policymakers are not only asking these questions—they also are looking for a map of the future that will help them assess changes in the Internet, and possible out-comes and implications of those changes for business, national policy, and regulation.

Recent research by Cisco IBSG has identified 10 major technology trends that we believe are shaping the direction of the Internet today and, most certainly, will change its direction in the future.

1.    A World Gone Mobile

2.    Cloud: A New Way of Delivering Technology

3.    Everything Can Be Delivered Over-the-Top

4.    Big Data: The New Oil

5.    A Global Village: Connecting the Unconnected

6.    Powerful Devices: The World in the Palm of Your Hand

7.    Bring Your Own Device: The Consumerization of IT

8.    The Internet of Things Is Already Evolving

9.    The New Mobile

10.  Converged Networks: A New Platform Architecture

Mobility is core to each and every one of these trends.  Whether it is the access, the devices that we are constantly carrying or the cloud services and big data that power our applications and experience, mobility is at its heart.  Mobility is redefining network architectures, and allowing both people and things around the world to achieve a level of connectivity that is unfathomable in a non-mobile world.  So, no matter how the Next Generation of Internet evolves one thing is certain: it will have mobility at its core.

Cisco IBSG has developed a plausible scenario for how these 10 disruptive technology trends might come together to shape the future of the Internet. We call this the “New Digital Explosion.” Why “new”? Changes in devices, networks, applications, delivery models, user behaviors, and mobility will create a step change in demand for and reliance on the Internet. 

The New Digital Explosion is not just about technology; it covers all aspects of consumers, the information and communications (ICT) industry, and global/national economies. One thing is certain: the New Digital Explosion will change the ICT industry, impacting all players across the value chain: There will be greater competition, redefined value chains/business models, and new strategies, resulting in both new challenges and business opportunities. Furthermore, the role of government will need to evolve to create an environment that encourages business and technology innovation, and investment and competition to the greater benefit of their societies.

Cisco IBSG’s recent point of view, The Next Generation of the Internet: Revolutionizing the Way We Work, Live, Play, and Learn, provides details on the 10 major technology trends, maps out the future of the Internet, and discusses the implications and opportunities for Internet businesses and governments in this new hyper-connected world.

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Creating a Wi-Fi Monetization Virtuous Circle

In the decade or so that Wi-Fi has existed, most technologists and mobile industry executives viewed it as the “poor cousin” to licensed mobile communications.  Now mobile operators around the world are asking how they can effectively use Wi-Fi to help them cope with the huge surge in mobile data traffic and to meet customer needs and expectations.  In addition, they are all eager to understand how they can make money from Wi-Fi and to make the business case to justify investments in deploying Wi-Fi networks. 

Based on extensive research and consultative engagements with leading global service providers Cisco has identified a number of new and innovative business models which we characterize as The Wi-Fi Monetization Pyramid – 3 layers of monetization opportunities which support the subsequent layers below (described in detail in our recent white paper W-Fi: New Business Models Create Real Value for Service Providers).

Approaching the fundamental question of Wi-Fi monetization as a pyramid, or series of layers of business opportunities, creates not only significant new business value for a service provider, but also a virtuous circle that leads to ever-increasing sources of new Wi-Fi value. As the Wi-Fi Monetization Virtuous Circle outlined below shows, the reinforcing network and scale effects of Wi-Fi investments not only deliver unique business benefits at each of the levels, but also establish a valuable platform to exploit additional monetization opportunities at the next level.

 

Deploying an initial public, home, and business Wi-Fi network provides a compelling ROI through Baseline business models. However, after this initial network is established there are now New Revenue opportunities that can be built on this platform. And, expanding the network through managed services and roaming agreements at key venues allows service providers to offer additional Value-Added Services to extract new sources of value from the Wi-Fi network. Now we have come full circle: Expansion of the network to new venues and the addition of new services make the network even more valuable to end users, making the ROI for the baseline models even higher.

 

Service providers who are successfully delivering business value from Wi-Fi do not view individual monetization opportunities in isolation.  Rather, they view investments in Wi-Fi as a platform upon which they can deliver a pyramid of new business models, creating a Monetization Virtual Circle of increasing business value.

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Unlocking the Business Value in Wi-Fi Networks

Wi-Fi networks seem to now be everywhere.  Once primarily confined to the home or office, we now expect Wi-Fi access in coffee shops, hotels, airports, stores and even in sport stadiums.  Not only are these Wi-Fi networks providing valuable Internet access to appreciative mobile users, they are collecting massive amounts of useful information.  Innovative businesses and operators are now learning how to unlock this valuable information to turn Wi-Fi networks into key enablers of business value.  We have identified eight technical characteristics of Wi-Fi networks that can help to deliver real value to the bottom-line:

1.       Recognizes All Wi-Fi Enabled Devices

Recent research by Cisco IBSG shows that consumers have an average of 2.6 mobile devices, most of which are now Wi-Fi enabled.  These devices are constantly signaling of their existence to Wi-Fi networks.  As a result, Wi-Fi access points are constantly collecting information on these devices and the movements of their owners without users having to authenticate on the network.  This means that venues are collecting information on a large number of people at an – effectively anyone who enters with a Wi-Fi activated mobile device in his pocket.  However, this does not raise personal privacy issues because only the MAC address of the device is collected and the information is aggregated across all users.

2.       Hyper-Sensitive Location

Triangulation from the access points can currently locate a mobile user to within 3 to 4 metres.  However, new technologies will make this even more accurate, down to 1 to 2 metres.  This means that location targeted advertising can be extremely sensitive to locations within a store or to specific stores within a shopping mall.  Equally, accurate and useful mapping and other location-based services can be offered to customers.

3.       Capture Device Information

By capturing the MAC address, the Wi-Fi network is collecting valuable information on the user’s device, such as type, manufacturer and the speed it moves about the venue.  This information allows businesses to vary their offers, advertising messages, services and customer experience by device type. 

4.       Identify Returning Customers

Capturing the MAC address of the different devices also allows the Wi-Fi network to identify returning customers, including the frequency, interval and the duration of their return visits.   This valuable information allows businesses to differentiate offers, advertising messages, services and customer experience between new and loyal customers.

5.       Sophisticated Path Analysis

Data analytic tools by Cisco allow sophisticated, user-friendly analysis of the extensive valuable data collected by the Wi-Fi networks.  These tools can display detailed maps and information of where and when people move about a venue.  Airports are using this to improve their operations in real-time and identifying opportunities to remove bottlenecks to the flow of travelers.  Equally, shopping mall owners are using it to justify different rents in the mall based on the amount of footfall in front of different shops.

6.       Advanced Filtering

Advanced filtering allows business users to drill down on the data and analytics that are most relevant to their business.  For example, users may want to identify the percentage of people who spent more than 10 minutes in a specific part of your store or shopping mall to evaluate the effective of their in-store merchandizing or marketing campaigns.

7.       Push Information to the Browser

Advanced Wi-Fi networks now have the ability to push information to the browser of the mobile device, giving the user the ability to accept or reject it.  This powerful capability means that businesses can now deliver targeted and rich messages directly to the browser, rather than just messages or banner ads.  Not only does this offer the ability to deliver much richer information, but the customer is much more receptive to receiving it.

8.       Analytics On Anything Happening on the Network

Future capabilities, currently under development, will allow business users to analyze anything that is happening on the Wi-Fi network.  For example, show me where those people using Facebook spend their time in the venue, and how often they return.  Or, show me where people are surfing price comparison sites in the store.  Imagine the value to a retailer of then being able to automatically push a price-matching offer to that price sensitive customer? 

The recent white paper (Wi-Fi: Service Providers Can Make Money with New Business Models) by Cisco IBSG describes the viable Wi-Fi business models for turning these technical capabilities into true business value. 

We are only just beginning to mine the valuable data available from Wi-Fi networks.  Innovative and pioneering businesses are showing us what can be done and the true business value that can be extracted from Wi-Fi Big Data.

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Creating Real Business Value from Wi-Fi

The insatiable demand for smartphones, tablets, and other connected devices is generating staggering amounts of mobile data. The recently released Cisco Visual Networking Index (VNI), predicts that global mobile data traffic will increase 13-fold from 2012 to 2017, reaching 11.2 exabytes per month.  In parallel, the use of Wi-Fi for Internet access is exploding as more mobile devices are Wi-Fi enabled, the number of public hotspots expands, and user acceptance grows. Until recently most technologists and mobile industry executives viewed it as the “poor cousin” to licensed mobile communications.  And they most 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 to avoid clogged networks and unhappy customers.

Mobile operators understand the business case behind off-loading data traffic to cheaper Wi-Fi --deferring significant capital expenditures for further build-out of the licensed network.  However, operators around the world are asking if there is more to Wi-Fi than just data offload? Or, more appropriately how do they actually make money from Wi-Fi -- turning a cost of doing business into profitable business models?  The simple answer is “Yes.” 

Cisco views the Wi-Fi monetization opportunities as a pyramid, or set of layers.  Each of the layers supports the subsequent layer above.  Not only is it extremely difficult to make a compelling business case for a stand-alone layer without successfully implementing some of the business models in the previous layers, but it is not in the SP’s strategic interests to focus on only one of the layers.  However, the SP and its customers derive increasing value as they move up the Wi-Fi Monetization Pyramid.

The core layers of Wi-Fi monetization opportunities in the pyramid, starting at the bottom, include:

1.       Baseline – using Wi-Fi for broadband retention or mobile data offload offer a very compelling return on investment, largely based on cost reductions, to justify further investment in other layers of monetization.

2.       New Revenues – leveraging the Wi-Fi network deployed in the Baseline layer to offer premium connectivity services, managed hotspots or Wi-Fi roaming offers opportunities to generate significant new revenues from Wi-Fi.

3.       Value Added Services – increasing new opportunities are emerging to leverage the Wi-Fi network developed in the previous layers to provide new and innovative services related to advertising, location, analytics, retail store interactions and special venues, such as sporting facilities.

The recent white paper (Wi-Fi: Service Providers Can Make Money with New Business Models) by Cisco IBSG describes each of these business models in much more detail – laying out the economics and providing case studies of success operators. 

The rapid growth of mobile data and the popularity of Wi-Fi have created a number of new and innovative money-making opportunities for SPs. The question is no longer “Can SPs make money from Wi-Fi?” Rather, it is “Where should they focus their efforts, and when should they deploy?”  By methodically climbing the layers of the Wi-Fi monetization pyramid, SPs can create compelling new business models and sources of revenues and business benefits to readily justify investments in building robust Wi-Fi networks and operational capabilities.

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