How Service Providers Can Monetize Wi-Fi

The insatiable demand for smartphones, tablets, and other connected devices is generating staggering amounts of mobile data and placing a crushing burden on networks. One barometer is the recently released Cisco Visual Networking Index (VNI), which 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 also exploding, as more mobile devices are Wi-Fi enabled, the number of public hotspots expands, and user acceptance grows.

The two trends are intersecting in crucial ways.

Until recently, most technologists and mobile-industry executives viewed Wi-Fi as the “poor cousin” to licensed mobile communications. And they saw little role for it in mobile networks or their business. The upsurge 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, they ask, is there more to Wi-Fi than just data offload? And, more appropriately, can they actually make money from Wi-Fi—turning a cost of doing business into profitable business models? The simple answer is, yes. In fact, the Cisco® Internet Business Group (IBSG) has identified and built business cases with service providers around 15 additional ways to benefit from Wi-Fi, beyond data off-loading. 

IBSG’s white paper, Profiting from the Rise of Wi-Fi, describes these business models in more detail, but the 15 business models basically fall into four different categories:

1.    Business Effectiveness—using Wi-Fi access networks to decrease operational costs or improve customer retention and service differentiation

2.    End-User Services—solutions for business and consumer end users using Wi-Fi for internet connectivity for their devices (e.g., smartphones, tablets, laptops)

3.    Intercarrier Wholesale—providing Wi-Fi-based services to other service providers, (e.g., cellular network operators, Wi-Fi providers)

4.    Value-Added Services—enhancing basic Wi-Fi access with additional services and alternative funding models

As the pervasiveness and customer adoption of Wi-Fi continue to grow exponentially, these new business models are providing real and meaningful opportunities for service providers. For example, we are seeing home broadband providers improve their customer retention by 10 to 15 percent through bundling free public Wi-Fi access with their broadband service. In addition, we believe that by offering a Wi-Fi enabled “Business Anywhere” service, operators can generate $10‑15 per business user per month. In the retail setting, delivering enhanced, value-added services will bring an incremental $100-150 per store; this is 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 take our word for it. End users tell us that they want these new Wi‑Fi business models and see great value in them. Unique mobile-customer research by IBSG (What Do Consumers Want From Wi-Fi) revealed that mobile users appreciate the lower cost and unlimited data usage of Wi-Fi and greatly value the flexibility and convenience that it offers. In particular, customers were interested in the national/international roaming business models and the Wi-Fi value-added retail offerings. These, consumers believed, would make them more efficient, save them money, and enhance their shopping experiences. Among U.S. broadband subscribers who identified that free public Wi-Fi was part of their subscription, a remarkable 61 percent told us that the inclusion of Wi-Fi was very or extremely important in their choice of broadband provider.  The inclusion is not only a good way to attract subscribers; it is also a good way to keep them.  

Of course, not all business models are attractive to all service provider segments.  Business models will need to be aligned to the different industry segments, while priorities are set and a starting plan created. We feel that our research, insights, and recommended approach will arm SPs with guidelines for setting priorities and determining which strategy is best for making real money from Wi‑Fi.

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The Future of Mobile Networks

The world has definitely gone mobile. According to the International Communications Union, more than 85 percent of the world’s population now enjoys access to a mobile phone. Further research from the Cisco® Internet Business Solutions Group (IBSG) reveals that almost half of all mobile users are consuming video, music, books, and games on their mobile devices on a regular basis.

The Cisco Visual Networking Index (VNI) predicts that these trends will cause global mobile data traffic to increase 13-fold from 2012 to 2017. Global mobile traffic will continue to grow at a rate three times faster than that of fixed IP traffic over this same time period. This outlook is great news for mobile network operators, as revenues from global mobile data services reached US$320 billion in 2011—more than the combined revenues of the music, movie, ISP service, and cable television industries, according to a 2012 assessment by Chetan Sharma Consulting.

While the demand for mobile is unquestionable, the definition of mobile is rapidly changing due to changes in technology, the market, and customer behavior. These factors are redefining what a mobile network is and what it needs to deliver, including near-ubiquitous Wi-Fi-enabled devices, a “nomadic” rather than an on-the-go lifestyle, next-generation hotspots, and small-cell technology.

Given the changes occurring in the mobile marketplace, Cisco IBSG has identified four possible scenarios of how networks could evolve to deliver mobility: 1) mobile only, 2) Wi-Fi only, 3) mobile max, Wi-Fi min, and 4) Wi-Fi max, mobile min. Of these, IBSG believes two scenarios present the best opportunities for delivering mobility: Wi-Fi and small-cell networks—a heterogeneous network (“HetNet”) world where licensed and unlicensed mobile networks co-exist and complement each other, enabling a next-generation mobile operator with Wi-Fi at its core network.

These four network scenarios will co-exist—each with its own unique features and value-add—enabling operators to further monetize their mobile services by providing both coverage in challenging locations and capacity in high-usage venues. In this way, operators can improve network economics, address spectrum challenges, tap new markets, and enhance the customer experience.

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Service Providers Are Sitting on a Gold Mine of Data

The so-called “data deluge” shows no signs of abating anytime soon. Facebook, for example, has more than 2.5 billion pieces of content and ingests more than 500 terabytes of new content daily.  Mobile devices are driving this growth of data.  The global proliferation of devices estimated to reach 10 billion by 2017—or 1.4 times the number of people on the planet. As a result mobile-data traffic is exploding. 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. 

But along with the challenges inherent to this tsunami of data, opportunities abound for monetizing and optimizing information. All of those new mobile consumers—in developed and emerging markets alike—will demand enhanced connected-life experiences that will be newer, better, and more personalized. Data is the new oil that will fuel this opportunity.  Networks and the Internet have a critical role to play in the future of Big Data. First, they are the collectors and disseminators of data, gathering it from the millions of Internet-enabled devices, applications, and sensors and storing it in the right place for analysis and further action. Second, they are creators of critical information on location, presence, device type, application, and more.

Service providers sit on a vast and unique trove of information—all they need to do to profit from this from this new and lucrative advantage is to capture and apply it. Many of these issues will be under discussion at the Mobile World Congress, which I will be attending in Barcelona this month. Here are five relevant trends, challenges, and solutions that I expect will be top of mind for service providers attending the show:

·         Capturing Data in Motion. All of that real-time and near-time information coursing through the network has vast, intrinsic value in creating SP-delivered experiences. When filtered and processed through Big Data analytics, it can become vital intelligence for business-to-business, business-to-consumers, and consumer-to-consumer interactions. For example, data on buying and browsing history, connection and device type, location and access speed can drive personalized, targeted advertising, a core area of opportunity that is estimated to become an $8 billion industry by 2016.

·         SP Wi-Fi. The rising tide of mobile data may threaten to swamp networks, but many providers are seeing Wi-Fi and licensed small-cells as increasingly viable offload solutions. Since the majority of all mobile-data traffic is generated from fixed locations, much of that traffic can be handled by localized, cost-effective, and carrier-grade Wi-Fi and small cell architectures. This will also drive an opportunity for business innovation, allowing operators to monetize indoor, location-based services, especially in high-density environments such as shopping malls, stadiums, airports and hotels. 

·         Network Virtualization. Cloud-based, virtualized network architectures will form the core of the mobile network. Indeed, advanced mobile cloud techniques can fundamentally improve operators’ cost models while offering an unprecedented opportunity to target markets based on providing wireless connectivity to the Internet of Everything.

·         Programmability. At times, some may have feared that service providers were in danger of being relegated to the role of “dumb pipes.” To avoid that fate, networks must be programmed to do more. The goal for service providers should be to oversee “elastic” networks that can dynamically adjust to changing needs, demands, and challenges. To achieve this, service providers will need to enhance all aspects of their networks with programmable intelligence Cisco’s mobile next-generation Internet architecture is one way to do this.

·         Intelligent Software/Intelligent Access. Intelligent software, such as Cisco Quantum, can harvest valuable information from the network, and combine with analytics and policy control to enable personalized experiences and services in real time.

Clearly, there is a major opportunity for service providers, who are already sitting on a gold mine of raw data. But they will need to take the right steps to capture, refine, and monetize that deluge of information. 

The Road to Mobile World Congress

Mobile World Congress 2013 promises to be bigger and better than ever. The new venue will attract even more members of the mobile industry to Barcelona this year to celebrate the industry’s success and catch a glimpse of its potential future. The recently released Cisco Visual Networking Index (VNI) indicates that this will be a rosy future indeed. The study predicts that global mobile data traffic will increase 13-fold from 2012 to 2017, reaching 11.2 exabytes per month. But the numbers don’t tell the whole story. 

Once again, all of the players in the mobile industry ecosystem are convening in one spot, promising excellent insights into the challenges, opportunities, and potential future of the mobile industry. I will be meeting with customers, analysts, and partners throughout the show, and, of course, wearing out my shoes walking the floor.

Here are some of the key themes and pressing questions that I expect to see, hear, and explore:

·         Next-Generation LTE—What is the status of LTE deployment?  What has been the record of success?  How has LTE changed the mobile world? Where to next for LTE? Is there life beyond LTE?

·         M2M—The Internet of Everything and pervasive, fast, mobile connectivity are finally creating a real market for machine-to-machine mobile communications.  What are those applications?  What are the new business models?

·         The Great Indoors—Many countries now have pretty good outdoor mobile coverage. But how do we extend that coverage indoors?  Especially given that new devices and applications are creating more “nomadic,” rather than mobile, usage patterns amongst users.

·         Wi-Fi—Wi-Fi really came out of the hidden corners at last year’s show to be on the agenda of every mobile operator. I think that this will be the year of Wi-Fi monetization. How do I make money from Wi-Fi? (Look for my blog during the week of MWC where I will share my thoughts on the answer to this question).

·         Small Cells—Small Cells and Wi-Fi are fraternal twins. They both provide excellent wireless access with their own unique attributes. How will licensed small cells and Wi-Fi coexist and complement each other? What are the new business models for small cells? Check out some of the insights from me and my fellow Big Thinkers in Small Cells.

·         Enterprise Mobility—Workers can now readily access email, calendars, and business information from anywhere. However, research by Cisco IBSG reveals that mobile business users expect much more. And enterprises are trying to understand how they can really use mobility to transform their businesses and their industries. What is the future for Enterprise Mobility? Who will be the big winners?

·         Big Data—The growing conventional wisdom is that mobile operators will need to learn how to carefully mine and analyze, and act upon, their terabytes of meaningful customer and network data to make their business more profitable. I will be looking for interesting startups in this space and case studies of operators who are really executing on this.

Of course, I can’t wait to get my hands on all of those sexy, new mobile devices that will be everywhere.  It will be interesting to witness how the Apple versus Samsung battle is evolving.  Do the interesting new devices from Nokia and Blackberry have any chance of challenging this battle of titans?  No doubt, the relationship between the over-the-top services (OTTs) and the mobile operators will be the topic of heated discussions. As will the topic of spectrum.

There is definitely a lot to look forward to and a lot to learn from this year’s Mobile World Congress. As in previous years, I will blog about the highlights and my key takeaways following the show. 
Please stop by to say hello and see some really cool things at the Cisco both, located at 3C54.

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May I Borrow A Cup of Wi-Fi?

When was the last time a guest in your home asked if he or she could “borrow” your home network to connect his or her smartphone, tablet, laptop, or other new mobile device to the Internet? Most likely: today. 

U.S. consumers carry an average of 2.6 mobile devices, according to recent research by the Cisco® Internet Business Solutions Group (IBSG). Not only do they expect their devices to connect to the Internet—they also expect their friends and neighbors to have home Wi-Fi, just as they have electricity and running water.

The value of “community Wi-Fi” is being recognized by a number of organizations. One is Fon, who has created a shared open-source network of more than 7 million hotspots around the world that community members can use for free. Another is BT, who has incorporated the Fon application and model into its home broadband service. This approach enables BT to provide broadband customers free access to the global Fon network, while expanding its U.K. hotspot network to more than 4 million sites—so, now friends and family members who are also BT customers can seamlessly authenticate and join the host’s home network.

To learn more about the value of community Wi-Fi and the business benefits to SPs, Cisco IBSG conducted a survey of 1,060 Canadian mobile users to understand their needs and behaviors, their current and future mobile usage, and the average profile of community Wi-Fi users. The study revealed that approximately 40 percent of mobile device owners are “community” users. Compared with other mobile users, community users are technically advanced, own more sophisticated devices, and use these devices up to twice as often as do average mobile users. The community segment is also significant to SPs: this group is younger, wealthier, and willing to spend more money on mobile services.

These and other research findings from the survey can help SPs understand the size of the opportunity, develop strategies for success, acquire new customers and retain existing ones, and differentiate their community Wi-Fi offerings and initiatives from those of their competitors, extracting a premium for their service.  

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