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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The Path to Wi-Fi Profitability

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.  The study also predicted that two-thirds of all mobile traffic will be video by 2015, and an additional 20 percent of this traffic will be devoted to both the mobile web and mobile data.

In parallel, we are witnessing a “perfect storm” in both Wi-Fi availability and customer acceptance that is resulting in a worldwide rise in the popularity of Wi-Fi.  Consumers can now readily use their numerous Wi-Fi enabled devices in their homes, offices and increasingly in many of the other places where they spend their lives.  Mobile users are actively searching out Wi-Fi connectivity as a cost-effective and adequate substitute or complement to mobile access to the Internet. 

Based on this Wi-Fi “perfect storm” and the explosion of mobile data traffic traversing their networks, Service Providers realize that they now need to pay attention to Wi-Fi.  In our conversations with SPs around the world they now recognize that that Wi-Fi is more than just data-off load and needs to be part of an integrated access strategy and architecture.  However, they are all anxious to understand how they can make money from Wi-Fi.  They want to understand what are the winning Wi-Fi business models? 

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.

My recent white paper (Wi-Fi: Service Providers Can Make Money with New BusinessModels) 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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