Tuesday, July 2, 2013

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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