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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Welcome to the Next Generation of the Internet

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 that we work, live, play, and learn. And that 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 here

9.    The New Mobile

10.  Converged networks: a new platform architecture

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 ICT industry, and global/national economies. One thing is certain: the New Digital Explosion will change the ICT industry, impacting all players across the ICT value chain: There will be greater competition, redefined value chains/business models, and new strategies, resulting in both new challenges and business opportunities. And 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’s IBSG’s recent white paper The Next Generation of the Internet 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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The Next Generation of the Internet

No one could have imagined the fundamental impact the Internet would have on both society and the economy—changing our lives forever. There are countless examples of how the Internet has transformed the way that we work, live, play, and learn. Take, for example, the ability to work from virtually anywhere—whether on the beach, in a different country, or even from the comfort of our homes.

There seem to be no limits to Internet usage. The Cisco Visual Networking Index (VNI) projects that global IP traffic will increase nearly fourfold from 2011 to 2016, reaching roughly 110 exabytes per month. That amount of monthly traffic is equivalent to nearly 27 billion DVDs, 26 trillion MP3 songs, or 780 quadrillion text messages. People now own multiple devices (almost all of which are connected to the Internet), creating more than 19 billion connections worldwide. Furthermore, there are currently more than 3.4 billion Internet users globally.

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 framework that will help them assess changes in the Internet, and the possible out-comes and implications of those changes for business, national policy, and regulation.

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. 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 ICT industry, and global/national economies. One thing is certain: the New Digital Explosion will change the ICT industry. IBSG explores how the next generation of the Internet will affect all players across the ICT value chain.  There will be greater competition, redefined value chains and business models, and new strategies, resulting in both new challenges and business opportunities.  Cisco IBSG also explores the role of governments in the New Digital Explosion – creating an environment that encourages business and technology innovation, investment and completion to the greater benefit of their societies. 

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Wi-Fi: From ‘Poor Cousin’ to Preferred Partner

For much of Wi-Fi’s history, technologists and mobile industry executives viewed it as the “poor cousin” to licensed mobile communications. Today, all that is changing with the explosive demand for mobile data, the proliferation of new and powerful devices, and shifts in customer behavior and usage.  Increasingly, Wi-Fi is seen by technologists and consumers alike as a partner to licensed mobile, enabling expanded wireless access. 

Based on research and engagements with leading operators throughout the globe, the Cisco® Internet Business Solutions Group has identified six important trends that we believe are redefining this new world of Wi-Fi:

1.       Predominance of Wi-Fi for Wireless Access

Almost all mobile devices, including smartphones, now have Wi-Fi as their core access technology.  And people are using these mobile devices to access increasingly data-intensive applications.  Recent research by Cisco IBSG found that roughly half of mobile users are now watching video on these mobile devices. Today, mobile is less about walking or driving and more about the convenience of a “nomadic” lifestyle—moving, sitting/stopping and connecting, then moving on again. Such nomadic locations are ideal for high-speed Wi-Fi, which easily handles those data-hungry applications.

2.       Proven Ways to Use Wi-Fi to Improve the SP Business

The explosive demand for mobile traffic has left mobile operators scrambling for ways to meet this demand, while overcoming spectrum constraints and managing CapEx expenditures. Offloading some mobile-data traffic to Wi-Fi promises savings to carriers of $2 to $5 per GB in deferred CapEx and lower operating expenses. Providers that bundle access to a public Wi-Fi network with their home broadband service are finding significant improvements in customer retention and acquisition. Privately, SPs report churn improvements of 10 to 15 percent through the strategic use of Wi-Fi, delivering a substantial impact to the bottom line.

3.       Growing Use and Importance of Public Wi-Fi

IBSG’s mobile research found that one-third of mobile users access public Wi-Fi at least weekly.  Many expect to find Wi-Fi in key locations such as airports, stadiums, town squares, coffee shops, and retail sites. Overwhelmingly, they expect this public Wi-Fi to be free or, at least bundled as part of their broadband or mobile service.

4.       “Land Grab” of Key Locations to Deliver Public Wi-Fi

As with retail, public Wi-Fi is all about “location, location, location.” A public Wi-Fi provider needs to provide access in key Tier 1 locations such as airports, cafes, and hotels. Increasingly, people also expect Wi-Fi in the other locations where they spend their time. Tier 2 locations, such as hospitals, schools, sporting venues, and public transportation hubs, are increasingly near the top of network deployment lists of Wi-Fi network providers.

5.       Consolidation of Public Wi-Fi Providers to Deliver SP Wi-Fi

As recently as five years ago, most public Wi-Fi was managed independently, by the venue owner or by a start-up Wi-Fi provider such as Wayport or The Cloud. As SPs begin to see the strategic importance of Wi-Fi, they are acquiring these independently managed Wi-Fi providers and becoming the predominant providers in many markets. At the same time, the venue owners realize that they need to provide much better Wi-Fi service, meet more complex technical and business requirements, and conform to increased regulatory demands. Many are looking to service providers to remove much of this complexity and manage the services for them.

6.       Providers Seeking Ways to Make Money From Wi-Fi

SPs recognize that mobile-data offload and broadband-churn improvement provide very compelling business cases for Wi-Fi investments. Beyond that, they are looking for ways that those investments can deliver new sources of revenue. Research by Cisco IBSG revealed a number of new business models that operators can exploit to profit from the rise of Wi-Fi. Premium access, managed services, business solutions, roaming, and wholesaling are some of the key models that providers are currently experimenting with to deliver new revenue from Wi-Fi. Of particular interest and potential is providing value-added services to enhance core Wi-Fi connectivity. Many retail and venue owners, for example, are looking to combine Wi-Fi capabilities with customer location to provide data analytics, enhanced customer experience, and hyper-targeted and relevant advertising.

As we have seen, Wi-Fi’s days as a “poor cousin” are over. Service providers that ignore the compelling cases for Wi-Fi will risk drop-offs in efficiency, profits, and customer satisfaction. Those who treat Wi-Fi as a preferred partner will thrive.

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Observations from Mobile World Congress 2013

I have just returned from a very interesting and jammed-packed week at Mobile World Congress 2013 in Barcelona. More than 70,000 people were estimated to have attended this year’s MWC, and its fabulous new conference facilities proved a great place to celebrate the industry’s accomplishments and catch a glimpse of its potential future. The mobile industry continues to grow while moving from success to success. And though much has changed since I reported my observations of MWC 2012, I would characterize the process as more evolutionary than revolutionary. 

The following are my personal observations and extrapolations from the show, based on my conversations with operators, customer meetings, analysts, and colleagues, as well as from simply walking the show floor. 

1.       LTE Has Evolved—At previous shows everyone was talking about LTE (Long Term Evolution) as the latest 4G wireless technology. This year you had to look pretty hard to see those letters, and they didn’t seem to be on the tip of most people’s tongues. Though many countries in the world still lack 4G coverage and many others are just beginning to deploy LTE, the industry seems to have moved on and is taking LTE as a given.  This leaves us in a technology trough, awaiting the next new, shiny network technology.

2.       SPs Manning the Booths, Turning the Tables—At one time, service providers were the kings of the show, being courted by vendors and other companies looking to sell them their mobile products and services. The tables seemed to have turned somewhat. I was surprised by the number of prominent service providers from around the world who had their own extensive booths or were part of the GSMA’s “Operator Village.”  Now, it seems that SPs are keen to show off and sell their latest applications, cloud services, gaming and other innovative mobile offerings. These services are seen as new revenue-generating opportunities that will counter similar OTT offerings.

3.       Wi-Fi 2.0, From Legitimacy to Money Maker—Last year Wi-Fi moved from the back corner to become a viable part of the mobile architecture, delivering in-building coverage and offload relief from the exponential consumer demand for mobile data. This was the year of Wi-Fi monetization— moving beyond cost savings to find new sources of revenue from deploying Wi-Fi.  Nearly every operator I spoke with asked the same question, “How do I make money from Wi-Fi?” My recent blog during MWC provides some of the answers.

4.       Small Cells in the Great Indoors—The shift of mobile users to more “nomadic” and indoor usage—and the need to cope with growing demand and limited spectrum—has MNOs scrambling to find ways to provide better in-building coverage and capacity.  Small cells, with much smaller footprints and power output, provide much of the solution. All vendors are now actively promoting licensed small cells as part of their network-access portfolio. Often, these are integrated with Wi-Fi access points for a combined licensed and unlicensed solution. Check out some of the insights from me and my fellow Big Thinkers in Small Cells.

5.       Devices Are All About the Software—Now that all smartphones, tablets and newer mobile devices (Phablet anyone?) look remarkably alike, the real battle for differentiation is in the software.  Windows and Blackberry (remarkably absent from MWC) and the recently announced Firefox OS are battling the Apple and Android mobile-operating-system hegemony. But device manufactures are also adding their own unique applications, software controlled features, and cloud services in an effort to differentiate their iPhone-like devices from competitors. Everything from advanced camera technology, to cloud music and gaming, to Samsung’s reputed eye-movement-controlled scrolling are being jammed into new devices.

6.       Mobile Cloud, Making Smarter Apps—Mobile cloud seems to have moved from a stand-alone topic to something that is increasingly just part of an app or a device.  Many of the cool and exciting new apps—including those for social networking, file sharing, and entertainment—have cloud at their core for storing and retrieving of information, processing, and providing the core functionality.

7.       Big Data, On the Move—The combination of Big Data with location, presence, and other mobile-specific information promises not only cool and useful applications but new ways for operators to monetize their terabytes of customer and network information. Companies were demonstrating how very accurate (2-5m) location tracking from Wi-Fi and small cells could be combined with customer information in a retail store; this will provide hyper-targeted promotions to shoppers on their mobile phone, resulting in increased store purchases.

8.       Enterprise Mobility, the Next Phase—Employees can now readily access their email, calendars, and business information from anywhere. And most companies are beginning to embrace bring-your-own-device (BYOD) policies. Many vendors are helping this trend along through better device management, security, and dual-persona solutions.  However, many in the industry realize that this is just the first phase—enterprises are now looking to understand how they can truly transform their businesses and industries. A number of innovative solution companies and consultancies are beginning to show the way.

9.       From M2M to the Internet of Everything—Pervasive, fast, mobile connectivity is finally creating a real market, not just for machine-to-machine but for everything that can be connected wirelessly.  Next-generation telemetry and entertainment systems for cars, as well as remotely controlled sensors and machines were on display. Operators and vendors alike expounded on the dawn of a new world where all animated and inanimate objects are becoming connected.

10.   Mobile Money,  Again, Again, and Again—At yet another MWC, solutions for  providing mobile payments were on display. Mobile payment solutions from banks, credit-card companies, MNOs and other providers were all competing to create a walletless world. But while lunch and coffee from the convention’s food vendors could be purchsed with mobile Paypal, I think that we still have a long way to go. I suspect that I will be reporting on the future promise of mobile payments again next year.