WBA study reveals that hotspots will provide 22% of extra cellco capacity, with NGH standards becoming mainstream in 2014
Carrier Wi-Fi is increasingly discussed in the same breath as LTE small cells as a key component of mobile operators’ HetNets, but in reality, the cellcos have largely used hotspots – their own or those of partners – to offload low value data from their overstretched macro networks. That is set to change as they start to integrate Wi-Fi fully, enabling greater capacity and new business models. The change will be enabled by technical advances such as multimode small cells , but critically by standards which allow users to move seamlessly between 3G/4G and Wi-Fi, and these will be the key factor in an upsurge in carrier Wi-Fi investment in 2014.
According to a survey of stakeholders in the Wireless Broadband Alliance’s annual report, carried out by Maravedis-Rethink, Wi-Fi already accounts for over one-fifth (22%) of the additional capacity cellcos are adding to their networks in 2013-14, and that contribution is set to increase as carriers implement dual-mode base stations and Wi-Fi devices proliferate.
Standards will be essential to moving from offload – largely a convenience and cost-saver for cellcos – to an enhanced user experience that will support new services and boost customer retention and satisfaction. As JR Wilson, chairman of the WBA, put it: “The biggest change [in 2014] will be one that people won’t even realize has happened – a whole new customer experience enabled by ubiquitous mobile broadband access.” One of the most striking differences in the 2013 survey, compared to the previous year, is that the emphasis on customer experience and value has strengthened markedly.
This change of perception is being driven by technologies which enable public Wi-Fi to be integrated far more seamlessly with other networks such as 3G/4G, fiber and cable. The WBA’s Next Generation Hotspot initiative on the infrastructure side, complemented by the Wi-Fi Alliance’s Passpoint program for devices, is a critical element, as are open roaming platforms.
The survey of about 200 Wi-Fi ecosystem players highlighted increased confidence in public Wi-Fi, with 52% feeling more bullish about investing than they did a year ago. The key drivers for this investment were pinpointed as easier offload from cellular networks, generating revenues for hotspot owners and savings for MNOs; and the need to increase customer satisfaction in order to reduce churn from operators of all kinds (wireless and wireline). However, there are challenges which have slowed some players’ roll-out plans since last year’s study. These include lack of clear ROI, cited by 44%, overall cost (42%) and device availability.
For mobile operators, there is a particular need to focus on public Wi-Fi as their cellular capacity is stretched by the explosion in data usage. Tier one MNOs expect 22% of the capacity they add in 2013 to come from public Wi-Fi and by 2018, 75% of their small cells will have integrated Wi-Fi. There is also a major upturn in Wi-Fi usage by wireline carriers such as the US ‘Cable Wi-FI’ consortium.
The deployment of hotspots will gather pace to meet all these requirements, whether by carriers themselves, specialists or wholesalers. Roll-out by carriers themselves will rise at CAGR of 13% between 2012 and 2018 to reach 10.5 in the last year of that period, with the Asia-Pacific region accounting for the largest percentage – 55% of the base in 2018. Combined with other hotspot deployments, the total installed base will reach over 55m in 2018. Homespots, residential access points where some capacity is left open for the community, will also be a key trend, and their base is likely to top 100m by the end of 2018.
When respondents discussed barriers to their public Wi-Fi deployment plans, they generally focused more on business model uncertainty than technology issues. That shows how the market is evolving, addressing many platform challenges while bodies like the WBA look to clarify the business returns. A critical element of that effort is to support seamless roaming through initiatives like the ICP program.
Despite some uncertainties, a variety of business models is emerging to add to conventional hotspot and wholesale approaches. These include offload, community Wi-Fi, neutral host services, advertising and, over the horizon, full quad plays and the internet of things. For the short term (2013-14), the most important monetization strategies among the respondents are Wi-Fi offload, closely followed by location-based services such as targeted marketing, and enterprise applications.