Up until fairly recently, Wi-Fi was about in-home PC connectivity. But a few factors – the popularity of smartphones, the advent of tablets, overburdened cellular networks, among others – have come together to make Wi-Fi ubiquitous and its use in public settings commonplace.

And the trend is only strengthening; In-Stat says that 800 million smartphones alone will ship in 2013 (and a few billion Wi-Fi equipped devices), and Cisco’s 2013 Global Mobile VNI report found that mobile offload will increase from 33 percent (429 petabytes/month) of mobile data traffic in 2012 to 46 percent (9.6 exabytes/month) in 2017.

In our exuberance to monetize the Wi-Fi industry, here are the three big ways where network operators or owners of service provider Wi-Fi deployments can mess it up (Note: the author’s employer, Cisco, makes and sells a variety of Wi-Fi equipment, but the content of this article applies equally to competing products as well).

Make it hard to access Wi-Fi

We have reached the point where we simply expect Wi-Fi to be readily available in airports, hotels and public places. And yet we all know the shock of discovering when the opposite is true. In most places, paying for Wi-Fi not only takes money out of consumers’ pockets, it’s also a hassle and a time suck. But keeping it free to consumers does not, in fact, destroy the business model. It creates others. The fact is people are enticed by free Wi-Fi.

Consider the tale of the cable MSO (I can’t name names yet) that added free Wi-Fi to its broadband package. The result: 15-18 percent churn reduction over 18 months. Now factor in what can happen with the addition of Wi-Fi network intelligence. Pairing free Wi-Fi with location-based analytics improves the business experience and opens up new revenue streams in crowded locations such as hotels and malls.

Say our friend Harry walks into IKEA. Call it a loyalty app, call it a mobile butler, call it a personal concierge – it gets awakened on his phone, by the intelligent network, and alerts him: “Want some free Wi-Fi, Harry, compliments of IKEA?” Harry agrees and is now on the IKEA Wi-Fi network, and chances are high that he’s looking for something IKEA can help him find or discover.

Now doing the opposite – making Wi-Fi difficult to use, with registration and pay schemes – drains time, battery power and more importantly enthusiasm. Anecdotally, a mobile operator recently mentioned to us that even a simple “terms and conditions” pop-up on their network causes a 50 percent drop-off rate, with users abandoning the activity they were planning on engaging in based on inconvenience.  And to the contrary, at a recent professional football game, another operator offered an unadvertised version of Wi-Fi which then generated more than a terabyte of traffic – simply because it was free and easy-to-use.

Abuse the user’s trust

Trying to knowingly or unknowingly capture private data about people, via their gadgets, always backfires in the long run. How happy and willing would you be to regularly frequent a Wi-Fi network if you knew you were going to be bombarded with myriad privacy-invading apps? Not so much.

The popularity of Groupon and other discount sites, however, confirms that if consumers crave anything it’s deals. The challenge then is offering them without compromising security and violating privacy. To effectively balance these factors, let your customers drive your Wi-Fi service. Recognizing the difference between user information and device information is essential to establishing trust with the customer. Rather than mining personal user data, Wi-Fi and location-based services can be used to improve the user experience through their intelligence and by allowing the user to opt in only with the info they want.

Our friend Harry is now on a Las Vegas vacation and could use a little assistance finding his way around the Bellagio resorts. Wi-Fi can help Harry find the ATM machines when GPS can’t reach him indoors or offer him discounted tickets for a late-night show. By enhancing Harry’s experience through network intelligence – offering him information he wants and, crucially, none that he doesn’t – loyalty is built and trust remains intact. The less intrusive the experience, the safer the end-user feels which is critical for encouraging network usage.

Spamming them with unwanted advances

So now you’ve earned Harry’s trust, but that doesn’t mean Harry wants six different offers from you within the span of 10 minutes. That means not pushing your coupon pop-up to Harry until you see one of two things: 1) he appears to be idle, and/or 2) an opportunity to send something contextually relevant arises.

This creates instant value for loyalty and “mobile butler” apps. If you’re the CIO of an IKEA-sized venue, and you know that a quarter of a million people downloaded your loyalty app, you’re probably still ho-hum about the whole thing. Why? Because most people aren’t accustomed to opening the app of the store they’re entering.

However, what’s “intelligent” about intelligent Wi-Fi is that it can awaken the app, to trigger the “Hey Harry,  free Wi-Fi” offer. Next, help him find what he’s looking for. Again, Harry’s mobile butler: “What are you looking for, Harry?” Uh, a drafting table. “Drafting tables are on aisle 10 and there is a special today – 20 percent off.” Result: One sold drafting table. User-pulled, not vendor-pushed.

Or, consider a mobile app / intelligent network launch we did with AT&T and the Fernbank Museum of Natural History in Atlanta. When you enter, a green light flashes near the antenna icon on your phone. Selecting it returns nearby services – maps, restroom locations, guided tours and more. The café  can detect slowdowns in the mid-afternoon, based on dwell times and crowding (flow control is another proven use for intelligent Wi-Fi.) It auto-generates a trigger that pushes an offer to museum-goers – “Free hot cocoa in the cafe!” – to attract appetites, and thus sales.

Jared Headley is director, service provider mobility, for Cisco. 

Photo courtesy Richard Paul Kane/Shutterstock.com.

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In two separate but reciprocal agreements, DoCoMo’s network of 55,000 hotspots will all become virtual nodes in Boingo’s Wi-Fi network. Before the deal, Boingo customers had access to only 5,000 hotspots in Japan. In turn, NTT DoCoMo customers will be able to roam onto Boingo’s global network, which now boasts 600,000 hotspots.

Boingo’s presence has expanded considerably in the last two years. It has announced similar roaming and offload deals with Korean carriers KT and LG U+ which together host 67,000 access points.

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Republic is trying to challenge the conventional pricing notions for mobile minutes, messages and megabytes by making heavy use of Wi-Fi. Republic is one of Sprint’s many mobile virtual networks operators (MVNOS), relying on its 2G and 3G networks for its backbone service. But wherever possible, Republic phones switch over to Wi-Fi to connect phone calls and offload Internet-bound traffic, which — theoretically at least — allows Republic to offset the large majority of its network costs.

Republic launched a year ago, but it has only let new customers, which it calls members, on board in a series of five waves as it tinkered with its business model. Starting now, though Republic is accepting pre-orders for its newest phone, the Motorla Defy XT, which will begin shipping in mid-December. The Android smartphone costs $259 and includes shipping and Republic’s $10 one-time membership fee. Current beta customers will also get access to the new Moto handset through a trade-ins or upgrades.

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Ruckus has been a rather hot item of speculation ever since Ericsson scooped up Ruckus’s primary competitor BelAir Networks in February (a story GigaOM broke a month beforehand). Both Ruckus and BelAir have been building out massive outdoor Wi-Fi hotspots grids for wireless, wireline and cable operators around the world, and in many ways Ruckus has been more successful than BelAir. In Japan alone, Ruckus has deployed 100,000 hotspots alone for KDDI, which the operator uses to offload traffic from its cellular networks.

Ruckus also sells enterprise and indoor Wi-Fi gear and it has begun partnering with big vendors like Nokia Siemens Networks to incorporate its Wi-Fi technology into their future heterogeneous network architectures.

We reached out to VP of corporate marketing David Callisch, but he said he could give no comment on the IPO. In previous interviews, though, Callisch said that Ruckus was more interested in remaining a standalone company than be purchased by one of the big vendors. While an acquisition is still a possibility either pre-or post-IPO, Ruckus appears to be sticking to its word.

Update: Ruckus’s S-1 filing paints a picture of rapid growth. Annual revenues increased from $44 million in 2009 to $120 million in 2011, and in the first six months of 2012, Ruckus has already entered $94 million into its ledger. The company turned its first profit of $4.2 million in 2011, and in the first two quarters of 2012 its already recorded a net profit of $24 million. The new company would trade under the ticker RKUS.

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O2 is using these 100 hotspot deployments as the infrastructure groundwork for a future small-cell network. Like Wi-Fi, small cells will deliver surgical capacity in high-trafficked areas, but unlike Wi-Fi, those cells will use O2’s licensed spectrum, providing a big boost of mobile broadband capacity exactly where its macro network is most congested. According to O2 Wi-Fi managing director Gavin Franks, the carrier is targeting the end of the year for the small-cell rollout.

“What we have deployed so far isn’t a full-fledged small cell network,” Franks said. “We have deployed a future-proof network that allows us to easily get to small cells. And obviously it’s our intention to do so.”

It might seem easy to task Wi-Fi nodes for double duty as small cells, but Franks said O2 had to plan its deployment carefully for the hybrid configuration. The dual radios will require more backhaul capacity than the DSL connections that usually power Wi-Fi can provide, so O2 has either run fiber or installed microwave radio links to hotspot clusters, which are then meshed together via Wi-Fi backhaul. Franks said O2’s mobile network planners determined the placement of each node beneath the macro network to ensure there would be no interference when the small cells went live. Finally O2 ordered up specialty outdoor Wi-Fi equipment from Ruckus Wireless that can easily support the installation of micro-cellular base stations in the future.

When the time comes, Franks said, O2 technicians will simply pop the chassis of the Ruckus access point, insert the 3G radio, and instantly have a live small cell. Ruckus makes its own 3G and LTE small-cell modules, but that doesn’t necessarily mean O2 will buy them. Ruckus has also partnered with Nokia Siemens Networks to provide an integrated Wi-Fi-cellular small platform, and NSN also happens to be one of O2’s primary network suppliers.

Of course, 100 small cells isn’t exactly an ambitious network. To get to a true heterogeneous network, or hetnet, O2 would need to layer thousands if not tens of thousands throughout London, providing a dense layer of high-capacity nodes under the macro network’s coverage umbrella.

But Franks said O2 is only in the first phase of its plans. This small-scale rollout will test the efficacy of small cells as well as its free Wi-Fi model. If they prove useful, O2 will look to expand the network throughout the U.K. as well as coordinate with its parent company, Telefonica, on international launches. But as of now, Franks said, O2 doesn’t envision creating small-cell networks on a grand scale. O2 is taking a more practical approach initially, using Wi-Fi and small cells to target high-demand areas rather than planning a ubiquitous network of tiny nodes.

Still, there is a lot of potential here for O2 to go big if it wants to. Unlike other carriers deploying Wi-Fi, O2 doesn’t plan to integrate hotspots with its mobile network or sell capacity to outside customers. “We don’t see any value in charging for Wi-Fi,” Franks said. “People just aren’t willing to pay for it.” Instead it wants to make its money through value-added services, such as selling multimedia or offering digital-wallet capabilities. If that model works, it could find itself putting up Wi-Fi all over the U.K. — and small cells would come along for the ride.

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It owes a big part of its success there to operator partner Softbank Mobile, one of Japan’s largest carriers with 25 million subscribers. Softbank gives every customer who buys a smartphone or tablet a Wi-Fi router, which Fon calls a Fonera, and automatically configures all of its devices to access Fon’s network. Considering Softbank for years was the only carrier in Japan to sell the iPhone, you can imagine how considerable that traffic is. Fon was originally launched to connect laptops, but today in Japan 80 percent of its traffic comes from either the iPhone or iPad.

For those of you who aren’t familiar, Fon was born in 2006 with the aim of building the world’s first global community Wi-Fi network. Fon members, or Foneros, buy a Wi-Fi access point or router that hosts both a private network for the user’s home or office and a public network. Members get free and automatic access to all other Fon access points, and Fon sells access to non-members via subscriptions or day passes.

Fon was a pretty revolutionary idea when it launched, and consequently it attracted some impressive investors – Google, Skype and Sequoia Capital all invested in the beginning, and later Skype co-founder Nikas Zennström’s Atomico and British Telecom signed up for a piece of the action. Fon didn’t exactly take off for the clouds though. Its business model depended on selling hardware to customers, which made viral growth difficult. It competes against the likes of Linksys and NetGear on store shelves. While it offers a community network those two companies don’t, the value of that network depends on reaching a critical mass of members, which it failed to achieve.

In May, Fon announced it had 6 million access points in 100 countries, which may sound like an awful lot. But to put that in perspective, in April, French telco Iliad launched a community Wi-Fi network with 4 million access points with a mere flip of a switch – that’s in a single country. When you’re talking on a global scale, 6 million access points is paltry. The biggest complaint I have heard from Fon users is they can never find a Fonera to connect to.

There are signs, though, that Fon’s fortunes are changing, in large part due to the smartphone explosion and carriers’ new willingness to use Wi-Fi to relieve their congested mobile broadband networks. Nowhere is that more evident than in Japan. According to Fon, Softbank has cut its 3G mobile data traffic in half during peak hours by offloading that traffic onto Fon routers.

Fon’s network density in Tokyo neighborhoods

Since Softbank has every interest in making Fon’s network as big as possible, it distributes Fon’s routers to all of its customers for free, which solves the critical mass problem. In the U.K., BT has uploaded software into its home routers that turn them into “soft” Foneras.

Those carrier deals are starting to drive a growth spurt for the company. Fon says it’s adding 1 million members every three to four months. The typical smartphone user redirects 500 MB to 1 GB — depending on the country — over Fon’s networks and connects on average once very 36 hours. Those are some mighty tempting figures to an operator looking for ways to conserve 3G and 4G capacity.

Japan is by far Fon’s most successful market, but Fon could easily repeat that success in other countries if it finds the right partner. My bet is that Fon is eyeing France, which is embroiled in a vicious price war sparked by Iliad’s Free. All of France’s big three are looking to Wi-Fi as a means of combating Free’s ultra-cheap voice and data plans. Bouygues recently signed a deal with Devicescape to gain access to its virtual hotspot network. Orange is leaning on its public Wi-Fi hotspots. And, of course, SFR has contracted with Fon.

Update: An earlier version of this post incorrectly stated that Softbank was the only carrier in Japan to offer the iPhone. Softbank lost its exclusivity in October when KDDI began offering the iPhone 4S over its CDMA networks.

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For another mobile operator to replicate such a feat it would not only need to strike partnerships with a broadband provider or hotspot aggregator, but it would also need to implement special handset clients or wait for new technologies like Hotspot 2.0 and Next Generation Hotspot to wend their way into the market.

Swedish startup Anyfi Networks, however, has developed a technology that bypasses those steps, potentially turning any access point into an extension of a customer’s home wireless LAN. Anyfi’s technology breaks the tie between the physical radio and the Wi-Fi network, connecting your device to myriad access points and public hotspots you have never encountered before. According to co-founder and CEO Björn Smedman, Anyfi automatically spawns “virtual hotspots” that your device treats just as it would your home network.

Every device sees the totality of an operator’s ‘network,’ whether it’s the Wi-Fi embedded in its own or a partner’s residential broadband gateways, a public hotspot network or even an open access point with Anyfi’s software installed, said Smedman, co-founder and CEO. “Whenever it sees that network it will automatically connect,” Smedman said. “We’re creating virtual access points that make every Wi-Fi access point accessible to every network.”

Smedman said the technology could be used in any a number of scenarios. If a carrier is both a wireless and wireline operator like Free Mobile (or AT&T and Verizon in the U.S.), it can leverage its existing install base of residential gateways to link its mobile and home broadband services together. A cable operator like Time Warner could augment its public hotspot with millions of home connections, or sell that access to a wireless operator looking to offload traffic from its 3G or 4G networks.

No software is required on the device, and the access point or residential gateway requires only a remote software update, Smedman said. Anyfi is already working with gateway maker Hitron to integrate its technology into existing products through firmware updates. If a carrier chooses to use the technology, it licenses the rights directly from Anyfi.

Consumers may not like the idea of strangers logging into their home Wi-Fi network, but Smedman said that never happens. Though the technology utilizes the physical radio in the residential gateway (which in most cases is owned by the operator) outside devices aren’t actually accessing the gateway’s secure home network. Instead, Anyfi’s software tunnels Wi-Fi authentication protocols to the device owner’s home gateway. From the device’s point of view, it’s at home. From the access point’s vantage point, it’s running two separate networks, one private and one public.

Anyfi is trialing the technology with a European and a North American operator, though he would not reveal their names. Smedman and his co-founder CTO Johan Almbladh studied applied physics together at the Lund Institute of Technology, after which they went their separate ways to work in different fields in the tech industry. The two got back together in 2009 to develop and patent Anyfi’s technology and then founded Anyfi shortly afterwards in Malmö, Sweden. The company, Smedman said, has raised “less than $1 million” in seed funding from investors and angels in Sweden.

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The Wi-Fi Alliance on Wednesday revealed its plans to begin certifying devices under its new Passport Passpoint initiative, which ensures mobile phones – among other things – can log into Wi-Fi networks seamlessly. Now it’s the Wireless Broadband Alliance’s turn to pick up where its partner left off, integrating those devices and the access points into the mobile operator’s network.

The WBA has closed out trials of its Next Generation Hotspot (NGH) standard with some of the world’s biggest operators, including AT&T, China Mobile, BT, NTT DoCoMo and Orange. Encouraged by the results, the WBA on Thursday said that the technology is now ready for commercial launch and expects the first NGH deployments over the next 12 months.

The Wi-Fi Alliance aims to negotiate the tricky connection between phone and access point without messing around with log-ins and registration pages as part of its Hotspot 2.0 and Passpoint initiatives. If a device is authorized to use a particular hotspot operator’s network, it simply connects.

From there NGH takes over, extending that handshake between phone and hotspot to the operator’s back-end systems where the connection can be treated like a regular cellular link. A Wi-Fi access point becomes just another cell on the operator’s network: data sessions and even voice calls can be passed from cellular to Wi-Fi, operator services like mobile wallet or media-streaming subscriptions can be maintained and the carrier can track data usage and even bill for Wi-Fi consumption (though many wouldn’t consider that positive).

Here’s what WBA Chair Chris Bruce had to say about the trial’s recent completion in the WBA’s statement:

The complementary relationship between Wi-Fi and mobile networks is finally becoming a reality. Next Generation Hotspots allow smartphones and tablets to automatically roam from the cellular network on to Wi-Fi hotspots thereby augmenting the coverage and capacity of both. Fixed and mobile operators alike are leading a Wi-Fi hotspot renaissance in a renewed effort to sate the seemingly unquenchable desire for ubiquitous broadband connectivity. What has made this trial so unique is that the key players from both the mobile operator community and the Wi-Fi ecosystem have actively come together and supported each other for this industry-wide program. The future is a great broadband experience that operates over all sorts of different technologies.

One of the biggest benefits of NGH will be its support for complex roaming arrangements. No operator is going to build Wi-Fi hotspots in every cranny of the world, so they will need to partner heavily to either share capacity or buy it from third parties. NGH will be able to negotiate those multi-leveled agreements, allowing devices to not only connect to multiple networks seamlessly but also prioritize which networks they connect to.

Expect to hear much more about Hotspot 2.0 and NGH next week when Mobile World Congress ramps up. As I wrote last week, Wi-Fi has become a huge theme at the show and threatens to overshadow LTE and HSPA as its dominant network technology discussed. All of the key operator players will be in Barcelona as will its major industry backers, Cisco System, Ericsson (which just became an NGH fan by virtue of its BelAir Networks acquisition), Google, Intel, Ruckus Wireless, Aruba Networks and Accuris Networks.

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We contacted BelAir and Ericsson for confirmation, but spokespersons from both companies declined to discuss the deal. “Ericsson does not comment on rumors or speculation,” Ericsson spokesman Jimmy Duvall said via email.

As smartphone data usage explodes, consumers have begun turning to home, office and public Wi-Fi to bring their handsets online, taking advantage of fast speeds while bypassing the data caps on their mobile plans. There are some exceptions, such as AT&T, but most U.S. mobile operators have been reluctant to incorporate Wi-Fi directly into their networks, preferring instead to keep customers on their 3G and 4G networks, where they can collect data revenues and maintain control of the network connection. With big vendors like Ericsson on board, though, that attitude could be changing.

Ontario-based BelAir has spent the past several years carving a niche for itself as an outdoor Wi-Fi vendor to cable providers and has even made limited progress with wireless operators. Its high-capacity long-range access points are used extensively in the outdoor hot zone networks of AT&T, Cablevision and Time Warner Cable. Earlier this month Bright House Networks turned on a 2,000 hotspot network across Florida using BelAir gear.

BelAir is by no means alone in this market. Competitors Ruckus Wireless and Israel’s Wavion have carved out much bigger outdoor Wi-Fi network niches, each landing big deals in Europe and Asia, where Wi-Fi is gaining much broader acceptance as supplementary mobile broadband technology. Ruckus scored the mother of all Wi-Fi deals last year when KDDI began rolling out a 100,000-hotspot network in Japan.

Ericsson’s interest in BelAir, however, may stem from some unique elements in the vendor’s product design. BelAir has been successful with domestic cable operators because it can hang its Strand access point directly off the fiber-coax strung across fiber utility in any city, making it very easy for a cable company to get Wi-Fi up quickly and cheaply. Second, BelAir has been expanding from its metro Wi-Fi roots into cellular technologies. It has begun combining Wi-Fi with cellular to create dual-mode access points, extending the coverage and capacity of the mobile operators’ primary voice and mobile broadband network while also offering a cheap means of offloading Internet-bound traffic.

From Ericsson’s perspective BelAir’s technology may be an easy way for it to break into metro Wi-Fi without cannibalizing its core product line. By slotting its own cellular radios into BelAir access points, it can sell operators both Wi-Fi and cellular upgrades in a single package.

Image courtesy of Flickr user buddawiggi

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Networking silicon vendor Mindspeed Technologies aims to become a big player in wireless infrastructure in a very small way. It is purchasing femtocell system-on-a-chip (SoC) maker Picochip for $51.8 million, creating what Mindspeed hopes will be a powerhouse in the so-far disappointing but still potentially lucrative miniature base station market.

Femtocells are essentially private cellular nodes that carriers give or sell to their customers to improve their coverage and provide additional 3G and 4G capacity. They use the same frequencies as the overall macro network, but they link back to the carrier’s network through the customer’s home or office broadband connection. Mindspeed estimates that its Trancede and Picochip’s PicoXcell SoC lines command a combined 70 percent of the HSPA femtocell semiconductor market and has the biggest exposure to femtocell manufacturers developing the next generation of LTE femtocells. Those would be some impressive stats if there were more of a femtocell market to speak of. The demand among operators for home and business base stations didn’t exactly go gangbusters.

In June, Informa Telecoms and Media reported that 2.3 million femtos had been installed in homes and businesses around the world. That may seem like a large number, but not when you compare it to the 1.6 million macrocells deployed at towers and on rooftops globally. Femtocells were supposed to webscale the cellular network, turning a network of a few big public nodes into a network with millions upon millions of small private nodes. The carriers’ lackluster enthusiasm for femtos, however, soon became apparent due to the interference problems. And as the smartphone gained popularity, Wi-Fi became a much cheaper and easier way to offload mobile data and voice traffic.

The femto vendors haven’t given up. They’ve changed tack, positioning their formerly private femtos as public “small cells,” which can be used to used to offload data capacity in congested outdoor and indoor networks. They may be on to something here as small cells fit nicely with the emerging wireless design concept of the heterogeneous network (or het net). The basic idea of het net is that the single monolithic wireless network will devolve into multiple networks, some providing an umbrella of persistent coverage while others focus solely on packing tremendous amounts of capacity into small areas.

Even if Het Net takes off, femto makers won’t necessarily be the benefactors. As you move into the public wide area network, you venture into the domain of the big telecom vendors, who tend to be very tight with their carrier customers. Ericsson, Alcatel-Lucent, Nokia Siemens Networks and Huawei are all developing small cell solutions of their own and they’re bringing established telecom silicon vendors such as Texas Instruments and Freescale along for the ride. Here Mindspeed may have an advantage. It isn’t a small specialist company like Picochip and has a established portfolio of ARM-based processors used throughout the telecom infrastructure market, counting Cisco Systems, NSN, Huawei, Alcatel-Lucent and Samsung among its customers.

Mindspeed is paying $27.5 million in cash and issuing 5.19 million new shares to Picochip’s investors. Mindspeed will also pay up to $25 million in cash by 2013 if Picochip meets certain unnamed financial performance objectives. Mindspeed expects to close the acquisition this quarter.

Picochip isn’t the femto vendor that’s attracting attention. Femto maker and software developer ip.access in December raised an additional $15 million in venture capital. Last year, Radisys bought femto software developer and designer Continuous Computing. The femto market seems to be heating up, but let’s hope it doesn’t flame out.

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