Wi-Fi: It’s the other cell network

Japan’s KDDI has seen the future of cellular service, and Wi-Fi has a starring role. The mobile operator will build out a Wi-Fi network composed of 100,000 hot spots and a WiMAX overlay that will take traffic off the cellular network when needed and will integrate seamlessly with the carrier’s existing 4G network. Given the demand for data, this heterogeneous network is the future of mobile broadband, and could lead to lower operating costs and perhaps cheaper prices for end users.

Here’s how KDDI’s network will operate according to Ruckus Wireless, the company providing the Wi-Fi base stations:

Lightning-fast hotspot deployment and cheap wireless backhaul

    The base stations are all dual-band 802.11n boxes with Ruckus’ adaptive antenna in them. The access points have a special USB port on the back that KDDI uses to connect a WiMAX router for backhaul.

Cover your insides

    Contrary to conventional wisdom, the majority of mobile data traffic that needs to be offloaded (some 75 percent) is generated indoors where cell signals have trouble and where users are most of the time.

Seamless sign on

    KDDI developed a special software client that uses existing cellular credentials. There’s a one-time “activation” process that requires the subscriber to use the cellular network to download a small client that then automatically configures all the encryption keys, wireless SSID and authentication information on the end device.

Adapt the existing Wi-Fi to something carrier grade

    KDDI isn’t using a traditional hot spot. Though they provide Wi-Fi access to KDDI users, the base stations are mobile data offload sites designed to siphon data traffic off the cellular network and onto a parallel Wi-Fi network that’s tied into their overall network architecture so KDDI is able to maintain visibility and control over the subscribers.

What KDDI has done is take the jerry-rigged AT&T (s t) or Verizon (s vz) approach to Wi-Fi, whereby a mobile operator provides access to free hot-spots but relies on the user to do the work, and tossed it out the window. KDDI has brought Wi-Fi (and WiMAX) into its network and made it work together in a way that will proactively keep its cellular network less congested. It also helps answer my question — why isn’t Wi-Fi better? — from a few months ago. Presumably, KDDI has or will also implement rules that will help route traffic onto the most appropriate network based on the content, cost and existing network traffic. It also needs to get a client that works on phones other than those running Android (s goog).

Consumers like Wi-Fi already.

However, such intelligent, multi-mode networks are the inevitable future for mobile operators given that our current demand for data will surpass our available spectrum. This has big implications for carriers, who could lower their cost for transferring a bit over their network by using alternative technologies, and perhaps lower the costs for consumers (or reduce caps.) It also changes the stakes for device makers who may have to start thinking about more power efficient radios (Wi-Fi is a notorious battery suck) and for Wi-Fi equipment providers such as Ruckus, Bel Air Networks, Meraki and Tropos. My guess is those carrier-grade Wi-Fi providers will suddenly find themselves acquisition targets from the Ericssons (s eric) and Alcatel-Lucents (s alu) of the world.

So, keep an eye on KDDI, its 32 million subscribers and its build out, which will be completed by March 2012. The future of mobile networks is less than a year away.