Blog Post

2013: The year carriers choose whether Wi-Fi is friend or foe

Do you remember when Verizon (s vz) actively disabled Wi-Fi radios on its handsets? Or even when most handsets didn’t have Wi-Fi radios? While it seems imaginable that we might go back to those days, some predict that in 2013 Wi-Fi’s popularity could provoke a fight between users and carriers. According to analyst firm, Informa:

There will be a shift in operator sentiment away from public Wi-Fi as it becomes evident that the growing availability of free-to-end-user Wi-Fi devalues the mobile-broadband business model. Mobile operators will respond by articulating the value of their cellular networks better, but others not affected by this trend will double down on their public Wi-Fi investments to continue to propel the deployment and monetization of Wi-Fi.

As trends go, this is somewhat wishy washy. While it uses strong language like “Wi-Fi devalues the mobile-broadband business model,” it also punts when it suggests that operators will react either by “articulating the value of their cellular networks better,” or double down on public Wi-Fi investments. If Wi-Fi is such a serious threat one would expect that carriers wouldn’t just beef up their marketing campaigns or continue investing in this technology that devalues their existing business model. But I think we will see some subtle changes occurring in Wi-Fi next year related to the conflict between carriers’ cellular networks and public Wi-Fi.

Image 1 for post "Episode VI: Return of the WiFi". AT&T adds hotspot access for iPhones (or not?)( 2008-07-18 12:15:57) Smartphones recently overtook laptops as the top users of Wi-Fi connections according to a study earlier this year by Informa. My colleague Kevin Tofel says this trend is likely driven by the availability of Wi-Fi, a shift to an always-connected society and carriers moving away from unlimited data plans.

But while carriers have been touting Wi-Fi as an offload strategy to help keep customers off overburdened cellular networks, several industry analysts are pointing out that network traffic has stopped growing as fast as it had been in the last five years as data caps take effect and users turn to Wi-Fi. And if users turn too far over to Wi-Fi, which does cost someone money for the backhaul pipe to the internet, carriers may see their revenues decline slightly. After all why pay for 10 GB plan if you can regularly get away with only using 3 GB per month thanks to ubiquitous Wi-Fi?

To avoid that drop in revenue, I wonder if we’ll start seeing Wi-Fi subscriptions offered by carriers. Much like the Boingo (s wifi) or iPass models, customers would pay a set amount (maybe $5 or $10 a month) for access to a worldwide Wi-Fi network from their ISP or their wireless carrier. AT&T (s T) thanks to its ownership of Wayport, might be in the best position to do this, although it’s also a service that a fixed line ISP might also offer. The fact that no one has a fixed monopoly on Wi-Fi makes this a difficult trend for mobile operators to control.

For example Republic Wireless, a mobile virtual network operator, has created a service that primarily relies on Wi-Fi for connectivity and defaults back to the cell network. Republic sells its service for $19 a month, far less than what people pay carriers. Thus, if carriers seek to monetize their Wi-Fi they are going to have to figure out how to create a service that’s better than what most users cobble together on their own day in and day out. Wireless operators can’t put the Wi-Fi genie back in the bottle, but there’s no reason to think they won’t try to control it for as long as they can. Better services and their connection to the handsets might help them keep control a bit longer. I think we’ll see more of that in the year ahead.

14 Responses to “2013: The year carriers choose whether Wi-Fi is friend or foe”

  1. Carriers have absolutely nothing to worry about if they would just be smart enough to:
    a) Eliminate – or at least vastly increase – bandwidth caps
    b) Continue investing in infrastructure so they can continue offering faster, more reliable, and more ubiquitous mobile broadband
    c) Make data plans cheaper

    All these things combined can more or less eliminate any desire to connect to WiFi hotspots in the first place, with the exception of areas with no mobile data coverage. Somehow, though, I suspect greed will shroud logic once again, and the carriers are going to discover new and unique ways to screw us all over. Again.

  2. Good luck trying to charge for something that was once FREE.. data isn’t bottled water, air or the top 30 on The Pirate Bay… In response, consumers will want smart phones to do voice, text & email, and offload web & high capacity data to wifi which they expect to be free.. if not they’ll balk.. try to remove wifi from these smart phones and they’ll just stop buying them. Try charging for wifi and watch consumers leave you in droves! Companies such as tracfone are already giving consumers feature phones with wifi built-in.. So the ball will be in the wireless carriers’ court.. either make data cheaper or watch fewer & fewer consumers buy it..

  3. Lately I’ve been seeing more WiFi provided by restaurants and coffee shops (heck even Whole Foods), but not as much by the carriers, at least out here in the sticks. What makes it interesting for me is T-Mobile WiFi calling, where my phone will make and receive phone calls using the WiFi radio instead of the 4G radio. This saves TMO from having to build out 4G infrastructure and I get decent speeds and fewer dropped calls indoors. But that’s mostly when I’m at a destination. It’s when I’m in route from one point to another that I use the mobile network, and that doesn’t necessarily need to be super fast, just reliable and reasonably quick.

  4. Coleman Cooper

    Your comment about carriers offering Wi-Fi is interesting. In Canada, SHAW cable is offering a service called Shaw Go. If You have a Shaw Internet package for your residence – they let you access their wi-fi network as part of your package. (
    About two years ago, Shaw was looking at getting into cellphone service, as an extension to their local phone and cable offerings, as part of their fibre buildout of their networks in Western Canada.

    They decided not to go on with the cell phone services, but are still building out fibre and setting up public wi-fi. They have a set of Apps on the apple and android stores to locate the free wi-fi points, and also let you stream and control their VOD offering. More and more of the local restaurants and pubs are using the fee wi-fi points as a selling feature. I imagine that Shaw is using the free wi fi point as a lever to get the shaw TV cable in the resturants and bars, and build out the network.

  5. As a consumer, I would gladly switch to VOIP using WiFi for all voice calls (and data, too) if I could have ubiquitous SMS for a reasonable price. The closest I can come to that right now is RebublicWireless although it remains to be seen if their business model is durable. BTW I read Informa to mean that the “others not affected…(who) will double down…on their investments” are the owners/operators/suppliers/developers of WiFi technologies — not the cellular companies.

  6. Dean Bubley

    This is a hugely complex area, with many more stakeholders than you suggest here.

    Mobile carriers are probably only the 5th or 6th most important group of players for WiFi, although that depends on which country you’re looking at. Top of the list are users themselves, fixed-broadband players, venue-owners, enterprises, devices/OS suppliers, WiFi aggregators, enterprises… and also maybe brands/advertisers, governments and app/content players.

    In most cases, mobile operators are in a very poor place to “control” WiFi – firstly because most of it is outside their own hotspot footprint (especially in homes, offices and “private” venues). Few users are going to tolerate unwanted interference in how and where their device connects to WiFi – especially as it is likely to give better in-building coverage than cellular in some frequency bands. In London, you can use WiFi (and hence Internet apps) on underground Tube platforms, but not cellular data. As long as carriers assist users in getting free-at-point-of-use WiFi, that’s fine. But if they attempt to count WiFi traffic against data caps, or apply onerous policy conditions, they risk a user backlash – especially if “pure” WiFi is available in the same place.

    That said, there will be some markets where free WiFi is less prevalent (eg because Internet users need to be registered) and so in those places it will remain easier for carriers to keep hold of its use. (For example, UAE, or maybe China).

    Dean Bubley
    Disruptive Analysis

  7. Since you seem to be only considering the US , they might have bigger fish to fry with T-Mo’s new subscriptions and Sprint trying to fight back., The big 2 might not be able to afford to make the user’s life even more difficult.
    While on the subject, it would be interesting to see some 150-200$ android “media players” that can be used for voice but with no 3G/4G. It’s about time for someone to test the waters but i don’t see the carriers allowing such a device so it can’t come from phone makers.

  8. WiFi is a best effort service and a short-range technology, unlike cellular and with LTE promising an IP-based backhaul, is a worthy competitor to unlicensed WiFi.

    ISPs/Carriers are busy milking the Free-WiFi cow and as a branding and customer-retention tool.