Weekly Update

Why carrier Wi-Fi will make the mobile market more competitive

Progress in the creation of standards is laying the foundation for a carrier Wi-Fi market that will be worth nearly $8 billion by 2019, ABI Research predicted this week. Cisco and Ruckus Wireless are the leading equipment vendors in these early days, and Alcatel-Lucent, Ericsson and Nokia are also vying for a piece of the pie. “More than 12” Next Generation Hotspot (NGH) networks are active worldwide, according to ABI, and Asia-Pacific has more installed hotspots than any other geographic market.

Wi-Fi’s worldwide footprint is massive, but the technology still isn’t carrier-grade. Several industry consortia are making in progress toward changing that, however, and creating a Wi-Fi user experience that mirrors cellular. Last month the Wi-Fi Alliance – which includes dozens of major players in tech, media and telecom – introduced features for its Passpoint standard aimed at making Wi-Fi easier and more effective for both users and service providers. The association streamlined the sign-up process for new users at the point of access; it introduced secure registration and provisioning to ensure users connect to the right network; and it rolled out support for operator policies such as which network users should join and in which priority.

Paving the way for disruption

Carriers have long been hesitant to embrace Wi-Fi, of course, because they don’t control the unlicensed spectrum it uses and they can’t monetize it the way they can their cell networks. But they’ve been forced to support it for data and increasingly for voice to satisfy their customers and minimize the traffic on cell networks. It’s no surprise, then, that all four tier-one carriers in the U.S. are part of the Wi-Fi Alliance, and that mobile network operators such as NTT DoCoMo and Orange have launched commercial NGH networks in their respective markets. But the consortium also includes some heavy-hitting cable operators, and it’s worth noting that Time Warner Cable is operating one of the few NGH networks to have launched in the U.S.

Meanwhile, a slew of MVNOs built on a “Wi-Fi-first” strategy is beginning to emerge in some important markets. France’s Iliad, which recently gave up trying to acquire a major stake in T-Mobile after being spurned twice, has had a huge impact in its home market through its Free Mobile business, which leverages residential Wi-Fi access points and to offer ultra-affordable voice and data services. As I noted earlier this year, a handful of U.S. MVNOs including Republic Wireless and FreedomPop have adopted similar strategies by prioritizing Wi-Fi connections and striking deals with cellular operators to deliver service where Wi-Fi isn’t available. And lurking on the sidelines is Google, which has partnered with Ruckus to build a large-scale Wi-Fi service in the cloud that the company has yet to announce.

Adding the mobile component

ABI also has predicted that the number of worldwide Wi-Fi hotspot deployments will grow from 4.2 million last year to more than 10.5 million in 2018, and that kind of ubiquity certainly poses a threat to the data revenues that have become the lifeblood of the carriers. But it won’t be enough for Wi-Fi only service providers to truly compete with mobile network operators, who can provide coverage in far larger areas. As Republic Wireless and FreedomPop demonstrate, however, Wi-Fi-dependent players can offer true mobility via the MVNO model, and earlier this year Google was reportedly in talks with Verizon and Sprint to offer cell service as part of a Wi-Fi-based offering. And Dish Network continues to sit on a pile of spectrum as it looks for an opportunity to join the mobile market and could still launch its own cell network, using Wi-Fi as a way to differentiate its service from existing carriers’ services. The evolution of Wi-Fi will make it easier for any of these players to take on the cellular network operators that have long dominated mobile.