Last week the Wi-Fi Global Congress was the opportunity to meet again industry colleagues as well as new faces and to take the pulse of the industry. Congrats to the WBA team for the flawless organization and the excellent next generation Wi-Fi connectivity in and around the convention center!
Although I have missed many interesting sessions while attending customer meetings, I felt the industry is maturing and many vendors are rethinking their strategies to best tap into the growing opportunity. Some like Benu and Aptilo are forming alliances with large vendor Arris to become one stop-shop solutions for carrier Wi-Fi while others like Accuris feel they are doing too many things and would be better off focusing one activity they are best at. Software providers like CLoud4Wi also believe the industry has suffered from a lot of noise in the past but is now in a better position to define where the profitable opportunities are. I also saw continued innovation going on from optimizing Wi-Fi deployments from XCellAir to the impressive demonstration of gigabit-speed service from Korea Telecom combining Wi-Fi and LTE speeds running at more than 600 Mbps!
On the operator side, as business models evolve and new use cases emerge, the resulting diversification of providers will fuel the creation of a broader range of Wi-Fi based services. Industry analysts suggest that this diversification can be explained by the fact that different types of operators will have divergent business priorities as well as dissimilar customer demands that they must meet.
It’s easy to identify the set of services that can be expected to generate significant growth throughout 2015 and 2016. A carrier-grade infrastructure and mobile integration will be necessary for some of these services to flourish. However, the important thing to understand is that these services expand the Wi-Fi model far beyond the typical businesses of consumer access, business access, advertising, and user-driven offload.
These service areas have been around for several years. Still, they are still experiencing revenue growth:
- Carrier driven mobile data offload and onload
- Hotspots managed by venues or brands with added value services
- Large events support
- Wi-Fi roaming services
- Municipal access
These services are new on the scene and will begin to provide valuable revenue streams over the next few years:
- Homespots, especially for MSOs
- Neutral host services
- Location and context aware services
- TV everywhere
- Big data analytics
- Voice over Wi-Fi
Going forward, the services provided by the growing pool of providers will be joined with or extended by other services, all of which will be facilitated by further enhancements to the Wi-Fi platform.
The Diversification of Providers
When it comes to the diversification of providers, one thing is clear. Their main Wi-Fi based revenue streams will change and branch out over the next few years. Existing providers that depend on Wi-Fi based revenue streams will need to adapt their business models. Those that own significant numbers of hotspots will see their wholesale revenue continue to be strong. However, those revenues will be a smaller portion of a mixed bag of revenue streams.
By 2019, revenue from managed services and enterprise customers will outstrip wholesale revenues. The reason for this is that competition and price pressure in the wholesale arena will cause a drag on revenue while managed services and enterprise customers will offer providers more opportunities to add value.
Additionally, the biggest opportunities for growth will be in smart cities, Wi-Fi first, and multiplay bundles that offer everywhere access to both content and applications. To benefit from the projected growth, each provider will have to combine services in creative ways instead of them all doing the same thing to try and profit from the same business cases as all the other providers.
Wi-Fi Calling & Homespots
A range of technology innovations and the creation of a carrier-grade infrastructure will combine to create new use cases. An excellent example of this dynamic is the combination of voice over Wi-Fi (Wi-Fi Calling) and homespots. Separately, they support a range of monetization options. But when combined together, they enable providers such as MSOs to transform into full wireless providers while reducing their reliance on MVNO deals and related fees.
Homespots is an area where cable and broadband operators will use their fixed lines and already established footprints in homes. This move allows providers to extend their Wi-Fi coverage. As soon as there is sufficient Wi-Fi coverage in place, supported by Wi-Fi roaming, providers can offer Wi-Fi first or Wi-Only services to their subscribers. Although some providers will continue to use Wi-Fi to attract and retain broadband and cable customers, other providers will focus more on offering Wi-Fi as a stand-alone service.
As more Wi-Fi services enter the market, consumer demand increases. As the industry continues to move toward a carrier-grade Wi-Fi infrastructure which brings with it high quality and dependable communication, customers will be willing to replace their cellular service for the less costly Wi-Fi calling service.
More details about industry trends are available in the free Wireless Broadband Alliance Industry Report.