Monetizing Wi-Fi Virtualization

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WiFi symbol in highlight concrete wall.

Internet connectivity is now no longer a luxury. Users expect to be online wherever they are, tapping into Wi-Fi connections in the same way they expect to find electricity and power sockets for recharging their mobile devices. The Internet of Things with machines, sensors, and applications multiplies the need for connectivity, putting increasing pressure on the capabilities of existing networking infrastructures, despite the massive investments made by communications service providers. Data volumes are constantly rising, and so are investment and maintenance costs, challenging larger operators and posing often insurmountable financial problems for the smaller ones. Wi-Fi virtualization can help.

Stronger Together

To bring costs down and make profits go up in the context of Wi-Fi virtualization, CSPs should understand the advantages of cooperating with rivals, instead of being ferociously competitive in all dimensions. Cooperative competition or coopetition allows a CSP to provide Wi-Fi connectivity and services to its customers at a fraction of the cost of going it alone. Investment and maintenance costs per CSP go down. Revenues from end-users increase, where end-users can mean both people and machines from the Internet of Things.

But will this solution also allow operators to function flexibly and independently? Will they avoid having to go through the laborious process of change requests to a Wi-Fi platform provider to update service offerings, and stepping on each other’s toes in terms of resource consumption?

Why Wi-Fi Virtualization is Attractive

To understand how such cooperative competition or coopetition can work, we need to understand what underpins the concept of Wi-Fi virtualization. There are three fundamental principles:

  • Physical Wi-Fi access points are divided up into virtual shares for different operators. Like the cloud SaaS (Software as a Service) model, the Wi-Fi is offered on a multitenancy basis.
  • For each operator deploying its Wi-Fi service via a virtual share, supporting functionality such as the Wi-Fi network controller and authentication, authorization, and accounting (“AAA”) is also virtualized.
  • Within the resource and service agreement limits of its virtual Wi-Fi share, each operator has complete autonomy for offering and managing network functions to its customers, and can deploy and redeploy at will.

This means that operators can leverage the inherent affordability of Wi-Fi for users compared with other networks for mobile connectivity (3G/4G licensed networks). Yet they do not have to worry about fully-owned infrastructure expenses or excessive costs to scale up.

Network Functions Virtualization is the Key

Operators no longer need to acquire and operate custom hardware appliances for specific network functions. Instead, they can mix and match the virtual building blocks, connecting or chaining them together to create their own brand of communication services.

Two Basic Business Models for Monetizing

So, what about monetization? Essentially, there are two business models. In the first, a Wi-Fi access point provider virtualizes its functionality and capacity for other operators to use. The Wi-Fi access point provider is not a consumer of its own virtualized Wi-Fi services, but effectively a wholesaler. It enables other providers, especially smaller, more specialized providers, to offer Wi-Fi connectivity, for example to compensate for a lack of 3G/4G services if they do not have a license for these. Each of these multitenant providers can then configure, brand, and compete via its own Wi-Fi service, dynamically adapting features and functions in accordance with the demands of its market.

Good for Other Providers Too, Not Just CSPs

In the second business model, the Wi-Fi access point provider uses its own virtualized Wi-Fi services. What it does not use, it can make available to other operators, as desired. The provider could again be a communications service provider, but now other possibilities also exist. For example, the provider could be a municipality building Wi-Fi into its urban infrastructure. “Smart cities” use networks to remotely and automatically control many different systems, ranging from city lighting and parking to water and waste water management. Wi-Fi emitters in different pieces of equipment like street lights can serve users in proximity, while sensors detect people’s presence, traffic levels, etc. and trigger appropriate actions, information then being fed back to a central server. A municipality could resell spare capacity to CSPs, helping both CSPs and the municipality to save money.

Everybody Wins

In these days of “make more from less”, virtualized Wi-Fi seems to fit the bill perfectly when it comes to local network connectivity. In addition, and perhaps rarely seen elsewhere, everybody sees the benefit, from the solutions vendor and the Wi-Fi platform operator, to the CSPs and the end-users – a win-win-win-win situation, so to speak.

Maravedis and 4G 360 provide leading market research and content marketing for the wireless industry.

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Mr. Fellah, is a Senior Analyst and founder of Maravedis with 20-year experience in the wireless industry. He authored various landmark reports on Wi-Fi, LTE, 4G and technology trends in various industries including retail, restaurant and hospitality. He is regularly asked to speak at leading wireless and marketing events and to contribute to various influential portals and magazines such as RCR Wireless, 4G 360, Rethink Wireless, The Mobile Network, Telecom Reseller to name a few. He is a Certified Wireless Network Administrator (CWNA) and Certified Wireless Technology Specialist (CWTS).

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