WiFi could help wireless industry, consultant says

WiFi is not necessarily a friend of mobile carriers, though it could be, according to a Denmark-based industry consultant who’s hosting an international summit on WiFi in mid-June. Wireless service providers are increasingly looking at data transmission as a source of revenue, as evidenced by Rogers Communications Inc.’s first-quarter financial report this year, which showed for the first time that more money came from data than voice in its wireless operations. All three Canadian wireless incumbents — Rogers, Telus Corp. and BCE Inc. — reported double-digit, year-to-year growth in wireless data revenue in their latest quarters. But is some potential revenue being left behind? Claus Hetting, chairman of the Wi-Fi Offload Summit happening in Palo Alto, Calif., on June 18 and 19, said between 70 and 80 per cent of the data used by smartphones in the United States and United Kingdom is transferred through WiFi connections. He did not have figures for Canada. “On a relative scale, mobile is losing out to WiFi because the WiFi traffic for smart devices is rising faster than the mobile traffic, even though both are growing,” he said in a phone interview. “The question is: What can the mobile industry do about that?” The Wi-Fi Offload Summit will feature presentations from companies such as AT&T, Sprint Corp. and Time Warner Cable Inc. Hetting said by making greater use of WiFi technology, wireless providers could win back a good portion of the data being transmitted outside of their networks. Iain Grant, a telecom analyst with the SeaBoard Group, said in an email that Canada likely has a similar proportion to the U.S. and the U.K. in terms smartphone data going through WiFi connections. However, he said this might be declining as improvements in the speed of mobile networks reduce people's “need to search for WiFi hotspots.” Grant added that data, on a proportional basis, is gradually getting cheaper in wireless plans and this is also reducing the necessity of accessing WiFi. Hetting said WiFi can provide higher-quality connections for wireless-service providers’ customers in areas where many people are accessing the same network, such as shopping malls and sports stadiums. He added that WiFi is cheaper than mobile connections to install. “It’s getting to the point where the existing mobile infrastructure is under pressure from data demand, and generally speaking, it’s very expensive to build mobile networks for high-density areas … because mobile networks are really designed for wide-area coverage,” Grant said. The Wire Report reported last year that professional sports teams, including some in Canada, are increasingly considering putting WiFi connectivity in their venues so game-related applications can be used during events. WiFi operates on bandwidths not subject to licensing by government, Hetting noted. Canadian companies paid a combined $5.27 billion in a federal government auction of 700 MHz spectrum earlier this year. The 2008 auction for AWS spectrum raised $4.25 billion. In a followup email, Hetting said installing WiFi in high-density settings generally leads to savings of between 30 and 40 per cent on equipment in comparison to mobile-network connections, and that’s before factoring in the cost of spectrum. Hetting said having devices automatically switch from mobile and WiFi networks, depending on location — without the need to log in or change the settings on one’s device — can be relatively simple, given the technology that exists today. It remains a “grey area” whether the right business model for mobile providers would be to charge customers for data usage over a WiFi connection that they provide, he said, adding there is a case to be made for direct monetization from such service. “It should be possible, given that the service that you’re getting is as good or conceivably better than what you’d get on mobile, that users should pay for it,” he said. Adrian Foster, an Ottawa-area-based spectrum expert with McLean Foster & Co., said the potential impact of mobile providers using WiFi technology is unclear since places such as airports and coffee shops would presumably not get rid of their free WiFi hotspots. If, for some reason, this free access was replaced by WiFi access from carriers at a cost, Foster predicted there would be a consumer backlash. “You’ve got a revenue opportunity, but what you’ve done is you’ve just pissed off a lot of customers,” Foster said. Hetting said that because users are accustomed to getting free WiFi from various spots, wireless providers might need to price WiFi data lower than general network data, or lower the price of data overall if rolling out WiFi connectivity. He added that mobile carriers might also provide WiFi in public areas at no extra cost to their customers for retention purposes, as Shaw Communications Inc. does. Shaw, which is not a mobile-service provider, offers free WiFi, primarily in Western Canada, to its home-Internet customers. Bell, a provider of wireless and home-Internet service, offers free WiFi to the general public at certain retail operations, such as Tim Hortons, McDonald's and Indigo bookstores, as well as on a 1.6-killometre stretch of Saint-Laurent Boulevard in Montreal. In 2012, Bell told The Wire Report that the WiFi service it provides at retail locations gives it an undisclosed amount of revenue from the host businesses and a chance to demonstrate its technology. Rogers spokeswoman Jennifer Kett said in an email Friday that Rogers does not use WiFi on an "integrated basis within our network, but we do see it as a complement to our wireless networks." She said that "we provide WiFi services to enterprises, public hotspots and arenas, on a case by case basis, to complement either our wireless network or as an additional feature for customers." Foster said mobile providers will have to decide what kind of technology is best for serving customers in certain areas. While some say WiFi is most effective for crowded areas, Foster noted that Verizon Communications Inc. has been touting the benefits of XLTE for serving dense spots where data demand is high. Whatever the best alternative is, it "will prove itself out, one way or another," Foster said. He noted there might be some benefit for mobile providers to use WiFi in some parts of their coverage. “If there are gaps that Rogers can fill with WiFi, where it makes sense because you don’t want to put up a cell, then go ahead,” he said, adding “that should be completely transparent to the consumer.” — With reporting by Derek Abma at dabma@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

WiFi could help wireless industry, consultant says

News | May 30, 2014

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