Property values, both for sale and rental, are becoming more widely affected by the quality of telecommunications service available, across both fixed/mobile and voice/data. We can see growing examples where house prices and office rental value are specifically driven downwards by poor connectivity. We sense a change of attitude by building owners and businesses who are increasingly prepared to fund their own in-building wireless systems. The reason is simple - it enhances their asset value. But are mobile network operators ready to rise to this challenge and embrace the change?
If not, the likely outcome is that third party fibre broadband and continued acceleration of self-built Wi-Fi installations will cut further and further into the mobile operators' share of peoples connectivity budget.
Property Value Impairment
Property owners, both residential and corporate, have huge capital and accrue increasing wealth from it. The apocryphal statement attributed to estate agents and realtors is that the three most important factors affecting price are always Location, Location and Location.
But a growing component of the value of any property today, whether selling a house or renting an office, is the broadband and mobile service available. Poor coverage, with dropped calls or intermittent data service, are not just annoying but destructive to both social and business life. Connectivity is becoming an increasingly important selection criterion.
That leads to increasing competitive pressure on mobile networks to provide better service, and encourages customers to switch to find one that works well.
Frustration breeds disloyalty
When you look at the options on offer, most network operators simply don't have the budget or manpower to serve the need for dedicated in-building systems across their entire customer base. RAN teams continue to evolve and fine-tune their "outdoor-in" radio network design, which have grown tremendously in capacity and capability over recent years.
Few have engaged with customers to offer tailored solutions for a wider range of in-building solutions. Today's team sizes, budgets and business processes aren't adequate to match demand.
So that's led to enormous investment in Wi-Fi, now a $12 Billion industry growing at 15% per year, present in the vast majority of indoor buildings. Widely accessible, easily installed, and compatible regardless of cellular network provider, it's become a popular and sometimes essential capability.
Users adopt it not only because it's free. Often the speed and response are significantly better – as shown below, my own home Wi-Fi is at least 15x faster than 3G cellular service (I don't have a residential small cell and am outside 4G coverage).
[Above compares indoor residential performance: Left = outdoor 3G mobile broadband vs Right = indoor Wi-Fi 802.11n]
But there remain issues of mobility (handoff, especially between Wi-Fi and Cellular), constraints on voice capacity (so voice calls may degrade during congestion) and battery life (searching for and managing Wi-Fi signals can be a battery drain). The short range of 5GHz Wi-Fi access points can either mean patchy coverage or require a larger number of them. Difficult network selection, login procedures and security threats have also hindered take-up – an aspect which Passpoint 2.0 should help ameliorate.
Cellular service providers still have the upper hand with seamless service, security and quality. A large part of that is due to operating in their own dedicated licensed spectrum. But if they cannot deliver reliable service in that spectrum and WiFi continues to dominate indoors, then customer loyalty can only be lost.
Happy to let others invest for offload
Operators have surreptitiously encouraged widespread use of Wi-Fi for some years, ensuring smartphones have Wi-Fi capability while setting an expectation of "best effort" service. They don't want to be seen responsible for poor quality or slow connections. More recently they've deployed their own branded Carrier Wi-Fi, but arguably still kept the expectation low. It's a useful distinction to help preserve the value of their own brand and associated premium quality.
They're also quite happy for their customers to connect through third party installed Enterprise Wi-Fi and/or WISPs (Wi-Fi Independent Service Providers).
In order to retain their key role in the "always-on, always-connected" world, operators need to find ways to augment network capacity and service quality indoors without growing their own internal teams or sacrificing the value of existing networks.
So why don't property owners install Small Cells?
Wi-Fi capability and quality have improved dramatically in recent years, but I'd still expect an LTE small cell to outperform in most respects apart from peak data rate. My guess is that many property owners would install them if they could, provided they were similarly priced and open to access from all.
Operators control the use of their own spectrum and as yet, don't appear willing to let others invest in expanding their network directly.
You could say that this is using spectrum not as an asset, but as a roadblock to better service.
Taking control of the outsourcing
Many of today's operators don't have the staff, capital or organizational structure to address the demands of Enterprise fully. Huge network expansion could be achieved if operators accommodated outsourcing to the big IT Enterprise players (companies like IBM, HP, Infosys, Accenture etc.). Those companies already have the resources to provide the growth and expansion opportunity for cellular services via small cells if they could do so in a similar carrier-neutral way to Wi-Fi.
Such companies are already installing Enterprise and Carrier Wi-Fi for businesses today, and could easily be engaged to do so for Enterprise Small Cells. The main reasons they don't (or can't) are a lack of technical support (interconnect and permission to use spectrum) from network operators, and the lack of a defined neutral host solution.
There are already technical solutions such as MOCN* (a multi-operator technology for single cells) which would allow full multi-operator/neutral host capability using today's small cells and network operators, but would require commercial leadership from a few pioneering operators to break the mould. [*See this explanation of network sharing using MOCN from Nick Johnson, CTO ip.access]
Property owners can drive huge investment in telecommunications and will contribute (or even fund entirely) in-building wireless solutions to avoid impairment of their assets. There is a clear commercial motivation.
Mobile networks have struggled to fully deliver in-building service, to the point where Wi-Fi is providing the majority of wireless data service indoors. They've benefitted from investment by others, offloading congested networks while setting a "best effort but free" customer expectation. But they risk losing out more widely.
Engaging with Enterprise IT solution providers to install Small Cells alongside Wi-Fi would provide the scalability and cost effectiveness to retain control. This may need a radical commercial approach for multi-operator service, such as the MOCN-based solution.
The wider benefit would be to ensure the mobile operators' continued supply relationship with the end customer from which to build additional services and value, even if it includes new types of delivery partners.