Two steps forward, one step back for public Wi-Fi

ForwardsSeveral recent announcements and developments for public Wi-Fi service highlight both success and setbacks. We recap and assess the situation. Why are some succeeding while others fail and how will the forthcoming LAA and MulteFire technologies displace or complement Wi-Fi in the longer term?

Private Wi-Fi systems have been extremely successful. You very likely have Wi-Fi both at home and work and use it daily. Mine generally performs well but struggles sometimes and can’t really cope with moving between hotspots or when under heavy load. Those living in denser accommodation (e.g. blocks of flats) with more congestion might be less satisfied. Those investing in more sophisticated Wi-Fi Access Points may be happier. 

Public Wi-Fi, where you make ad-hoc connections when out and about, has a more variable reputation. It can work well when sat down in less congested place, such as restaurants, hotels, banks or museums. We’ve also described how carefully engineered deployments can cater for larger numbers sat in stadiums. But it can still have issues with mobility (i.e. moving between access points) and voice calls (i.e. more than a few concurrent calls per access point).

The range of commercial models for Public Wi-Fi: 

  1. Standalone Wi-Fi providers or WISPs (Wireless Internet Service Providers) with no mobile component whatsoever. I’d include the various Cloud based solution providers who enable existing public venue deployments to become more easily accessible.
  2. Fixed Network/Cable Operators, who capitalise on their large installed based on residential Wi-Fi “Homespots” and complement those with some in public areas.
  3. “Wi-Fi First”, such as Republic Wireless, FreedomPop and Google Fi, which are MVNOs that offload traffic as much as possible onto WiFi using cellular as a last resort.
  4. MVNOs, running on the back of a partner mobile network, with some level of Wi-Fi offload. The emphasis is on using cellular most of the time but taking advantage of Wi-Fi offload when it’s good enough.
  5. MNOs with either their own Wi-Fi infrastructure or a partner arrangement
  6. MNOs with no interest in Wi-Fi and who would prefer all traffic is handled on-net.

Some examples and recent developments

Standalone Wi-Fi providers such as iPass, Cloud4WiFi, PurpleWiFi rarely invest in their own Wi-Fi access points. Venues and enterprises deploy their own equipment and are aggregated and managed remotely. The key is critical mass – nobody wants to have a whole host of different subscriptions and schemes in order to access each different network. Just as credit card networks have consolidated to two or three global networks where almost all retailers accept both, you want to have maximum compatibility. It’s tough to make money out of such schemes. iPass is perhaps the largest with annual revenues of around $100m and negligible profit. Many metropolitan Wi-Fi schemes have struggled financially. Venues need to fund the infrastructure and offer it primarily as a free service for visitors/staff rather than seeing this as another profitable revenue stream.

Fixed network operators and Cable providers win loyalty of their broadband internet customers by including some public Wi-Fi services. In some cases they will directly fund and operate free Wi-Fi services in public places, exclusively offering free access to their own subscribers as a differentiator. I doubt many of these sites are profitable from paying visitor revenues alone. 

Wi-Fi First operators were intended to be the disruptive equivalent of low cost airlines, radically reducing cost by optimising access through free Wi-Fi wherever possible and relying on cellular service only as a last resort. Price points are low with tight margins. Google Fi competes alongside smaller startups such as Scratch Wireless, FreedomPop and Republic Wireless who are setting the trend. Recently Scratch Wireless has withdrawn its proposition from new customers - Analyst Rethink Wireless points out the difficulties of covering costs without large scale. FreedomPop is backed by Intel and last January announced a new round of $50 million of funding. I tried it myself only to find the SIM card supplied couldn’t be activated to work with an iPad – their App only works with an iPhone – something that frustratingly wasn’t mentioned on their website.

MVNOs (Mobile Virtual Network Operators) provide service on the back of any existing partner mobile network. They’ll gain some margin by negotiating wholesale rates but still have the same customer acquisition, backoffice, billing and handset subsidy costs. They win share by building on their existing customer base (e.g. if they are already a fixed or cable network provider), coming up with innovative pricing offers, quad-play packages or sticking to SIM only deals. Some recognise that offloading as much traffic to free Wi-Fi as possible can reduce costs both for themselves and their customers. Devicescape, who provide a system that actively seeks out and manages offload to Amenity Wi-Fi, recently announced a pan-European deal with Liberty who own both cable networks and MVNOs. Their solution has been successfully deployed in the UK for some time and will be rolled out in stages across other properties.

MNOs (Mobile Network Operators) take different approaches depending on their spectrum holdings and attitude. Some have invested in their own public Wi-Fi hotspots and in few cases quite heavily. China Mobile has in the past had several million but is replacing many with indoor LTE small cells; AT&T acquired Waypoint and have several hundred thousand; PCTL Pakistan deploys Wi-Fi for offload where spectrum is very congested. Others take quite a different view, such as Verizon Wireless and EE, who would both rather that customers are on-net where they can be charged for service delivered. The extra capacity gained through LTE and the additional spectrum it opened up provides a very attractive business opportunity to increase revenues from additional traffic delivered.

A new wave of unlicensed and shared spectrum solutions

Just to complicate matters, there are three new solutions on the horizon:

  • -       LAA, which opens up unlicensed spectrum to provide further capacity alongside existing LTE. It requires Small Cells and will add/augment capacity rather than expanding coverage. It’s only available for MNOs and their partner MVNOs, will require next generation handsets but avoid costly spectrum.
  • -       MulteFire, which operates exclusively in the unlicensed spectrum, building on LAA technology. This can be installed by anyone and fits with any of the Wi-Fi and MNO commercial models listed above.
  • -       3.5GHz band, which in the US is likely to become available on a shared spectrum basis. There are already commercial deployments of 3.5GHz in many other countries using standard LTE, and recent developments in Japan are driving demand for compatible handsets, as explained in this recent article.

LAA is primarily a method of increasing network capacity from the same number of small cells. The focus on 5GHz band and low RF power means that range is likely to be limited and mostly (but not entirely) used indoors. Think of it as a turbo-charged small cell in terms of data rates, delivering higher speeds and lower latency/less contention and thus a better user experience. It doesn’t in itself enable any different commercial model, although does increase demand for small cell technology because it isn’t currently compatible with DAS or C-RAN architectures.

MulteFire can be completely standalone, just as a Wi-Fi network. You can deploy one yourself at home if you wish. But for maximum value, it would be interconnected directly or through roaming with mobile network operators, thus being compatible with existing SIM cards. Even if venue owners didn’t charge for access, it would still be valuable to be connected to multiple MNOs to ensure security, connectivity (routing incoming calls via VoLTE) and services (eg Firewall, filtering). Whether MNOs choose to charge their subscribers for usage when connected through MulteFire or Wi-Fi may become a hot topic in the future.

The 3.5GHz band is getting a lot of press attention in the US, but is already moving quickly in other regions of the world. It’s possible that standalone LTE networks may be permitted using this shared spectrum, which will open up another opportunity. Again I would see the same constraints and benefits as for MulteFire where roaming support from existing MNOs would boost adoption.

In all these three cases, new handsets and small cells will need to be deployed, so it may take a few years for these to become widespread. This gives the industry time to consider these evolving commercial models and opportunities opening up, and how they will choose to address them.

In the meantime, existing mature 3G and LTE small cell technology can be deployed today without waiting for the next generation of chipset or capacity enhancements.

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