Using public Wi-Fi as customer magnet

Industry analysis #4 2016
Upsell and loyalty strategies of operators:
Using public Wi-Fi as customer
magnet
Public Wi-Fi is a tool in the toolbox of many operators. In this analysis – our fifth on the subject
– we show how telcos, cellcos and cablecos in mature markets in Europe, America and APAC
use public Wi-Fi to attract and retain customers – and to upsell.
We also update you on Wi-Fi usage and deployment. You might be surprised to see that the
wide adoption of 4G LTE and an increasing use of mobile data meant more Wi-Fi, not less.
tefficient AB
www.tefficient.com
24 September 2016
1
Is the smartphone a 3G/4G – or a Wi-Fi – device?
In August, OpenSignal1 published a report showing the share of time smartphones had been connected to
Wi-Fi – as opposed to 3G/4G – for 95 countries, see Figure 1.
Figure 1. OpenSignal’s ranking of countries after smartphones’ share of time on Wi-Fi
The Netherlands tops the chart with a very high value of 70%, but in almost all mature markets,
smartphone users spend more time on Wi-Fi than on 3G/4G.
1
A company that provides a smartphone app to crowdsource actual network performance and coverage data; www.opensignal.com
tefficient AB
www.tefficient.com
24 September 2016
2
Time on Wi-Fi isn’t the same as data volume since most smartphones do not perform software updates
unless they connected to Wi-Fi. Because most users have a variable (per GB) price of mobile data, there is,
in addition, a user behaviour to manually prioritise Wi-Fi, especially when the user knows that he/she is
about to use larger volumes of data. Previously published stats from App Annie indicate that, as a global
average, about 80% of smartphone data volume is over Wi-Fi.
You can read more about this in our blog post.
Benchmarking public Wi-Fi deployments
Clearly most of the Wi-Fi usage shown above happens at one location – the home. Since our last Wi-Fi
deployment report2, operators have however, in most cases, expanded their number of public Wi-Fi hot- and
homespots3 significantly. We will soon come back to what this means for public Wi-Fi usage, but let’s first
take a look at the Wi-Fi deployments.
14
Wi-Fi spots [M]
12
10
8
6
4
0
Comcast, US
Orange, FR
BT, UK
SFR, FR
China Mobile, CN
KDDI, JP
Free, FR
Oi, BR
Ziggo, NL
Cablevision, US
Telekom, DE
Telenet, BE
Proximus, BE
Vodafone, DE
Vodafone, IT
Vodafone, ES
Softbank, JP
Unitymedia, DE
NOS, PT
KPN, NL
UPC, PL
Charter, US (incl. Cable WiFi)
Telstra, AU
Cable WiFi, US
UPC, CH
UPC, HU
MEO, PT
VOO, BE
Cosmote, GR
UPC, AT
Virgin Media, IE
UPC, RO
UPC, CZ
NTT docomo, JP
SK Telecom, KR
Telekom, HU
KT, KR
LG Uplus, KR
Shaw, CA
UPC, SK
Chunghwa, TW
AT&T, US
FarEasTone, TW
Sky, UK
Virgin Media, UK (via partners)
3, HK
CSL/HKT, HK
O2, UK
Telus, CA
Bell, CA
Swisscom, CH
Telia, SE
eir, IE
TIM, BR
Spark, NZ
Singtel, SG
2
Wi-Fi hotspots
Wi-Fi homespots (could include hotspots)
Figure 2. Reported Wi-Fi hot- and homespot numbers4 – all
2
2014 report: http://tefficient.com/how-operators-use-wi-fi-to-strengthen-existing-business/; 2015 update: http://tefficient.com/howcarriers-are-using-wi-fi-across-the-world/
3
A homespot is created by letting the router at the customer premise transmit two SSIDs – one private and one public
4
Most operators with homespots just report an (impressive) total and do not break out the hotspot number
tefficient AB
www.tefficient.com
24 September 2016
3
We will soon break down Figure 2 further, but let’s start by
looking at the global leaders in the number of deployed Wi-Fi hotand homespots.
#1: Comcast is the largest cable operator
in the US with around 28 million customer
relationships – of which 24 million subscribe
to an Internet service via Comcast’s cable
network. If every one of these customers hosted a homespot,
Comcast would have had 24 million homespots. The actual value
by the end of June was 15 million. This number might include
regular Wi-Fi hotspots (if any). It might also include the 0.5
million Cable WiFi spots that Comcast’s customers also have
access to. Cable WiFi is a consortium providing Wi-Fi access to
customers of five cablecos: Comcast (Xfinity), Time Warner Cable
(now part of Charter), Cablevision (Optimum, now owned by
Altice), Cox and Bright House (now part of Charter).
#2: Orange France has started to grow its number
of homespots again and is currently reporting a total
of 7 million. This number includes a relatively large
number of regular hotspots as well.
#3: BT has 5.3 million Wi-Fi hot- and
homespots – a number which hasn’t been
growing in many years in spite of BT’s growing fixed broadband
retail base (now above 9 million). BT used to be the #1 in our
comparison, but Comcast and Orange France have both overtaken
BT. BT’s recent acquisition of the largest mobile operator in the
UK, EE, might mean that BT no longer thinks mobile data offload
is good for their business. An indication of this is that the inclusive
BT Wi-Fi proposition which apply to the BT Mobile brand so far
hasn’t been extended to the EE brand.
#4: SFR has 4 million Wi-Fi spots – a number
which has been stable for a few years.
Reported Wi-Fi spot numbers
When operators report the number of
Wi-Fi homespots, the number
corresponds to the number of access
points since one (enabled) customer
access point – in parallel to be the
private access point of the household –
becomes one homespot. The amber
bars in our diagrams are thus believed to
be highly comparable.
When it comes to Wi-Fi hotspots,
reporting practices varies though. Also
here, some operators put an equal sign
between hotspots and access points, but
since many operators have multiple
access points per Wi-Fi hotspot, some
operators are rather reporting the
number of Wi-Fi zones than access
points. This means that the
comparability of the green bars in our
diagrams varies. Examples of operators
reporting hotspot zones rather than
access points are Telia, KPN, KT (on
average 2 access points per hotspot
zone) and Sky (also around 2 access
points per hotspot). Examples of
operators reporting access points are
SK Telecom and China Mobile.
In addition to the graphs in this analysis,
we would love to provide an all-hotspot
diagram. However, since so many
operators don’t break out their hotspot
number from their total hot- and
homespot number such a diagram would
overlook operators with large – but not
reported – hotspot deployments.
#5: China Mobile had 4.4 million Wi-Fi access points used
solely as hotspots in mid-2014, but the company has since changed its strategy to
focus on 4G (TD-LTE). As part of this, China Mobile wrote down the value of its Wi-Fi
investment significantly in 2015. The company is no longer reporting Wi-Fi figures, but numbers from the
Chinese Ministry of Industry and Information Technology suggest that about a million Wi-Fi hotspots
have been closed in China during 2015. China Mobile isn’t the only possible source, but our estimation is
that China Mobile operated something like 3.5 million Wi-Fi hotspot access points in June 2016. It’s still the
world’s largest Wi-Fi hotspot-only network run by a single operator.
We will soon break down Figure 2 into continents of the world, but first let’s look at the development in the
number of reported Wi-Fi hot- and homespots in the 18 months from December 2014 to June 2016.
tefficient AB
www.tefficient.com
24 September 2016
4
6
5
4
3
2
1
0
-1
Comcast, US
Orange, FR
Telekom, DE
Oi, BR
Vodafone, IT
Unitymedia, DE
Vodafone, ES
Vodafone, DE
UPC, PL
Telstra, AU
UPC, CH
UPC, HU
Cablevision, US
Cosmote, GR
NOS, PT
UPC, AT
Virgin Media, IE
UPC, RO
Cable WiFi, US
KPN, NL
UPC, CZ
Telekom, HU
MEO, PT
Telenet, BE
UPC, SK
Shaw, CA
AT&T, US
Chunghwa, TW
O2, UK
3, HK
Swisscom, CH
Sky, UK
Singtel, SG
TIM, BR
Proximus, BE
Virgin Media, UK (via partners)
CSL/HKT, HK
NTT docomo, JP
Spark, NZ
KT, KR
LG Uplus, KR
Bell, CA
Free, FR
SFR, FR
eir, IE
Telia, SE
SK Telecom, KR
KDDI, JP
Softbank, JP
BT, UK
Ziggo, NL
China Mobile, CN
Wi-Fi spots development Dec 2014-Jun 2016 [M]
7
Wi-Fi hotspots
Wi-Fi homespots (could include hotspots)
Figure 3. Development in reported Wi-Fi hot- and homespot numbers from December 2014 to June 2016 – all
Figure 3 indicates a very rapid development in the deployment of operator
Wi-Fi. It is interesting that this Wi-Fi rollout happened simultaneously with a
peak in mobile operators’ rollout of 4G LTE. Comcast leads; added almost 7
million spots during these 18 months. Orange France is number 2 followed
by Telekom, Oi and three Vodafone affiliates.
The only operator with (an estimated) significant reduction in the size of its
Wi-Fi network is China Mobile. China Mobile is the only case where 4G
rollout had a clear negative impact on Wi-Fi. The reason to this is that China
Mobile was mandated to use the home-grown TD-SCDMA standard for 3G
and consequently used Wi-Fi as a bridging technology waiting for 4G.
This Wi-Fi rollout
happened
simultaneously with
a peak in mobile
operators’ rollout of
4G LTE
Let’s now break down the totals as of June 2016 (Figure 2) into three
regions – Europe, Americas and APAC & China.
tefficient AB
www.tefficient.com
24 September 2016
5
Europe
Figure 4 shows the European subset. Orange France, BT and SFR are, as already mentioned, top ranked.
Free follows with 3 million Wi-Fi homespots. The operator with the highest density of Wi-Fi spots is arguably
the Liberty Global held cableco Ziggo of the Netherlands with 2 million Wi-Fi hot- and homespots.
7
Wi-Fi spots, Europe [M]
6
5
4
3
2
Wi-Fi hotspots
eir, IE
Telia, SE
O2, UK
Swisscom, CH
Virgin Media, UK (via partners)
Sky, UK
UPC, SK
UPC, CZ
Telekom, HU
UPC, RO
UPC, AT
Virgin Media, IE
VOO, BE
Cosmote, GR
UPC, HU
MEO, PT
UPC, PL
UPC, CH
KPN, NL
NOS, PT
Unitymedia, DE
Vodafone, IT
Vodafone, ES
Proximus, BE
Vodafone, DE
Telenet, BE
Ziggo, NL
Telekom, DE
SFR, FR
Free, FR
BT, UK
0
Orange, FR
1
Wi-Fi homespots (could include hotspots)
Figure 4. Reported Wi-Fi hot- and homespot numbers – Europe
Telekom has made a late entry into homespots and is currently reporting 1.5 million hot- and
homespots in Germany. The number is growing fast, something which is also true for other
Deutsche Telekom affiliates that too are under DT’s partnership with Fon: Cosmote, Magyar Telekom and
Hrvatski Telekom.
Telenet of Belgium, also part of Liberty Global, reports 1.3 million hot- and homespots, a number now
matched by the telco incumbent Proximus. Telenet’s customers have, in addition, access to VOO’s 320000
homespots in southern Belgium, though.
Also Vodafone Group got a taste for Wi-Fi homespots – through the acquisitions of Ono in Spain and Kabel
Deutschland in Germany. Vodafone has since, without acquisitions but in partnership with Fon, started to
deploy Wi-Fi homespots in Italy and should there have reached around one million – the same as in Spain
and Germany – by now.
tefficient AB
www.tefficient.com
24 September 2016
6
Liberty Global has taken the Wi-Fi homespot
concept from Belgium and the Netherlands to
all of its other European markets (branded UPC
with the exception of Germany and Ireland):
Germany (Unitymedia), Poland, Switzerland
(see picture right), Hungary, Austria, Ireland
(Virgin Media), Romania, Czech and Slovakia.
One Liberty Global operation is missing, though:
Virgin Media in the UK. This is likely also why
Liberty Global hasn’t met the expressed target of 10 million Wi-Fi spots in Europe, see Figure 5.
10
Target
9
Wi-Fi spots in Europe [million]
8
7
...repeated here...
6
5
Slovakia
Czech
Ireland
Romania
Austria
...and changed
to 2016 here
10M target for 2015
expressed here...
Hungary
Switzerland
Poland
4
3
2
1
0
Q4 '14
Q1 '15
Q2 '15
Q3 '15
Q4 '15
Q1 '16
Q2 '16
Q3 '16
Q4 '16
Figure 5. Liberty Global: Development in reported and targeted Wi-Fi spots – Europe
With BT “owning” the homespot concept in the UK, Virgin Media has tested a different approach to Wi-Fi
which includes being the sole wireless network in the London underground and partnerships with Sky and
Arqiva when it comes to Wi-Fi hotspots around the UK. Rumours are that Virgin Media is about to launch WiFi homespots, but that technical problems have caused a delay.
Other reporting European operators without homespots are Sky UK (formerly The Cloud), O2 UK, Swisscom,
Telia and eir.
tefficient AB
www.tefficient.com
24 September 2016
7
The Americas
Comcast’s 15 million Wi-Fi spots is not just (by far) the highest number in the Americas, it’s as shown also
highest in the world. In Figure 6, we’ve truncated the scale to improve the visibility of the other operators.
15 M
2,5
2,0
1,5
1,0
TIM, BR
Bell, CA
Telus, CA
Shaw, CA
AT&T, US
Cable WiFi, US
Cablevision, US
Wi-Fi hotspots
Charter, US (incl. Cable WiFi)
0,0
Oi, BR
0,5
Comcast, US
Wi-Fi spots, Americas [M]
3,0
Wi-Fi homespots (could include hotspots)
Figure 6. Reported Wi-Fi hot- and homespot numbers – Americas
Oi, the largest of Brazil’s incumbents, is quickly expanding its number of homespots in cooperation with Fon.
The current count is 2.3 million. Back in 2014, it was just one million.
US cableco Cablevision (trading under the Optimum brand name) follows with 1.5 million. Similarly to
Comcast, this reported number could include Cable WiFi’s 0.5 million spots. Cablevision leveraged its Wi-Fi
network when launching Freewheel, a Wi-Fi-only service for mobile devices. We will come back to this.
Charter has through the recent acquisitions of Time Warner Cable and Bright House turned into the second
largest cableco of the US. The Wi-Fi agenda of Charter is much behind that of Comcast, but the new larger
Charter expresses an ambition to expand its Wi-Fi network.
Shaw, a Canadian cableco operating in the western parts of the country, has built a Wi-Fi network with
75000 hotspots. If relying on reported figures, it’s the largest Wi-Fi hotspot network outside Japan and
Korea. Shaw’s telco competitors Telus and Bell are also having their own Wi-Fi hotspot networks, but
significantly smaller.
AT&T operates 32000 Wi-Fi hotspots across the USA.
tefficient AB
www.tefficient.com
24 September 2016
8
APAC & China
If there weren’t hardly any green (hotspot) parts in the European and American diagrams, there are in the
APAC and China chart, see Figure 7.
3
2
Wi-Fi hotspots
Spark, NZ
Singtel, SG
CSL/HKT, HK
3, HK
FarEasTone, TW
LG Uplus, KR
Chunghwa, TW
KT, KR
SK Telecom, KR
Telstra, AU
NTT docomo, JP
KDDI, JP
0
Softbank, JP
1
China Mobile, CN
Wi-Fi spots, APAC & China [M]
4
Wi-Fi homespots (could include hotspots)
Figure 7. Reported Wi-Fi hot- and homespot numbers – APAC & China
China Mobile is, as mentioned, still likely the operator with the single largest network of Wi-Fi hotspots in
the world.
The Japanese telco KDDI (with brand name “au”) follows. KDDI was one of the pioneers when it came to
offloading mobile data to Wi-Fi5, but since 2014, KDDI stopped to report Wi-Fi deployment and offload
figures, making us believe that progress stalled.
KDDI’s competitor Softbank has a very large Wi-Fi hotspot network with 400000 hotspots. Softbank did
previously push also homespots in partnership with Fon, but similarly to KDDI, there hasn’t been any
reporting on it lately.
The Japanese incumbent NTT docomo has, with a delay compared to KDDI and Softbank, established a WiFi network of 150000 hotspots.
5
See e.g. our 2014 report: http://tefficient.com/how-operators-use-wi-fi-to-strengthen-existing-business/
tefficient AB
www.tefficient.com
24 September 2016
9
We jumped over the Australian telco incumbent Telstra in
Figure 7: The company adopted Wi-Fi quite late. Its Wi-Fi
network consists of 4500 hotspots (some of which are
located at phone booths, see picture) and 0.5 million
homespots (in partnership with Fon) – almost all of it
deployed in the last 12 months.
Also telcos in Korea, Taiwan and Hong Kong have
established large networks of Wi-Fi hotspots. Hong Kong,
essentially a city, is particularly well served by operators: 3
has 20000 hotspots and CSL/HKT 15000. Hong Kong’s
operators stand out positively when it comes to removing barriers between mobile and Wi-Fi with automatic
authentication and offload. Unlimited Wi-Fi is included in the mobile plans of both 3 and CSL.
tefficient AB
www.tefficient.com
24 September 2016
10
Public Wi-Fi usage
Many operators and regulators are today reporting mobile data traffic, see our analysis. Too few operators
and too few regulators are, however, reporting anything about operator Wi-Fi. We have made an effort to
present stats from those that do – Hong Kong, the UK and Korea.
Hong Kong
If we start in Hong Kong, Figure 8 shows the development of:


The number of public Wi-Fi hotspots provided by operators (upper, grey, line)
The mobile data traffic (lower, blue, line)
45000
35000
30000
25000
20000
15000
10000
5000
0
1/2012
2/2012
3/2012
4/2012
5/2012
6/2012
7/2012
8/2012
9/2012
10/2012
11/2012
12/2012
1/2013
2/2013
3/2013
4/2013
5/2013
6/2013
7/2013
8/2013
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12/2013
1/2014
2/2014
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1/2015
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12/2015
1/2016
2/2016
3/2016
4/2016
5/2016
6/2016
7/2016
Wi-Fi hotspots / mobile data traffic in TB
40000
Public Wi-Fi hotspots [OFCA]
Mobile data traffic [OFCA]
Figure 8. Development in number of public Wi-Fi hotspots and mobile data traffic in Hong Kong
Even though the number of public Wi-Fi hotspots grew significantly – from 10000 to more 43000 during four
years, the mobile data traffic grew – but only linearly. In most other mature markets (without a similar Wi-Fi
focus from operators), mobile data would have had more of a hockey stick slope. The extensive use of Wi-Fi
(for offload and indoor coverage reasons) by Hong Kong’s largest operators is clearly an explanation –
mobile data traffic is automatically offloaded to Wi-Fi without need for user interaction. In line with that
ambition, Hong Kong’s operators have also been among the first in the world with native Wi-Fi Calling6.
6
Read Aptilo’s white paper ”Seamless Next Generation Wi-Fi Calling”, written by tefficient: http://tefficient.com/wi-fi-calling-read-allabout-it/
tefficient AB
www.tefficient.com
24 September 2016
11
The UK
Ofcom of the UK is one of very few regulators to report both the number of public Wi-Fi hotspots operated
by telcos7 as well as the traffic over these. Figure 9 compares the two.
Wi-Fi hotspots / traffic in TB
50000
45000
+7%
40000
+46%
35000
30000
25000
20000
15000
10000
5000
0
2012
2013
Public Wi-Fi hotspots [Ofcom]
2014
2015
Wi-Fi hotspot traffic, June annualised [Ofcom]
Figure 9. Development in number of public Wi-Fi hotspots and associated traffic in the UK
The number of public Wi-Fi hotspots (grey line) increased 7% from June 2014 to June 2015 – ending at
45000, a number very close to Hong Kong which says something about the lower density of hotspots in
the UK. Traffic over these hotspots (red line) increased significantly faster, 46%, which means that the
average utilisation went up.
Figure 10 compares this Wi-Fi traffic trend to the mobile data traffic trend.
7
BT, KCOM, O2, Sky and Virgin Media plus Arqiva (from 2013). BT’s (Fon) homespots aren’t included, just the hotspots.
tefficient AB
www.tefficient.com
24 September 2016
12
900
+65%
800
Traffic [Petabyte]
700
600
500
400
300
200
100
3,8%
5,2%
5,1%
0
2012
2013
2014
Mobile data traffic, June annualised [Ofcom]
4,5%
of mobile
+46%
2015
Wi-Fi hotspot traffic, June annualised [Ofcom]
Figure 10. Development in mobile data traffic and public Wi-Fi traffic in the UK
In between June 2014 and June 2015, the mobile data traffic of the UK increased faster than the Wi-Fi
traffic; 65% vs. 46%. During this year, UK operators expanded their 4G LTE networks and started to make
4G generally available in most plans.
With a few exceptions8, most of UK’s mobile customers aren’t auto-connected to operator Wi-Fi, but need to
take manual action (login or download/use an app) to be. This is one possible reason to why the public Wi-Fi
traffic increased at a slower rate than the mobile data traffic. The public Wi-Fi traffic represented 4.5% of
the mobile data traffic in June 2015. This was actually somewhat lower than the year before (5.1%). If
the UK operators would have continued expanding the number of Wi-Fi hotspots as quickly as before, it’s
likely that the Wi-Fi traffic would have grown faster.
Let’s for a minute return to the comparison with Hong Kong. Since it’s not reported, we don’t know how
much traffic the Wi-Fi hotspots in Hong Kong take but it likely much more than in the UK:



The density of Wi-Fi hotspots is very high – the landmass of Hong is less than 0.5% of UK’s
The largest mobile operators have auto-offload and have deployed a high number of hotspots (see
Figure 8) – why would they if there wasn’t a need?
The mobile data traffic grows “just” linearly compared to UK’s more exponential growth
8
O2 has started with SIM-based auto-authentification of O2 mobile customers when the entirely public O2 Wifi is available. 7000 of
13000 hotspots are currently supporting this. EE, O2 and Vodafone have started to use EAP-SIM to auto-connect customers to the
Virgin Media operated Wi-Fi network in the London underground.
tefficient AB
www.tefficient.com
24 September 2016
13
With its dense Wi-Fi grid and auto-offload, Hong Kong’s leading operators remain relevant for customers
who seldom need to search for other networks to satisfy a demand for either higher quality or
unmetered capacity. This is true also for customers’ non-SIM devices. The Wi-Fi situation has been more
fragmented in the UK since Wi-Fi has been a tool for fixed operators rather than for mobile. Recent
consolidation – BT’s acquisition of EE and Virgin Media’s acquisition of Arqiva’s Wi-Fi business – might imply
a change. Ofcom’s numbers for June 2016 aren’t expected until December – let’s see if these indeed show a
recovery in Wi-Fi’s share of traffic.
Comcast (and the US)
The next set of figures show what an impact a significant rollout of Wi-Fi has – not only for the player doing
it (Comcast in this case) but for a country as a whole given that the player is sizeable enough.
10000
+138%
9000
8000
Traffic [Petabyte]
7000
6000
5000
4000
3000
2000
446 PB
1000
5% of mobile
+496%
0
2012
2013
US mobile data traffic [CTIA]
2014
2015
Comcast Wi-Fi hotspot traffic
Figure 11. Development in mobile data traffic in the US and Comcast’s public Wi-Fi traffic
In 2014, Comcast started to deploy Wi-Fi homespots on a wide scale. By the end of 2014, it had 8.3 million
spots. By the end of 2015, 13.3 million. And in June 2016, 15 million. The effect on Comcast’s public Wi-Fi
traffic (red line) was obvious: In 2015 it was 446 Petabyte, up 496% year-over-year.
tefficient AB
www.tefficient.com
24 September 2016
14
Without any automatic SIM-based authentication (Comcast isn’t yet
offering mobile services), 446 Petabyte still represented 5% of the
total mobile data traffic of the US even though mobile traffic grew
strongly in 2015.
It shows the offloading potential of massive Wi-Fi deployment – even
when it’s “just” homespot-based like Comcast.
At a conference 20 September, Comcast’s CEO disclosed that the
company will launch its own hybrid mobile/Wi-Fi service by mid2017.
Comcast’s figures
show the offloading
potential of massive
Wi-Fi deployment
Korea
Even though Korean operators were global pioneers in 4G – including early launches of LTE-A and VoLTE –
and with an unprecedented lead in 4G coverage and speed 9, Wi-Fi continues to play an important role in
order to offload mobile data, but also to offer higher, combined, throughput than what 4G in isolation could
offer.
Figure 12 below is based on figures from the Korean Ministry of Science, ICT and Future Planning (MSIP). In
contrast to Figure 10 and Figure 11, the red Wi-Fi traffic line is only showing the traffic which has been
automatically offloaded by the mobile operators to their own Wi-Fi networks.
9
See OpenSignal’s global comparison: http://opensignal.com/reports/2016/08/global-state-of-the-mobile-network/
tefficient AB
www.tefficient.com
24 September 2016
15
250000
Mobile data traffic per month [TB]
+50%
200000
150000
100000
Premium unlimited 4G
plans introduced
50000
5,2% of mobile
+21%
-50%
Dec 12
Jan 13
Feb 13
Mar 13
Apr 13
May 13
Jun 13
Jul 13
Aug 13
Sep 13
Oct 13
Nov 13
Dec 13
Jan 14
Feb 14
Mar 14
Apr 14
May 14
Jun 14
Jul 14
Aug 14
Sep 14
Oct 14
Nov 14
Dec 14
Jan 15
Feb 15
Mar 15
Apr 15
May 15
Jun 15
Jul 15
Aug 15
Sep 15
Oct 15
Nov 15
Dec 15
Jan 16
Feb 16
Mar 16
Apr 16
May 16
Jun 16
Jul 16
0
Auto-offloaded to WiFi [MSIP]
3G [MSIP]
4G [MSIP]
Figure 12. Development in mobile data traffic (3G, 4G and auto-offloaded to Wi-Fi) in Korea
Year-on-year (July 2015 to July 2016), the offloaded traffic grew 21% and was in July representing 5.2% of
the total mobile data traffic in Korea. Wi-Fi traffic originating from non-SIM devices – and from SIM devices
manually connected to Wi-Fi – isn’t included. This means that even if the 5.2% figure is similar to the figures
seen in the UK and in Comcast’s network, the Korean level of offloading is higher.
The 4G traffic (blue) grew yet faster, though: 50% year-on-year.
The automatically offloaded Wi-Fi traffic overtook the 3G traffic already
late 2014 and 3G is rapidly becoming obsolete as data carrier. The
importance of Wi-Fi offload increased in absolute terms since the
introduction of 4G, but decreased in relative terms.
With hundreds of thousands Wi-Fi hotspot access points operated by the
three Korean operators, one could perhaps expect yet more Wi-Fi offload
than what Figure 12 shows. One explanation to the increase in mobile data
traffic is, as often the case, the introduction of premium unlimited
plans. It started in Q2 2014, see the arrow in Figure 12.
The increase in
mobile data traffic is,
as often the case,
explained by the
introduction of
unlimited plans
In Korea, unlimited means unlimited data volume but with speeds throttled
after a certain cap. Let’s use KT’s Olleh as example, see Figure 13.
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Figure 13. Olleh’s present 4G plan setup
First of all unlimited volume is only available on more premium plans. On the most premium, the speed is
throttled to 5 Mbit/s once the 30 GB full-speed allowance is consumed. The two cheaper unlimited plans
throttle speed to 3 Mbit/s after the cap.
Another explanation to why Korean’s data usage has increased is demonstrated by the cheaper plans; Olleh
has here included the possibility to rollover unused data which should mean that less data is voided.
Another explanation to why 4G traffic outpaces offloaded Wi-Fi traffic in growth is that Korean operators
have expanded their number of 4G sites significantly since 2013 without making a similar expansion of Wi-Fi.
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Trending: Unlimited mobile data
As exemplified by the Korean case, the comeback of unlimited mobile data plans is a strong trend.
Since unlimited data drives higher data usage, unlimited mobile data plans speak for operator-controlled WiFi offload in order to handle high and increasing data volumes cost-effectively.
At the same day, 18 August,
both Sprint and T-Mobile
introduced their new unlimited
mobile plans on the US market.
Sprint’s plan is called Unlimited
Freedom whereas T-Mobile calls
its plan ONE.
Both Sprint and T-Mobile were previously offering unlimited options, but with the new plans, the two
competitors lowered the entry price to unlimited significantly. T-Mobile’s approach is more radical since TMobile ONE replaces all of T-Mobile’s previous plans. Sprint is more careful, offering Unlimited Freedom as
an option to the traditional bucket plans.
But are the plans truly unlimited? Short answer: No. Both Sprint and TMobile throttle video streams10 to a resolution of 480p – which is sufficient
for small screens, but not for large. In both cases, customers can however
buy themselves higher video resolution: 1080p costs 20 USD per month
with Sprint Unlimited Freedom Premium whereas a T-Mobile ONE
customer can increase the resolution to up to 4k for 3 USD per day or
subscribe to T-Mobile ONE Plus which costs 25 USD more per month11.
Regardless of which option a customer chooses, both Sprint and T-Mobile
reserve the right to de-prioritise customers who have used more than (at
present) 23 and 26 GB per month. This is quite a lot – so even if not truly
unlimited, plans like this will encourage a data-spending behaviour.
Even if not truly
unlimited, plans like
this will encourage a
data-spending
behaviour
In the local US context of unlimited, it should be said that AT&T reintroduced an unlimited
plan already in January – available solely as a bundle with AT&T’s DirecTV (satellite) or UVerse (IPTV) services. Albeit expensive, the combo plan has been a hit for AT&T who in June already had 5
million mobile customers on it.
Several European operators (in e.g. Switzerland, Austria, Finland, Latvia and Lithuania) have
also reintroduced unlimited mobile data – sometimes with speed tiers or tethering limitations. And
some operators like Elisa and DNA in Finland and ‘3’ in the UK never stopped offering it in the first place.
We think unlimited mobile data will continue to gain traction in saturated mature markets since it has the
potential to lift the ARPU. Even though operators will apply various tactics 12 – video-optimisation, speed tiers,
10
Sprint throttles music and game streaming as well. T-Mobile throttles tethering to 0.5 Mbit/s on the regular ONE plan whereas Sprint
limits the throttling volume to 5 GB per month.
11
Plus brings full speed tethering as well
12
Often in conflict with net neutrality legislation or frameworks
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fair usage policies, limitations on tethering, network-level ad blocking – mobile data traffic volumes will
increase significantly. If costs shouldn’t increase, it calls for operator-controlled Wi-Fi offload.
With unlimited mobile data, the end-user will no longer actively seek to offload to Wi-Fi so an operator
offering it will have to make sure it happens automatically without user interaction.
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Best practices for automatic offloading
So how do you then accomplish automatic offloading to Wi-Fi? Here,
mobile network operators (MNOs) or full MVNOs have a great
advantage over all other type of operators or MVNOs: The HLR/HSS.
With this in place, an operator can provide SIM-based
authentication using the EAP-SIM or EAP-AKA protocols. For SIMbased devices, there’s then no need for cumbersome login
procedures with passwords or for users to download, install and use a
dedicated operator Wi-Fi app. It’s also safer since EAP-SIM/AKA
requires 802.1x which encrypts the communication (incl. the
authentication data) between the device and the Wi-Fi access point.
Mobile network
operators (MNOs) or
full MVNOs have a
great advantage
Operators without an HLR/HSS (or not using SIM-based
authentication) have to rely on the end-user to take manual action: To login using a username and
password that the operator previously shared. Even though this login typically just needs to be done once
– the device will remember the password – it’s apparently a hinder for many users13. Fewer users obviously
result in lower total offload levels.
To assist, most operators without SIM-based authentication provide a dedicated Wi-Fi app to ease the use
of the operator’s public Wi-Fi. But it still requires the end-user to take action: Find the app, download it,
install it – and still input the username and password before it’s ready to use.
If the target is to offload as much as possible to an operator’s
Wi-Fi without losing control, any manual action required by endusers will lower the adoption rate and hence the total level of
offloading. That’s why we mean that automatic SIM-based
authentication is the best practice14.
But not all operators covered here have it. Generally speaking,
Asian operators are better at it than American and European
operators. All three major operators in Japan and Taiwan are
e.g. using EAP-SIM/AKA to authenticate and connect mobile users to Wi-Fi automatically.
We highlight a few markets – France, the UK, Hong Kong and Singapore – because of certain local
differences in how operators have dealt with Wi-Fi and offloading.
13
The support pages of non-EAP-SIM/AKA operators are full of questions from end-users on where to find the password. The need
often arises when out and about, far from the password which might be printed on an operator letter at home or sent in an email which
the user now doesn’t have access to.
14
Not all devices have a SIM and that operators therefore still need to have authentication methods for non-SIM devices
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France
Three out of four mobile operators in France have deployed sizable Wi-Fi networks, mainly consisting of
homespots.
Orange has the largest network (even in Europe, see
Figure 4) with 7 million Wi-Fi spots. But Orange’s mobile
customers aren’t auto-connected to that Wi-Fi when
available.
Instead, they are advised to download and install the Mon
Réseau (My Network) app which, among other things, assists in finding Orange Wi-Fi spots. It doesn’t
actually connect to them, though: The user has to accept it each time.
SFR has 4 million Wi-Fi spots and an app called SFR WiFi. In it, the user toggles an Auto Connect
WiFi button and enters an activation code which is sent as an SMS. From this point on, the device
auto-connects to SFR’s Wi-Fi using EAP-SIM.
Lastly, the best practice: Free with 3
million Wi-Fi spots. The mobile users
aren’t asked to do anything, they will
simply auto-connect to Free’s Wi-Fi
using EAP-SIM when available. No
app, no password, no passcode.
Free has less Wi-Fi spots than
Orange, but likely a higher level of
offloading thanks to this fully
automatic setup.
The UK
BT has one of the largest Wi-Fi networks in Europe (see Figure 4). Until recently, when EE was aquired, BT
didn’t have a mobile network. BT instructed its fixed broadband customers to take advantage of their Wi-Fi
network and save on their mobile data bills. A dedicated app helped BT customers to locate and connect to
BT Wifi.
When BT launched BT Mobile, its MVNO offer for consumers, in March 2015, the company highlighted that
it came with unlimited BT Wifi:
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Not being a mobile operator, BT has not used EAP-SIM/AKA to auto-connect its mobile subscribers to its WiFi. In order to auto-connect, users have to install and use the BT Wifi app. Once fed with the right username
and password, the app auto-connects mobile users. The procedure is
the same for non-BT Mobile customers.
So far, BT has not extended the unlimited BT Wifi proposition to
EE’s mobile customers (even though BT now owns EE). There
might be technical reasons to this – or BT will pursue a different
Wi-Fi strategy from now on. It’s interesting to note that EE –
before being purchased by BT – started to use EAP-SIM to auto-connect
its mobile customers. Not to any EE Wi-Fi (there isn’t one), but to the
Virgin Media Wi-Fi network covering London Underground.
BT, with Wi-Fi,
doesn’t use EAP-SIM
EE, without Wi-Fi,
does
It demonstrates that the Wi-Fi network doesn’t need to be your own
network – it can be a partner’s network. Also O2 and Vodafone are
using EAP-SIM to auto-connect its customers in the Underground.
Since the Virgin Media Wi-Fi network is the only available network (Wi-Fi or mobile) in the tube, this is likely
leading to that operators pay more to Virgin Media than they would if the login would have remained manual.
But for Londoners, the constant need to login (there’s no coverage in between the stations) has been an
annoyance and EE/O2/Vodafone are clearly doing this to make the commuting more convenient for
customers. We think of it as a best practice.
Also customers of ‘3’ are given access to the same Wi-Fi network, but in 3’s case through a one-time login
(automatic thereafter).
O2 is essentially a mobile-only operator. This didn’t prevent O2 from building a fully open and free
Wi-Fi network, starting in central London in time for the 2012 Olympics. That Wi-Fi network has
now grown to 13000 hotspots around the UK. The motivation to why a mobile operator charging
mobile data per Gbyte allows
customers and non-customers
to freely use a public Wi-Fi is
multifaceted.
Branding is one, having a
suitable proposition for venues
(incl. analytics) another. O2’s
difficulties to find site locations
in dense city areas could also
have contributed; with Wi-Fi at
strategically located venues, O2
could perhaps improve its
network image at a low cost?
From the beginning, O2 didn’t
treat O2 customers any different:
They too had to login. This has though changed; 7000 of 13000 hotspots now support auto-connect
(based on SIM authentication) for O2 customers.
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Lastly, Virgin Media. As mentioned, Virgin Media hasn’t yet launched Wi-Fi homespots in the
UK – unlike all other Liberty Global held operations in Europe. One reason might be that Liberty
Global didn’t acquire Virgin Media until mid-2013 and that it simply takes time. Another reason
could be that BT was seen to have drained the Wi-Fi differentiation pond already. The rumour is anyhow
that Virgin is about to launch homespots, but that the project is delayed.
In the meantime, Virgin partnered with Arqiva 15 and Sky (The Cloud) to use their Wi-Fi hotspots – and the
company built the London Underground Wi-Fi. In September 2016, Virgin confirmed the acquisition of the
Wi-Fi business of Arqiva (with 31000 public access points). Virgin has a Virgin Media WiFi app for iOS, but
not yet for Android. This app auto-connects to Wi-Fi when it has been set up.
Hong Kong
If the UK features a magnitude of Wi-Fi strategies, the two largest
operators in Hong Kong have both gone for a maximum deployment
and high offloading agenda.
3 is marketing its 20000 hotspot network as the largest in Hong Kong
(picture to the right). Mobile customers are automatically connected
to 3’s Wi-Fi using EAP-SIM – no user action required (beyond
enabling Wi-Fi). Unlimited Wi-Fi usage is included in the mobile data
plans.
The competitor CSL is also having a large Wi-Fi network of 15000 hotspots. Mobile
customers are also here entitled to unlimited Wi-Fi. In order to connect, a customer
needs a username and password, but if downloading and using the CSL Wi-Fi app the
connections can be made automatic following first setup.
Singapore
Singtel, the incumbent in Singapore, entered the public Wi-Fi space quite late. In 2014,
the company presented a plan to build 1000 well-located high-speed Wi-Fi hotspots. At
the same time a new plan, Combo, was launched introducing Wi-Fi on the mobile plan.
Price points were raised by 3 SGD. The Wi-Fi data would, like mobile data, be capped
(to 2 GB), but Singtel gave unlimited Wi-Fi allowances to June 2015. That period was
later prolonged, first to 29 February 2016 and now to 31 March 2017. The number of
Wi-Fi hotspots was 900 in June.
Note that Singtel has done this rollout despite a public Wi-Fi network, [email protected], being provided by the
government of Singapore. All three operators Singtel, M1 and Starhub are using EAP-SIM to auto-connect
their customers to [email protected] M1 and Starhub are not having any Wi-Fi network of their own. Starhub
has though started a HetNet trial where Starhub’s mobile users can be auto-connected to a dedicated Wi-Fi
using EAP-SIM.
15
The terrestrial broadcaster of the UK
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Wi-Fi Calling usage
Wi-Fi can be used to offload mobile data, but with native Wi-Fi Calling, WiFi can also be used to offload mobile voice. Since both use the same IMS
core, voice over LTE (VoLTE) and Wi-Fi Calling are perfect complements
and both technologies offload voice traffic from circuit switched 2G/3G to a
packet switched network (4G LTE or Wi-Fi).
This bring potential quality benefits for the end-user, but another driver is
that mobile operators can refarm 2G/3G spectrum when the 2G/3G traffic
load decreases – also on voice – and instead use it for 4G LTE. This
improves spectrum utilisation and, in the longer run, costs. Another
obvious benefit with Wi-Fi Calling is that it can extends the coverage area
for voice into those nasty corners indoors where mobile networks tend not
to cover.
VoLTE and Wi-Fi
Calling are perfect
complements
Read more about Wi-Fi Calling in this whitepaper that we wrote for Aptilo.
As highlighted in the Wi-Fi analysis of 201416, T-Mobile USA has been the global pioneer in Wi-Fi Calling. TMobile is also one of the leading operators (outside of South Korea) when it comes to VoLTE adoption. A
number of operators have, however, followed and introduced Wi-Fi Calling in 2015 and 2016:










EE, UK
Rogers, Canada
Bell, Canada
Swisscom, Switzerland
Vodafone, UK
Orange, Spain & Poland
3, Sweden & Denmark
Telekom, Germany
Telenor, Norway & Denmark
… (the list is not exhaustive)
Another operator that launched Wi-Fi Calling is T-Mobile US’ competitor AT&T: First on iOS devices – in
October 2015. Then, in June this year, AT&T launched Wi-Fi Calling on its first Android device (LG G4). In
conjunction with this, AT&T revealed that they carried 4 million calls over Wi-Fi each day.
That figure spurred T-Mobile’s CTO Neville Ray (see
snip) to state his present figure: 22 million calls
over Wi-Fi each day.
16
http://tefficient.com/how-operators-use-wi-fi-to-strengthen-existing-business/
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25
Calls using Wi-Fi calling, per day [M]
22 million
20
15
10
5
4 million
0
AT&T
T-Mobile
AT&T
T-Mobile
Figure 14. Number of Wi-Fi Calling calls per day, June 2016
Since AT&T has twice as many customers as T-Mobile, T-Mobile’s figure is obviously more impressive. But
are 22 million calls per day a lot? It depends on how you look at it. T-Mobile’s CTO did, referring to 4Q 2015,
mention that around 5% of all call minutes were carried over Wi-Fi. To compare, T-Mobile’s figure for
VoLTE was 57% in Q2 2016.
But think of it this way: Those 22 million calls would likely not have happened
that day without Wi-Fi Calling. There’s no financial incentive for an end-user
to use Wi-Fi Calling. Calls are charged the same. The effect on customer
loyalty is, though, as important as the effect on revenue. A customer that
can’t call or be reached where he/she often is will be very likely to churn.
Wi-Fi Calling forgives constraints in mobile network rollout and planning.
When stating the 22 million call per day figure, T-Mobile also gave a few
more figures:


Those 22 million calls
would likely not have
happened that day
without Wi-Fi Calling
6.5 million customers use Wi-Fi Calling on a monthly basis
In June, T-Mobile had nearly 44 million devices on its network that
support Wi-Fi Calling
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Best practices for using Wi-Fi to reap business benefits
We have shown that many operators continue to expand Wi-Fi networks and increase offloading levels by
adding auto-connect functionality and Wi-Fi Calling. The question is why?
To increase prices
When Singtel included Wi-Fi into essentially all of its mobile plans in 2014, the
company increased comparable price points with 3 SGD (2 EUR). This
corresponds to 4% of Singtel’s current postpaid ARPU. In mature markets like
Singapore, ARPU is in slow decline and inclusive Wi-Fi could be used to mitigate
that trend.
When Belgian cableco Telenet increased its fixed broadband prices in
January 2015 with 2-3 EUR per month, the company motivated it with
the investments done, specifically mentioning that their launch of EAPSIM allows customers to “drastically reduce their mobile data usage”.
To trigger upsell
Telia in Sweden today uses Wi-Fi as one of several upsell triggers in
its mobile plans, see picture to the right. Unlimited access to Telia’s
public Wi-Fi is granted to postpaid customers – starting at the 4 GB
plan. A customer on the 0.5 GB entry plan needs to pay 80 SEK (8.5
EUR) more in order to get access to Telia Wifi (and get 4 GB of mobile
data).
Telia is since 2011 using EAP-SIM to auto-connect mobile users to
Telia Wifi.
The way Spark (formerly Telecom) in
New Zealand uses Wi-Fi as a mobile
upsell trigger is a best practice in its
simplicity.
All mobile customers, post- or prepaid,
can use 1 GB of Wi-Fi data per day if
they pay 19 NZD or more per
month (12 EUR).
A simple way to leverage Spark’s Wi-Fi network with 1000 hotspots – many reused phone booths. Spark isn’t
yet using EAP-SIM.
The three Taiwanese operators Chunghwa, FarEasTone and Taiwan Mobile include Wi-Fi on more
premium mobile plans. Offloading is automatic using EAP-SIM.
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Proximus from Belgium uses its large
network of Wi-Fi hot- and homespots to
convince mobile customers to become Pack
subscribers – since it’s only multi-play
customers who can access Proximus’ Smart
Wi-Fi. Combined with bundling discounts, it
seems to work; 53% of Proximus’ fixed
consumer and small office customers were
fixed-mobile converged in June 2016.
Similar to Telenet, Proximus uses EAP-SIM to auto-connect to its Wi-Fi.
To attract and retain customers
Several operators are using Wi-Fi as a “for all” proposition, targeted to attract as many customers as
possible – regardless of ARPU. And, of course, to retain them. A few examples:
Since April 2016, unlimited Wi-Fi is included in all of Telekom’s MagentaMobil plans in Germany.
It’s so far only automatic (using EAP-SIM) on some 2000 hotspots, though. Deutsche Telekom
group, now deploying public Wi-Fi and homespots in most of its European integrated operations, has
market-specific monetisation models – Hungary, Croatia, Romania and Greece currently all feature different
methods.
Orange France and Poland have public Wi-Fi included in all (or almost all) mobile plans – but with
automatic access only via an app. Also Orange France’s competitors SFR and Free have chosen to include
Wi-Fi on all mobile plans.
Vodafone is deploying Wi-Fi to attract fixed/cable customers, not mobile. In Germany, Spain and
Italy, you need to be a fixed, cable or converged customer to get access to Vodafone’s public WiFi. Access requires login or app.
The Brazilian operators Oi and TIM include public Wi-Fi in postpaid and prepaid plans – if mobile data is
included. Both of them auto-connect customers to Wi-Fi hotspots17 with EAP-SIM.
As mentioned, the two largest operators in Hong Kong, 3 and CSL, include public Wi-Fi in all plans – using
auto-connect functionality.
The three Japanese operators NTT docomo, KDDI au and Softbank all include public Wi-Fi in all plans –
using EAP-SIM for auto-connect.
Also AT&T has chosen to include public Wi-Fi on most mobile plans – using EAP-SIM for autoconnect.
17
Oi’s Wi-Fi homespots aren’t yet supporting EAP-SIM. TIM doesn’t have homespots.
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To disrupt
The Canadian cableco Shaw has built its public WiFi network partly to disrupt the business of its fixed
competitor in the west, Telus. Telus has an opento-all Wi-Fi network with 8000 hotspots, but Shaw
has 75000. These are only open to Shaw customers,
though. But Shaw is also disrupting the mobile
business of Telus – as well as Rogers and Bell – with its savings message shown above. What’s interesting is
that Shaw in March 2016 acquired WIND, a Canadian tier-2 mobile operator which Shaw is now integrating
and transforming. The question is if this will mean that Shaw in the future will tone down its disruptive
message towards mobile?
Supported by Wi-Fi, the Liberty Global held cableco Telenet was
originally very disruptive in the Belgian mobile market. With more than
1 million MVNO subscriptions in a country with roughly 11 million
people, Telenet has for a few years been the quickest growing mobile
player. But also Telenet decided to buy a mobile operator: The
ownership of BASE was transferred from KPN to Telenet in February.
With the acquisition, Telenet gained 2 million mobile subscriptions. The
MVNO subscriptions aren’t on the BASE network yet; Telenet’s original
MVNO subscriptions will remain on the Orange network until 2018.
In August, Telenet started an ambitious rollout and modernisation program on the mobile network of BASE.
The question is also here: Will Telenet be less disruptive with Wi-Fi from now on?
Ziggo in the Netherlands was also one of the Wi-Fi
pioneers among cablecos in Europe. Also here, mobile
operators were the focal point of Ziggo’s disruption. As
an MVNO, Ziggo hasn’t been as successful as Telenet,
though: Ziggo had 207200 mobile customers in June.
The wholesale prices might have had an effect –
perhaps also one reason to why Ziggo deployed Wi-Fi
in the first place; to save on the MVNO bill.
For a long time, it was rumoured that Liberty Global
would buy T-Mobile, a mobile-only operator, thereby
creating a parallel case to Belgium. Instead,
Vodafone and Ziggo found each other in a 50/50 JV
which recently was approved by the European
Commission (subject to Vodafone selling its small fixed
consumer base).
Ziggo’s MVNO customers are already on the Vodafone network and it will be interesting to see if Ziggo’s
disruptive use of Wi-Fi will continue or gradually fade off. Unlike Telenet, Ziggo’s mobile customers have
public Wi-Fi included in their plans, see picture above.
So maybe we shouldn’t expect more Wi-Fi disruption from cablecos that gradually become MNOs?
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Cablevision, a New York-based cableco, launched a local assault on the mobile business of e.g. Verizon,
AT&T, T-Mobile and Sprint when the company in February 2015 introduced its Wi-Fi-only service
Freewheel.
For 10 USD per month, Freewheel users
can enjoy unlimited voice, text and data –
over Cablevision’s Wi-Fi network in the
greater New York area. Freewheel doesn’t
have any mobile fall-back; if there’s no
Cablevision Wi-Fi, there’s no service.
The Freewheel customers need to have a
specific Motorola handset.
Cablevision has never reported the
number of Freewheel customers. Shortly
after Altice’s acquisition of Cablevision (in June 2016), Cablevision declared that Freewheel was no longer
available for new customers, but that the service would continue for existing
Freewheel customers.
So maybe we shouldn’t expect more Wi-Fi disruption from Wi-Fi only
propositions either?
What incumbents without a Wi-Fi agenda rather should worry about is Wi-Fi
first. The pioneer in this space is Republic Wireless in the US. Until
recently, the handsets supported were, due to proprietary software, limited to
a few not-so-well-known devices.
What incumbents
without a Wi-Fi
agenda should worry
about is Wi-Fi first
But in May, Republic Wireless added T-Mobile as its host mobile network18
and added seven new handsets to its line-up – where at least the new
Samsung handsets are very well known.
At the same time, Republic Wireless changed
its plan structure, see picture to the right. If
only considering the mobile data bundles
(“Cell Data”), the price points aren’t
disruptive, but the point is that most users
could do with significantly less mobile
data by automatically be offloaded to Wi-Fi.
18
Previously it was Sprint
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Republic Wireless isn’t reporting its customer base, but revenue figures indicate a customer base of in
between 0.5 and 1 million.
Another Wi-Fi first attempt – also in the US – is carried out by a very well-known player:
Google19. In April 2015, it launched Project Fi. The basic fee is 20 USD per month and
each GB of mobile data is 10 USD. Unused mobile data is refunded each month20.
Project Fi uses Sprint, T-Mobile and U.S. Cellular as host networks. Note that these three networks are used
interchangeably – a Project Fi user can be on any of them depending on location: A network of
networks. A Project Fi user needs to have a Nexus (5X, 6 or 6P) handset but BYOD (bring your own device)
is fine as long as it’s one of those there Nexus models. We expect that the rumoured Pixel phones,
supposedly to be introduced 4 October, will be supported as well. To date, Google has not reported how
many customers Project Fi has.
Another Wi-Fi first option is provided by Freedom Pop. Based on a freemium
model, a US user can consume up to 0.5 GB of data, 200 voice minutes and 500
texts per month without paying anything for that service. Higher usage is of course possible, but costs extra.
Wi-Fi plays a role in Freedom Pop’s setup, but how is not really clear. There are many different premium
plans, options, promotions and add-ons. In the US, Freedom Pop is an MVNO on Sprint’s network. In
January 2016, Freedom Pop said it had more than 1 million subscribers. In November 2015, the company
expanded to Europe when launching in the UK, using ‘3’ as host network. Freedom Pop has a target of
100000 users for the first year and has said that more than 50% of its UK subscribers don’t pay anything. In
August this year, Spain was added focusing on a zero-rated WhatsApp proposition.
If FreedomPop, Republic Wireless and Project Fi (albeit owned by Google) all are small,
United States will soon witness the entry of a large industry player in this space of hybrid
mobile/Wi-Fi services: Comcast. By mid-2017, the company – with 28 million customers to
upsell to – will take its Wi-Fi assisted mobile proposition to market, utilising its Wi-Fi network of 15 million
spots and its MVNO partnership with Verizon.
So will the telecom industry be “Ubered” by Wi-Fi first? There’s yet no
reported evidence of it happening, but disruptive players have been able to
carve out a niche market – at least in the US. Traditional operators, with
business to defend, need to relate to public Wi-Fi as a threat and an
opportunity. The best advice is to study the best practices in this analysis
and copy them.
Will the telecom
industry be “Ubered”
by Wi-Fi first?
If you don’t do it, the Wi-Fi first players will.
19
20
Or, more accurately, Alphabet Inc.
A practice Republic Wireless also had until May 2016
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Conclusion
Smartphone users in almost all mature markets spend
more time on Wi-Fi than on 3G/4G. Even with very high
or unlimited mobile data allowances, Wi-Fi remains a key
component of the connectivity experience of a smartphone
user. [Even more so with a number of auxiliary Wi-Fi-only
devices].
Facing disruption from Wi-Fi first players (whether they are
start-ups, Google or cablecos), traditional operators need to
take control over the full customer experience –
including public Wi-Fi.
Traditional operators
need to take control
over the full customer
experience – including
public Wi-Fi
Some operators are already: In the midst of a growing
adoption of 4G LTE and an increasing use of mobile data, our stats shows that operators deployed
more Wi-Fi, not less. It also triggered more operators to enable automatic offloading of mobile
data – and voice – to Wi-Fi.
Our analysis samples a number of best practices on how operators – technically as well as
commercially – include Wi-Fi into a combined, carrier-grade, connectivity experience. The practices
show how to use Wi-Fi to attract and retain customers – and to upsell.
International telco competitiveness specialist providing operators and suppliers with analysis, benchmarks and go-tomarket preparation. Expertise in quad-play, data monetisation, customer loyalty, Nonstop Retention®, mobile video, WiFi business models and high margin equipment sales.
www.tefficient.com
tefficient AB
www.tefficient.com
24 September 2016
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