Wi-Fi Investments: Current Situation

Transcription

1 WBA Industry Report 2011 Global Developments in Public Wi-Fi

2 CONTENTS 3 Executive Summary 4 An overview of today s Wi-Fi ecosystem 7 Q&A: An interview with Chris Bruce, Chair, Wireless Broadband Alliance & CEO, BT Openzone 9 WBA milestones and achievements 11 Operator best-practice case studies 11 Operator case study: Boingo 12 Operator case study: China Mobile 14 Operator case study: Orange France 15 Operator case study: True About the Wireless Broadband Alliance Founded in 2003, the aim of the Wireless Broadband Alliance (WBA) is to secure an outstanding user experience through the global deployment of next generation Wi-Fi. The WBA and its industry leading members are dedicated to delivering this quality experience through technology innovation, interoperability, and robust security. Today, membership includes major fixed operators such as BT, NTT Communications, Comcast and Time Warner Cable; seven of the top 10 mobile operator groups (by revenue) and leading technology companies such as Cisco, Google and Intel. These members serve over 390 million customers and have rolled out over 290,000 hotspots worldwide. They also work with international operators to drive innovation, deliver seamless connectivity and optimize network investments. The WBA Board includes AT&T, BT, Boingo, Cisco, Deutsche Telekom, KT, NTT DOCOMO, Orange France, True Internet and TMN/Portugal Telecom. 17 An overview of WBA member companies 19 Wi-Fi ecosystem survey analysis Wireless Broadband Alliance Head Office 3 Tai Seng Drive #04-00 Singapore ABOUT INFORMA TELECOMS & MEDIA Informa Telecoms & Media is the leading provider of business intelligence and strategic marketing solutions to global telecoms and media markets. Driven by constant first-hand contact with the industry, our 60 analysts and researchers produce a range of intelligence services including news and analytical products, in-depth market reports and datasets focused on technology, strategy and content. Informa UK Limited All rights reserved. The contents of this product are protected by international copyright laws, database rights and other intellectual property rights. The owner of these rights is Informa UK Limited, our affiliates or other third party licensors. All product and company names and logos contained within or appearing on this product are the trade marks, service marks or trading names of their respective owners, including Informa UK Limited. This product may not be copied, reproduced, distributed or transmitted in any form or by any means without the prior permission of Informa UK Limited. Whilst reasonable efforts have been made to ensure that the information and content of this product was correct as at the date of first publication, neither Informa UK Limited nor any person engaged or employed by Informa UK Limited accepts any liability for any errors, omissions or other inaccuracies. Readers should independently verify any facts and figures as no liability can be accepted in this regard - readers assume full responsibility and risk accordingly for their use of such information and content. Any views and/or opinions expressed in this product by individual authors or contributors are their personal views and/or opinions and do not necessarily reflect the views and/or opinions of Informa UK Limited Informa UK Ltd. All rights reserved. Informa Telecoms & Media Head Office Mortimer House, Mortimer Street London W1T 3JH, UK 2

3 Executive Summary This paper uncovered unprecedented growth in Wi-Fi hotspot deployments which are predicted to rise 350% by It found that 58% of operators - including 47% of mobile operators - believe Wi-Fi hotspots are either very important or crucial to enhance their customers experience; offload busy mobile broadband networks; and provide a value-added services platform. The paper looks in detail at the plans of four operators Boingo, China Mobile, Orange France and True. It found that a key factor in this deployment activity is the rise in mobile data. Global mobile data traffic is expected to reach million terabytes by 2014 which operators plan to manage through pricing strategies followed closely by use of Wi-Fi-based offload. It also revealed that smartphone connections to hotspots will soon overtake laptops globally. Laptops now represent less than half (48%) of the connections to hotspots, with smartphones now encompassing 36% and tablets already on 10%. In APAC, smartphones already outnumber laptop connections while in North America and Latin America, smartphones and laptops represent the same number of connections. The paper also highlights several barriers to further adoption and usage of public Wi-Fi. These include cumbersome authentication procedures, the costs to access the networks, user discovery of available networks and security. However, the report highlights that several of these challenges will be overcome by the Next Generation Hotspots currently being trialled around the world, which allow users to seamlessly roam between cellular and Wi-Fi networks using their mobile handset s SIM card as authentication, thereby alleviating concerns surrounding authentication, network discovery and security. The research also found that operators are already overcoming the issues surrounding the cost of access by increasingly bundling public Wi-Fi access as part of broadband or cellular packages. 3

4 An overview of today s Wi-Fi ecosystem Wi-Fi has firmly established itself as the most heavily-used wireless technology ever deployed in terms of the volume of data traffic transmitted over networks using Wi-Fi, according to Informa Telecoms & Media. The evergrowing ubiquity of Wi-Fi networks combined with the integration of low-cost Wi-Fi chipsets into a vast and mature ecosystem built of thousands of devices and the explosion of applications has ensured that hundreds of millions of users worldwide now make regular use of Wi-Fi to access the Internet. This has meant that developing a Wi-Fi strategy has become an imperative for virtually all operators globally. According to Thomas Wehmeier, principal analyst at Informa Telecoms & Media, any network director seeking to efficiently and profitably manage the follow of data traffic across their network should be looking to include Wi-Fi as part of an holistic customer-centric network strategy. After successfully establishing itself firmly as a must-have feature in virtually every smartphone and an increasing number of lower-cost mass-market feature phones, the second wave of Wi-Fi has truly emerged. In 2010 alone, more than 1,950 device models supporting Wi-Fi were certified by the Wi-Fi Alliance, including almost 250 Wi-Fi enabled smartphones (see fig. 1). In total, the Wi-Fi Alliance has issued more than 9,000 product certifications. Support for Wi-Fi has come from executives from the world s largest operator groups. In fact, eight of the 10 world s largest operators by revenue have deployed their own public Wi-Fi networks. historically been dominated by the laptops of the mobile workforce, but the rise of smartphones means that they are set to take over as the primary device connecting to public Wi-Fi networks. Operators around the globe are reporting that the mix of devices connecting to their public Wi-Fi networks is changing rapidly on an almost daily basis and, according to the joint WBA/ Informa Telecoms & Media industry survey, connections from smartphones and tablets already account for almost 51% of the total on average. There has always been a strong community actively supporting the Wi-Fi ecosystem through bodies such as the Wireless Broadband Alliance, although these typically represented business units historically linked to the fixed divisions of major operator groups, such as France Telecom, Deutsche Telekom, KT, NTT, Telefonica and Portugal Telecom. As mobile data markets develop and We urge all handset manufacturers to provide [an] embedded Wi-Fi connection and make it a default function Wang Jianzhou, Chairman, China Mobile, February 2011 Connections to Wi-Fi networks have as the penetration of smartphones, tablets and other connected devices increases, there is widespread expectation that almost all operators will be required to enter the Wi-Fi space in some way to remain competitive. Operators have chosen a variety of different strategies to meet customer demand for Wi-Fi with their choices typically dependent on the existing status of the local Wi-Fi market and their own market position and network strategy. A large number of operators, such as Thailand s True, South Korea s SK Telekom and China s three operators, have chosen to invest heavily in building out their own extensive networks, while others have preferred to purchase wholesale capacity from existing players or build partnerships with some of the major Wi-Fi aggregators, such as ipass or Boingo. Fig. 1: Number of Wi-Fi certified product launches, Product launches 1,600 1,400 1,200 1, Feature phones 2006 Source: Wi-Fi Alliance 2007 Smartphones 2008 Other devices Mobile devices as % of all devices 4

5 In the era of explosive mobile data traffic growth (see fig. 2), data offloading has rightly been positioned at the very front and center of industry thinking, but the business models that have driven and continue to drive Wi-Fi investments are extremely varied (see fig. 3). In the UK, one of the world s most advanced markets for Wi-Fi, investments are being underpinned by a range of divergent business models: BT, the UK s fixed incumbent, is using Wi-Fi as a means to differentiate and add value to its fixed-broadband offerings Telefonica is using Wi-Fi to build a location-based services strategy BSkyB has acquired The Cloud and moved to build a multiscreen content-delivery strategy for its core satellite TV business that relies on its extensive public Wi-Fi assets. The upshot of this widespread interest in Wi-Fi is that the number of public Hotspots is set to proliferate, growing from 0.8 million at the end of 2010 to 5.8 million by the end of 2015, according to Informa Telecoms & Media (see fig. 4). This research does not include the 4.5 million community Wi-Fi public hotspots provided through FON and its successful partnerships with leading operators, such as BT, SFR Softbank and MTS Fig. 4: Global number of public Hotspots, Public Hotspots (mil.) Source: Informa Telecoms & Media Fig. 2: Global mobile data traffic, Terabytes per annum (mil.) North America Source: Informa Telecoms & Media Latin America 2010 Much of this growth will come from emerging markets such as China, India and Brazil where some of the largest-ever mass deployments of public Wi-Fi are being undertaken by incumbent and new entrants to the market: The world s largest mobile operator, China Mobile, is planning to deploy a total of one million Wi-Fi Hotspots throughout China. This spread of public Wi-Fi networks will be a truly global phenomenon and operators in all regions and all types of markets have declared their Asia Pacific 2011 Fig. 3: Business drivers for Wi-Fi investments Wi-Fi access revenues Customer acquisition tool Source: Informa Telecoms & Media Churn reduction tool Value-added services platform Data offloading Europe 2012 Enhanced user experience intention to move into Wi-Fi. Recent announcements of new rollouts span markets as diverse as Romania, Namibia and Qatar. The expansion of public Hotspots is not only being led by the land grab for key venues, such as hotels, stadia and airports, being witnessed in new markets, but also by the increasing density of Wi-Fi networks in established markets. Wi-Fi is increasingly moving beyond the traditional prime locations to the next generation of Hotspot locations, such as retail outlets, local- and wide-area outdoor Hotzones, as merchants and Wi-Fi network operators alike begin to understand the variety of profitable business models that can be underpinned by deployment of Wi-Fi. Africa/Middle East 2013 Improve indoor coverage What s happening in the public Wi-Fi market is being matched equally by continued penetration of Wi-Fi into 2014 private households and businesses. 5

6 Fig. 5: Global number of private Hotspots, Private Hotspots (mil.) Source: Informa Telecoms & Media Hundreds of millions of Wi-Fi enabled households and offices are expected to emerge in the coming years, according to Informa Telecoms & Media s forecasts (see fig. 5). Although the Wi-Fi experience has improved with the deployment of n and the implementation of authentication based on 802.1x, there is unquestionably still much to be done to grow the adoption and usage further and to build a firstclass user experience. Challenges that must still be overcome include simplifying the authentication and sign-on process, establishing a truly global roaming footprint and addressing concerns around security and privacy. Just as fixed and cellular technologies are not standing still, the common standards that underpin Wi-Fi technology are evolving in parallel, with sometimes interweaving paths. Vendor, operators and Wi-Fi industry bodies, such as the Wireless Broadband Alliance and the Wi-Fi Alliance, are responding to changing demands from end users to develop new standards and frameworks to further enhance the Wi-Fi user experience in terms of authentication, speed, capacity, security and user experience. Both operators and users have come to rely on Wi-Fi, so it has been compelled to grow smarter. Carrier-grade Wi-Fi with telecomsgrade reliability has become almost a must. The focus today is on simplifying the Wi-Fi user experience and aligning it as closely as possible with the mobile experience in terms of connection management, authentication and sign-on, charging and billing, and importantly security and privacy. Although authentication methods have improved in the latest Wi-Fienabled devices, evidence suggests of the network performance on offer, that additional simplification and as well as perceptions of usability, automation is needed to drive security and privacy, and will also adoption of public Wi-Fi usage be focused on obtaining access in outside the home. O2 UK has key venues with high traffic demand, reported that only 20% of the such as airports, hotels and urban potential base of users currently Hotzones. The need to meet these access free public Hotspots provided user expectations will be a strong by its partners. This is despite driver towards additional investment the fact that O2 has a customer into Wi-Fi networks and a move base that is tech-savvy and has towards Next Generation Hotspot been bundling Wi-Fi for free in deployments based on common smartphone tariffs since June standards. The good news is that The UK has dense public Wi-Fi the industry has come together and Wi-Fi awareness is very high to develop these standards. The precisely the conditions one would Wi-Fi Alliance developed the expect to drive leading levels of Hotspot 2.0 specification that is public Wi-Fi usage. being used to certify products, and the Wireless Broadband Alliance As a result, support for SIMbased authentication is expected products to run its Next Generation is using Hotspot 2.0 certified to proliferate with the strong Hotspot trials to demonstrate support of the operator community. interoperability between operators, Standards such as EAP-SIM and roaming partners, and CPE and EAP-AKA are set to be included in a device vendors. The results of the greater variety of smartphones and trials will be published to the Wi-Fi tablets and as more OEMs include Alliance and the GSMA to continue to Wi-Fi in their devices. inform and improve standards and specifications. In spite of the spread of sponsored Hotspots that offer access for The combined effort of the Wi-Fi free on a national basis to the end ecosystem to build the next user, users will continue to show generation of Hotspots and a variety willingness to pay for Wi-Fi where of new business models that exploit no alternative form of connectivity the enhanced capabilities of Wi-Fi exists or where Wi-Fi is perceived networks and devices will ensure as the best available form of that Wi-Fi continues to dominate connectivity. The willingness to pay as the most important wireless and the amount paid is likely will be technology in terms of data traffic proportional to the perceived quality transmitted. 6

7 Q&A: An interview with Chris Bruce, Chair, Wireless Broadband Alliance & CEO, BT Openzone Chris Bruce, Chair Wireless Broadband Alliance Q: What is the role of the Wireless Broadband Alliance (WBA) in the telecom industry in general and in the Wi-Fi industry in particular? CB: The WBA is focused on driving the next generation of Wi-Fi services for the benefit of consumers. We re removing the barriers to deployment and take up which means ensuring ease of access, robust security and interoperability. In short, we re the organization that establishes the specifications and roaming mechanisms that help consumers enjoy a seamless and interoperable Wi-Fi experience anytime, anywhere. Q: How do you think users connectivity needs are evolving and what role do you think Wi-Fi has to play in changing everyday user behavior? CB: With smartphone use set to increase by 150% by 2015 and mobile data usage continuing to grow exponentially, Wi-Fi clearly has a big role to play helping operators manage demand. In terms of usage patterns, we are seeing a greater emphasis on quick-to-consume snackable content on the go and this clearly plays to the strengths of next generation Wi-Fi offerings. But the point here is that the general public doesn t care about acronyms like 3G, 4G or Wi-Fi, as long as they receive the right communications experience. The future of media and telecoms involves hiding complexity from the user and seamlessly employing the wide spectrum of technologies at our disposal to provide the best possible experience in a world where data demand is insatiable. So it s not a question of Wi-Fi or any other access technology changing user behavior. It s about our industry as a whole delivering a compelling and seamless user experience, regardless of the location or delivery mechanism. The WBA has a key role to play making this happen. Q: How do you think these changes have shaped the industry s perception of the importance of Wi-Fi? CB: I think there s a growing awareness that Wi-Fi is fundamental to fixed, wireless and mobile networks, and this is reflected in the growing membership of the WBA. In particular, we ve seen a big change in mobile operators that now see Wi-Fi as a complementary access network able to intelligently offload much of the rapidly growing volumes of data traffic. For fixedline operators, Wi-Fi offers a means to bundle wireless access for customers when away from base. Q: What do you think have been the WBA s most notable achievements during the past year? CB: At the top of our agenda is our Next Generation Hotspot (NGH) initiative launched in June This is a program born of our conviction that public Wi-Fi can only meet its true potential if users can seamlessly and securely access hotspots, thereby avoiding today s challenges around finding available networks and then successfully logging into them. These challenges are set to be addressed by the Next Generation Hotspots being trialed around the world that securely and automatically log users into available Wi-Fi networks, drastically simplifying the user experience. I see the completion of the NGH trial as a key milestone in the WBA s goal to drive wireless broadband adoption globally by developing a common commercial and technical framework for interoperability across networks, technologies and devices. I m delighted that other industry bodies like the Wi-Fi Alliance and the GSMA have recognized the value of this initiative and are now working with us to help ensure its success. 7

8 Q: Cellular standards are evolving to LTE and LTE-Advanced, but at the same time Wi-Fi standards and technology are not standing still either. How do you see Wi-Fi technology developing and evolving in the future? CB: Once again I think it s more important to focus on service delivery than the technologies that sit behind it. Our aim should be to make it as easy as possible to connect to public networks, such as those in airports, cafes and other high footfall locations, as to a person s home Wi-Fi network. This is why the WBA is driving services that will be more seamless, secure and with better coverage through next-generation hotspots. For the foreseeable future, Wi-Fi will co-exist with LTE as operators need to maximize the use of all available spectrum to meet the public s ever increasing capacity demands. Q: How is the WBA changing to address the consumer and industry developments you ve described? CB: We ve become more active, more collaborative and more focused on communicating the strategic imperatives associated with driving next generation of wireless services worldwide. We re continually working with a wide variety of organizations including the GSMA and the Wi-Fi Alliance amongst others. We ve grown our membership to almost 70 leading companies which include major fixed operators such as BT, Comcast and Time Warner Cable; seven of the top 10 mobile operator groups (by revenue) AT&T Group, China Mobile, Deutsche Telecom Group (T-Mobile), France Telecom Group (Orange), NTT DOCOMO Group, Telefonica Group and Verizon Wireless - as well as leading technology companies such as Cisco, Google and Intel. I think what is exciting is the diversity of businesses that recognize the value and opportunities associated with working with the WBA. For example, the latest intake of new members include a mix of leading Wi-Fi, mobile and broadband network operators; service providers; and media players from across the Americas, Europe & Asia Pacific, as well as technology providers and partners. 8

9 WBA milestones and achievements 2003 Established WBA, started Wi-Fi roaming trials 2004 First commercial Wi-Fi roaming announced among members Wireless Roaming Intermediary exchange (WRIX) development started WRIX commercially deployed; WRIX wins WBI 2007 Awards! Launch of User Experience Program for UAM Seamless authentication work with FMCA & WiMAX Forum 802.1x /EAP-SIM trial between FMCA and WBA members Findings of the 802.1x Trial published WISPr 2.0 development initiated 2010 EAP over WISPr 2.0 Trial launched User Experience for Smartphone work launched 2011 Next Generation Hotspot Program (NGH) announced Launched NGH Trial & NGH Operators Guidelines projects A unique industry forum strategically focused on public Wi-Fi, the WBA has delivered several critical enablers since 2003 to facilitate seamless Wi-Fi user experience and interoperability for the operators worldwide. WBA launched its award winning WRIX Wireless Roaming Intermediary exchange, a compressive set of Wi-Fi roaming best practices & specifications, in 2007 which has since been widely deployed by an ecosystem of leading operators, roaming hub/ interconnect providers and aggregators globally. Having successfully built the foundation to support global Wi-Fi roaming, the WBA launched its Next Generation Hotspot (NGH) Program in The vision of NGH is to facilitate a cellularlike seamless, secure and easy to use Wi-Fi experience and interoperability across operators. NGH will offer an improved user experience through Automated selection of approved Hotspots Reuse of mobile login credentials Protection against loss of critical user data Protection against fraud. Growing industry interest in Wi-Fi 24 new members join the WBA in 2011 With the growing interest in Wi-Fi roaming and data offload, the WBA has seen a significant surge in membership with 24 new members joining the alliance since the beginning of 2011 and bring it to total of 68 members globally. The mix of new members includes leading Wi-Fi, mobile and broadband network operators and service providers from across Americas, Europe & Asia Pacific as well as technology providers and partners. WBA s Next Generation Hotspot (NGH) program gains momentum An ecosystem-wide NGH Trial was launched in June 2011 for the end-to end inter-operator testing and validation of key standards 802.1x, u and EAP-SIM/AKA & EAP-TLS/TTLS authentication. The NGH Trial participants include a group of major global operators, equipment vendors and roaming Hub providers who will exercise key NGH requirements for secure and seamless auto-authentication and connectivity on home and roaming partners networks. The phase-1 NGH Trial results, expected in 1Q12, will include detailed instructions for a NGH-based roaming lifecycle and feedback on Hotspot 2.0 specifications to the Wi-Fi Alliance. The NGH program will also develop comprehensive operators guideline to help operators migrate from legacy to Next Generation Hotspots. 9

10 The phase-1 of the NGH Operators Guideline is expected to be published in 4Q11. Completion of the NGH Trial will be a key milestone in the WBA s goal to drive wireless broadband adoption globally by developing a common commercial and technical framework for interoperability across networks, technologies nd devices. WBA goals and objective for 2012 Building on its foundation of strong operator-heritage and a set of critical Wi-Fi roaming enablers created by it, the WBA now aims to focus on the following: Enable an industry ecosystem to promote the potential of Wi-Fi as a complimentary technology/ service to meet customers & public operators wireless broadband needs Tackle the barriers and further the adoption of Wi-Fi service through (a) ease of use, (b) interoperability and (c) security. Continue to drive the development and deployment of NGH across the ecosystem and focus on ensuring interoperability though a compliancy programs for operators globally. Leverage WBA s existing cooperation programs with GSMA and Wi-Fi Alliance and address gaps to facilitate standards based Wi-Fi roaming, 3G/4G interworking and data offload. WBA and Wi-Fi alliance to collaborate on Hotspot innovations During the WBA Roundtable in Paris in June 2011, the Wi-Fi Alliance and WBA announced a collaboration to harmonize their programs related to Wi-Fi Hotspot ease of use and roaming. The WBA's NGH Program & Wi-Fi roaming efforts and Wi-Fi Alliance's planned certification program for Wi-Fi equipment are being worked on with close coordination between the two groups to help ensure the best user experience. WBA and GSMA cooperating on Wi-Fi roaming GSMA and WBA have started a joint Wi-Fi Roaming Taskforce with the intention of bringing together the Wi-Fi and 3G/4G ecosystem in a collaborative effort. Both, the GSMA and WBA members have a strong shared interest to improve the Wi-Fi experience for their respective customers and enable data offload and roaming. A White Paper being developed by 4Q11 by the joint taskforce, the goals of which include identifying gaps in available standards and make recommendations to address these gaps and define and deliver a common technical implementation of 3GPP to Wi-Fi interworking for both devices and network. 10

11 Operator best-practice case studies Operator case study: Boingo Key points Boingo owns, manages and operates a global Wi-Fi-Hotspot footprint, the majority of which is deployed in major airports in North America, Europe and Asia, with the rest in stadiums, malls and restaurants. Boingo has successfully pursued a hybrid business model that sees it sell wholesale and retail access to its Wi-Fi network in a number of ways. The operator is evolving its business model by teaming up with consumer-product brands so they can deliver branded messages on the Boingo Hotspot landing page. Boingo sees a standards-based approach to Wi-Fi-network identification, authentication and quality of service as essential to accelerating use of the technology among consumers. Overview US-based Boingo is one of the main Wi-Fi operators in the US, offering high-density, carrier-grade Wi-Fi in public venues, with a historical emphasis on large sites, such as airports and stadiums. The operator began selling Wi-Fi access in 2001, focusing initially on the businesstravel ecosystem, emphasizing airports and hotels. Boingo offers both retail and wholesale Wi-Fi and has about 25,000 Wi-Fi Hotspots in the US, paid and unpaid, and more than 125 roaming partners in 100 countries, offering access to about 400,000 Hotspot locations globally via a single account. The company has grown through acquisitions: In 2006 it acquired Concourse Communications, which managed and operated Wi-Fi services at 12 airports; in 2007 it acquired Sprint Spectrum s Wi-Fi network of seven managed and operated airports and one nonexclusive airport; and in 2008 it acquired Opti-Fi Networks Wi-Fi network of 25 managed and operated airports and Washington State Ferries. The operator funded its Wi-Fi business with three rounds of venture funding before it became profitable. It has continued to expand its market presence and generated enough capital for growth and potential M&A with a May 2011 IPO. Business model Boingo owns, manages and operates a global Wi-Fi-Hotspot footprint, the majority of which comprises major airports in North America, Europe and Asia, with the rest in stadiums, malls and restaurants. Boingo has roaming partners in the US and abroad. Boingo sells both retail and wholesale Wi-Fi access, and it sells retail access on subscription, daily and per-use bases. Subscriptions are largely tied to a geographic area (e.g., North and South America, Europe or Asia) and offer unlimited amounts of Wi-Fi access to the Boingo global network in that region for a number of registered devices; the unlimited plans cost US$ a month. Day-access rates start at US$6.95 in the US, while per-hour rates start at US$1.99 in the US and 2.99 (US$4.70) abroad. Boingo also offers a global plan that includes 2,000 minutes anywhere in the world for US$59 a month. In September Boingo launched an international version of its Boingo Wi-Fi Credits app on the itunes App Store. The base price for a global one-hour Wi-Fi credit for ipad, iphone and ipod Touch users outside the US is 2.99 (US$4.07) (see fig.). The app also enables users to see nearby Wi-Fi Hotspots. Boingo Source: Boingo For its wholesale business, Boingo sells access to its Wi-Fi network to operators, including Verizon and South Korea s KT and LGU+. The operator generates revenue from these agreements using a variety of business models, including peruser, per-minute and per-megabyte revenue-share agreements. Operators are signing Wi-Fi agreements with Boingo to offload traffic from congested cellular networks, to offer cost-effective data-roaming services outside home networks, and to offer Wi-Fi 11

12 where coverage is strong, such as in airports and stadiums. Boingo gives away Wi-Fimanagement and -location software to retail customers and, as part of its wholesale business, offers it as a white-label service to operators with which it has Wi-Fi agreements, either in SDK or full app versions. Results Boingo had about 200,000 retail subscribers at end-2010, up from 140,000 at end Retail monthly churn decreased slightly in 2010, to 9.5%, from 9.7% in Total revenue grew from US$65.7 million in 2009 to US$80.4 million in The wholesale business contributed 45% to Boingo s 2010 revenues, and its retail business contributed 50%, split 30% retail subscription and 20% single-use (day pass/hourly). Boingo has seen the mix of Wi-Fi traffic in its managed airports change dramatically since smartphone use took off, with smartphones overtaking laptops as the most widely carried Wi-Fi devices in airports, even as the number of laptops continued to increase. Between June 2007 and June 2011, Boingo saw 500% growth in the number of devices seeking Wi-Fi in its managed network of airports. The growth was largely driven by non-laptop devices, such as smartphones and tablets. IOS devices (iphone, ipad and ipod Touch) now represent 83% of all non-laptop devices seeking Wi-Fi in the managed network. The growth in device numbers has also been accompanied by a growth in data consumption. The average mobile devices used 114MB of data in May 2009 and 211MB in May Average megabytes per minute was 0.37MB in May 2009 and 0.89MB in June 2011, pointing to the increased consumption of higher-bandwidth content, such as streaming video and streaming audio. Future growth in this area is expected, and it will require continued investment in network upgrades to support the data demand. Outlook Boingo is teaming up with restaurant and shopping-mall chains and other retail-brand facilities to expand the number of venues in which it offers Wi-Fi access. Boingo is also teaming up with consumer-product brands so they can deliver branded messages on the Hotspot landing page. The advertising message could be linked to the users location through advanced location-based services, which advertisers could use to offer store discounts based on user proximity. Boingo sees a standards-based approach to Wi-Fi-network identification, authentication and quality of service as essential to accelerating use of the technology among consumers. Making the 3G/4G-to-Wi-Fi handover seamless to the end-user will provide a viable data-offload solution for carriers while standardizing deployment for Wi-Fi operators and manufacturers. It will also make integration into mobile operators cellular networks easier and more cost-effective. Operator case study: China Mobile Key points Wi-Fi constitutes an important part of China Mobile s networktraffic-management strategy, because of strains on network capacity. China Mobile uses Wi-Fi to augment its fixed broadband network and mitigate the impact of its competitors bundling offers and also to support its 3G network and compete better in mobile broadband. Two prohibiting factors are the limited number of Hotspots and occasional network-connection problems. Take-up is also limited by the relative complexity of accessing Wi-Fi using handsets. The operator, which has about 60,000 Wi-Fi Hotspots now, has an aggressive plan to deploy 1 million in the next three years across China. Overview China Mobile began deploying Wi-Fi in 2003, and its strategy underwent a significant change in 2009 when the operator saw smartphone penetration increase dramatically, along with the use of always-on applications. Wi-Fi constitutes an important part of the operator s network-traffic-management strategy: China Mobile, which has about 60,000 Hotspots now, has an aggressive plan to deploy 1 million Hotspots in the next three years across China. The majority of China Mobile s Hotspots are operator-owned. Most are in metropolitan areas: hotels; restaurants and cafes; transportation hubs; and campuses. The operator has some revenue-sharing deals, for example with some Universities and cafe chains. 12

13 Wi-Fi plays a central role in complementing China Mobile s GPRS/EDGE network and nascent TD-SCDMA network in dataintensive areas and will help the operator do several things: Offload data from its mobile network and deliver higher data throughputs to subscribers, thereby enhancing the user experience, which the operator hopes will lead to reduced churn. Augment its fixed broadband network and mitigate the impact of its competitors bundling offers. Strengthen its 3G network and be more competitive in mobile broadband. Maintain its superior network advantage, appeal to users and buy time for a full rollout of TD-LTE. Market positioning China Mobile is offering both a prepaid plan (at CNY0.05 [US$0.008] a minute) and a monthly subscription for Wi-Fi access from both handsets and PCs (see fig. 1) but provided free Wi-Fi trials in most cities from 2010 to mid The operator also bundles Wi-Fi minutes into some 3G plans. The operator has begun marketing the Wi-Fi service on a large scale because of the limited number of Hotspots deployed. It hopes to encourage TD-SCDMA dongle users to use the Wi-Fi network first and then prioritize marketing of highbandwidth services, such as mobile video, mainly to Wi-Fi users rather than 2.5G-data-plan users. University campuses are the only places where China Mobile has really promoted its Wi-Fi service. The operator already has the strongest brand equity among university students with its youth sub-brand, M-Zone. Universities are one of the first areas where China Mobile has been actively expanding Wi-Fi coverage. The operator has also been working on a major initiative to enable automatic authentication on the Wi-Fi network. The operator offers special campus Wi-Fi pricing plans that are cheaper and provide more-generous minute bundles for Wi-Fi access in a cluster of local universities (see fig. 2). Fig. 2: China Mobile's campus Wi-Fi rates in Guangzhou Monthly fee CNY20 CNY30 CNY40 CNY50 Source: China Mobile Duration 200 hours 300 hours 350 hours 400 hours Results China Mobile s internal report states that there were only 1.9 million users of its Wi-Fi service in 2010, indicating the operator has a significant opportunity to dramatically increase the number of its subscribers who access the service. One prohibiting factor is the limited number of Hotspots and occasional network-connection problems. Take-up is also limited by the relative complexity of accessing Wi-Fi-enabled handsets. The operator sees laptops generating most Wi-Fi usage at the moment. Seamless handover and authentication of Wi-Fi and mobile networks is vital if Wi-Fi is to become mass-market, especially for the country s low-end users, who make up the majority of people using mobile handsets to access the Internet. Outlook China Mobile wants a Wi-Fi authentication client to be loaded onto the smartphones it sells in the future and is talking to device manufacturers about enabling this. Because the Chinese government mandates that all Wi-Fi equipment conform to the local Chinese version of Wi-Fi, WAPI (Wireless LAN Authentication and Privacy Infrastructure), the operator might face a challenge in offering Wi-Fi roaming to customers. Fig. 1: China Mobile's standard Wi-Fi rates Revenue (CNY mil.) % H09 Source: Informa Telecoms & Media H10 China Mobile s network-capacity strains mean that Wi-Fi has become urgent in its network-planning strategy. Wi-Fi will not only ease the operator s 2G-network congestion problems but also help the operator maintain its technology leadership and offer a better customer experience in a cost-effective manner, even though it does not have a strong 3G network to compete with China s other two operators. 13

14 The wide availability of Hotspots and quality of service are two key factors that will determine whether China Mobile s Wi-Fi service is a success. China Mobile should also accelerate the upgrades of its network and handsets to enable seamless authentication and handover of the Wi-Fi and cellular networks. The removal of complex login and password details for users to connect to the network is critical if the service is to be taken to the mass market. Operator case study: Orange France Key points Orange France pursues a B2B and B2B2C Wi-Fi strategy, the foundation of which is its 2,100 premium (wholly run by the operator) Hotspot locations. Orange sees Wi-Fi very much as a complement to its 3G network, not as a way to substitute to rolling out 3G, nor in the future, its LTE network. Because Orange s mobile broadband tariffs come with data, the operator doesn t see that there is a reason for users, given the quality of its 3G network, to switch by themselves from 3G to Wi-Fi. Orange sees most of the Wi-Fi usage among its own subscribers coming from laptops: most smartphone data usage is on the 3G network. Overview French incumbent Orange is the leading fixed and mobile operator in France. It launched its Wi-Fi strategy in 2003 using a pay-as-youuse time-based model. The second phase of Orange s Wi-Fi strategy began in 2008, when it switched business models, including Wi-Fi, for certain subscribers. At this time, Orange also began a B2B2C Wi-Fi model, forming partnerships with venue owners so they could propose Orange-operated Wi-Fi networks with a paid or free model. The foundation of Orange s Wi-Fi network is its 2,100 premium (wholly run by the operator) Hotspot locations. Added to this network are around 40,000 Hotspots run by Orange s business broadband customers that are able to activate a Hotspot in a box on their customer premises hotels, transport hubs, stadia, cafes, etc. The operator has no plans yet to team with third-party Wi-Fi providers to augment its own French Wi-Fi network. Orange has struck deals with Wi-Fi providers like operators and aggregators to enable their users to access the Orange network. Market positioning Both the coverage/capacity of its 3G network and B2B venue-owner customers has determined Orange s Wi-Fi strategic goals: Because it has a widespread 3G network and has no capacity problems, it has not been aggressive in using Wi-Fi as a way to offload capacity from its 3G network. Orange sees Wi-Fi very much as a complement to its 3G network, not as a way to substitute to rolling out 3G, nor in the future, its LTE network. Furthermore, because Orange s mobile broadband tariffs come with data included, the operator doesn t see that there is a reason for users, given the quality of its 3G network, to switch by themselves from 3G to Wi-Fi. Nonetheless, the operator continues to examine the benefits of 3G-to-Wi-Fi ubiquitous access in order to provide its subscribers with the best available experience. It will also continue to support its B2B partners to provide connectivity on venue sites and improve its global data footprint. Similarly, and again because of the quality of the coverage and capacity of its 3G network, the operator doesn t perceive there to be any benefit in rolling out citywide Wi-Fi mesh networks. Orange already bundles Wi-Fi access in all its mobile data broadband tariffs and highlights its Wi-Fi network as a key benefit of choosing it rather than its rivals. The operator also offers hourly and daily passes for access to its Wi-Fi network (see fig.). Results Orange doesn t derive any direct Wi-Fi revenue from the majority of its mobile subscribers because Wi-Fi access is bundled into its broadband tariffs. The operator shares investments with venue partners to provide operator-class Wi-Fi services at destinations for its subscribers and ad hoc users. Orange also provides Wi-Fi services for in-bound roamers, opening its network to its roaming partners and allowing them to include Wi-Fi in their retail offer. Orange sees most of the Wi-Fi usage among its own subscribers coming from laptops: most smartphone data usage is on the 3G network. However, among in-bound roamers, the Wi-Fi usage coming from smartphones is growing. 14

15 Outlook Operator case study: Orange France In France, the different fixedbroadband service providers proposed a community-based Wi-Fi network based on home hubs by enabling users to share their Wi-Fi signal with other users. Millions of users sharing their broadband access would considerably increase the operator s Wi-Fi footprints. Price Duration 30 mins 1 hour 10 hour 24 hours Terms Usable from 07:00 to 18:00 on the day of purchase from first connection Connection available for 30 days after first connection Connection available for 30 days after first connection Connection available for 24 hours after first connection days 30 days of connection available for 30 days after first connection Source: Orange Orange is backing the WBA Next Generation Hotspot (NGH) initiative to standardize SIM-based Wi-Fi authentication. It sees this as crucial to provide device manufacturers with a single approach to Wi-Fi management, which will make it simpler for users to access the network. Operator case study: True Key points True is Thailand s leading Wi-Fi provider and has a robust strategy to consolidate its lead in the market. Seamless handover and Wi-Fi authentication have been key factors to enabling True to make a success of Wi-Fi, judged by the number of people who use the service. True has seen clear revenue benefits from its aggressive Wi-Fi strategy as well as cost savings derived from shifting network traffic from cellular to Wi-Fi. The operator has aggressive rollout targets and can be expected to continue to see success in signing up Wi-Fi users as smartphone and tablet penetration and use both accelerate in the market. Overview True is Thailand s only fully-integrated communications company and the leader in convergence.thailand s True is a fixed, cable and mobile operator and also produces its own content that it offers to its subscribers on an exclusive basis. True is thirdplaced challenger to AIS and DTAC on the mobile side; Thailand s largest broadband provider; and also second in the country in terms of fixed-line market share. True sees Wi-Fi as a key differentiator. It has aggressively rolled out its Wi-Fi network to reach 40,000 Hotspots nationwide, focused on the Bangkok Metropolitan Area, having begun work on it in The operator is the largest Wi-Fi provider in the country and believes that operating its own network gives it a clear advantage over rivals that either don t offer Wi-Fi access or that have teamed up with third parties for Wi-Fi access. In line with its convergence strategy, True positions Wi-Fi as another way to deliver its exclusive content, including TV programs, games and news,, as well as a way to access the Internet, seeing increasing smartphone penetration and social networking as key drivers of usage. True began to see a clear need for Wi-Fi access with the launch of the iphone in The operator sees Wi-Fi as a key factor in the success it has had with the iphone it was the first operator to officially launch the device in Thailand and remains the largest iphone operatorprovider in the country and also for its success with smartphones in general. Today, around 60% of True s Wi-Fi traffic is generated by smartphones, while tablet-originated Wi-Fi use is growing rapidly. In terms of specific usage, Web browsing, accessing True s exclusive content and social networking are the most popular services that users access over Wi-Fi. Strategic goals True has four main strategic goals for its Wi-Fi network: 1. To differentiate from its rivals in terms of the quality, ease-ofuse and coverage of its Wi-Fi network. 2. To enhance its customers experience. 3. To increase revenues. 4. To offload traffic from its 3G network. 15

16 Market positioning True s mobile and broadband subscribers pay THB100 (US$3.30) per month to access the Wi-Fi network. The network is not open to those who are not True subscribers except with a prepaid package available on an online basis. However, the operator doesn t market this package very aggressively as it focuses overwhelmingly on positioning the network as a way to generate use from its subscribers and to attract fixed and mobile customers from rivals. True s Wi-Fi and 3G marketing message True markets its Wi-Fi network to complement its 3G network in order to communicate and differentiate its mobile broadband coverage, rather than emphasizing one or other in isolation (see fig.). In July, True began to roll out an n network aimed at high-end subscribers. This network offers 100Mbps download speeds for a subscription of THB300 per month to True s existing broadband and mobile customers. The operator aims to roll this network out to 700 locations by the end of For True, seamless MAC-addressbased authentication will enhance its users Wi-Fi experience; it is a principal differentiator for the operator over rival Wi-Fi providers for the moment. Seamless handover between 3G and Wi-Fi networks is also an important differentiator; True sees it as the key to offering the best experience of accessing the Internet while on the go. True has been actively participating in the development of seamless authentication technology in various forums and organizations. Results True has around 800,000 Wi-Fi subscribers split roughly 50/50 between its fixed-broadband and Source: True ( mobile user bases. Based on these figures, True s monthly Wi-Fi revenues are around THB60 million (US$2 million). True s financial benefits from Wi-Fi also include the opex benefits derived from the technology as it enables the operator to offload a significant amount of traffic from the cellular network. Outlook True plans to expand its Wi-Fi network in tandem with its DOCSIS 3.0 broadband network, which it is in the process of rolling out nationwide. True will use the DOCSIS network to carry its Wi-Fi traffic in areas where both are rolled out. The operator has very aggressive Wi-Fi targets it plans to increase the number of its Hotspots from 40,000 to 100,000 by the end of the year. True sees Wi-Fi authentication as a crucial factor that determines users experience of the network, and plans to upgrade to Next Generation Hotspot based technology once it is available and mature. The operator has found striking international roaming agreements to be a challenge because there is no standards framework for connection and clearing in place. The operator has around five operators each a WBA member in the pipeline to offer Wi-Fi roaming in partnership with other operators on a bilateral basis. True says that it has found the WBA s roaming framework beneficial to finalizing agreements with other operators. In terms of national roaming, True has signed a national Wi-Fi roaming MOU with CAT to further trial and monetize its network. With the number of Thai consumers adopting convergence lifestyles on the rise, True expects that the increasing smartphone and tablet penetration, along with the increasing need to access the Internet while on the go and in public spaces, will continue to drive Wi-Fi use in Thailand and, as a result, increase the importance of its Wi-Fi network to end users. 16

17 An overview of WBA member companies The 68 member companies that make up the Wireless Broadband Alliance reflect the diversity and breadth of the entire Wi-Fi ecosystem, including a unique mix of operators, technology vendors, device manufacturers, roaming hub providers, content providers and other industry players. With over 40 operator members, including a broad range of integrated operators, mobile operators, broadband ISPs and pure-play Wi-Fi operators, the membership continues to reflect the strong operator heritage that has always characterised the WBA. WBA membership mix, operators vs non-operators Non-operators: 24 Operators: 44 Source: WBA The membership of the Wireless Broadband Alliance has continued to grow at a strong pace during 2011 and this year has seen the single largest intake of new member companies with a total of 24 new members joining by October Major new companies that have joined the WBA during 2011 include Softbank Mobile, Time Warner Cable, TeliaSonera Mobile Networks, BSkyB and SK Telecom. WBA member companies by company type No Source: WBA 14 Mobile operators 20 Integrated operators 13 Wi-Fi operators and aggregators 21 Vendors and other industry players The recent intake of members during 2011 has continued to expand the geographical diversity of the WBA membership with joiners representing new countries including Canada, Israel, Malaysia, Philippines and Nordic countries. The United States remains the most heavily represented country in terms of member companies with 19 out of 68 members headquartered in the US, including 10 based Silicon Valley-based members. 17

18 Member companies Wi-Fi operators/aggregators Mobile operators Vendors & other industry players Integrated & fixed broadband operators 18