What do you call it when, in less than a month, significant announcements from mobile carriers, chip vendors, and device makers, regarding deployments, acquisitions and IPOs have a common theme? Well, when the mobile operators involved include AT&T, China Mobile and O2, it's pretty logical to call it a global trend.
And the subject of all this activity? Wi-Fi (or WiFi, if you prefer). In this article, I'll recap the latest Wi-Fi news of interest to mobile carriers, then look at the role that the technology is playing in mobile carrier networks, and the impact this is having on the development of Wi-Fi features and capabilities.
Wi-Fi in the news
In the period between Dec. 28, 2010, and Jan. 27, 2011, it was hard to read a mobile industry blog, newsletter or magazine without tripping over Wi-Fi. It started with AT&T announcing expansion of their Wi-Fi hotzones in New York City and San Francisco. From there we heard about Qualcomm planning to buy Wi-Fi chip maker Atheros and saw a whole host of new tablets and smartphones appearing at CES. China Mobile went public about planned LTE and Wi-Fi acquisitions, Cablevision revealed that its Wi-Fi network racked up 50 million sessions in 2010, and Verizon's Wi-Fi partner, Boingo, announced an IPO. Meanwhile, in the U.K., news of BT extending free Wi-Fi to its iPad users was quickly overshadowed by BSkyB's plan to buy Wi-Fi operator The Cloud, and then O2 launched O2 Wifi [sic], "free for all in venues across the country."
It certainly has been quite a month for Wi-Fi, but it's actually been quite a couple of years for Wi-Fi and its relationship with mobile carriers. So, beyond the obvious value of Wi-Fi as a solution for data offload, which we'll look at in more detail, what's going on here?
Wi-Fi in the mobile carrier's network and business
If content is king (how else would you explain lolcats raising $30 million), mobile devices are certainly next in line to the throne. So, where does that leave mobile carriers, the guys that get no credit when things go right and lots of heat when they don't? Right where they've always been, in the middle. Popular devices and must-have mobile content are driving a deluge of data so everyone wants more mobile capacity, but nobody wants to pay a lot more for it.
So, what we're seeing in this onslaught of pro Wi-Fi sentiment is a growing movement towards carriers incorporating Wi-Fi into their business and network planning to deal with all this data without incurring huge CapEx. But offload is only part of the story. Some analysts suggest it's even beside the point. Mobile carriers can also look at Wi-Fi as an alternate channel for their own content and services. In fact, Emma Mohr-McClune, research director, Consumer Services at Current Analysis, posited that O2 Wifi "has nothing to do with O2's cellular mobile business at all. If you look at it, it's a media play in its own right."
An interesting perspective when you consider the suggestion from industry analysts, Ross Rubin at NPD and Chetan Sharma, that Wi-Fi-only iPads constitute greater than 60 percent of iPad sales and that Wi-Fi-only usage may be 75 percent or more. If those numbers are indicative of a tablet trend, mobile carriers that don't have a compelling Wi-Fi offering risk literally losing touch with tablet users. Market research firm IDC reported that, from the second to the third quarter of 2010 alone, the tablet market grew 45 percent, driven by the iPad, so this is not a market that any carrier can risk ignoring.
Of course, mobile carriers and Wi-Fi haven't always enjoyed a close relationship. BelAir Networks was founded on the principle that, properly designed and architected, Wi-Fi could play a key role in carrier networks, but I'll admit that some of our early matchmaking efforts didn't get past the first date. But that was before 2007 – before Apple rewrote the book on how much data capacity a smartphone could consume and got us all hooked on mobile browsing, apps and video.
As iPhone usage drove congestion issues for first-mover mobile carriers, Wi-Fi started to look much more attractive. At this early stage of the relationship, mobile carriers were content to provide services to their customers through third-party relationships with Wi-Fi network operators. But, even back as far as AT&T's acquisition of Wayport in late 2008, there were clear signs that mobile carriers' interest in Wi-Fi was becoming a bit more proprietary. Increasingly, mobile carriers are choosing to own their own Wi-Fi networks, at least in the geographical areas where they want to maintain a direct relationship with their customers. By owning their Wi-Fi networks, mobile carriers are able to control both the quality of the network experience and their own brand and media relationships with their customers.
And there's certainly no reason to believe that mobile carriers' investments in Wi-Fi infrastructure will have a short shelf life. ABI Research forecasts that Wi-Fi chipsets will achieve 22 percent CAGR between 2010 and 2015, so there's apparently no end in sight to the popularity of this near ubiquitous consumer-friendly technology. Nor is data consumption likely to abate. U.S. figures from Neilson revealed that median smartphone user data consumption increased 340 percent from 40 MB per month in Q3 2009 to 137 MB per month in Q3 2010, and in that same period, smartphone ownership doubled. Smartphones are also being credited for an 18 percent global surge in cell phone sales in Q4, 2010 compared to Q4, 2009. As IDC analyst Kevin Restivo explained: "Mobile phone users are eager to swap out older devices for ones that handle data as well as voice, which is driving growth and replacement cycles." Not to mention driving data demand.
We know by now that LTE will deliver a 2 – 4X capacity increase based on current macrocell deployment methodologies. But, with ABI estimating that data capacity requirements are increasing 150 percent per year, that additional capacity won't last long, especially in high traffic areas. The use of Wi-Fi to augment licensed spectrum or provide an alternative mobile broadband channel is both a short-term tactic and a long-term strategy.
Mobile carrier-grade expectations
As mobile carriers increasingly buy or build their own Wi-Fi networks, they bring their carrier-grade expectations to bear on this traditional residential/enterprise technology. So, we've seen Wi-Fi evolve both from the efforts of standards bodies and from the work of vendors engaged in large-scale deployments. On the standards front, both the Wi-Fi Alliance (WFA), through the Hotspot 2.0 initiative, and the Wireless Broadband Alliance (WBA) have been working with carriers and vendors to develop standards for seamless roaming between cellular and Wi-Fi networks. And while 802.11n is the current performance benchmark, its successor, 802.11ac, promises to deliver speeds of more than a gigabit per second in 2012.
Wi-Fi is the poster child for a successful standard and it's really only in areas not covered by the standard that mobile carriers' unique requirements need to be more specifically addressed. In addition to their obvious need for more robust "carrier-grade" equipment, mobile carriers look for Wi-Fi to integrate with their back office systems, including policy management and AAA, often with both security and policy enforcement enabled right at the access point (AP). Business intelligence, including user experience insights and location-based personalization, are also key carrier requirements, not traditionally found in enterprise Wi-Fi. Of course, many of these mobile carrier Wi-Fi networks are much larger than traditional enterprise, so scalability becomes more critical, including the ability to manage tens of 1000s of APs in a single network. Finally, let's not forget that mobile carriers bring mobile expectations to their deployments. In addition to standards for seamless roaming between Wi-Fi and cellular networks, tunnelled architectures, enabling full mobility within a Wi-Fi hotzone made up of multiple APs, are becoming table stakes with carriers.
And for their investment in their Wi-Fi networks, what do mobile carriers gain? Beyond its value for offload and as a media channel, Wi-Fi brings another future-proof benefit to mobile carriers. A network of Wi-Fi APs provides the foundation upon which forward-thinking mobile carriers can base their large-scale small cell LTE network rollouts. Now there's a win-win relationship.
When you consider Wi-Fi's continued evolution and cost-effective adaptability for carrier networks, as well as the ongoing role that it can play in the mobile carrier's business, it's not surprising that it's been in the news so much lately. I guess I'd be more surprised if it wasn't.
Bernard Herscovich is the founding president and CEO of BelAir Networks.