TMCnews Featured Article
Public Wi-Fi Business Model is Changing
By Gary Kim, Contributing Editor
Use of Wi-Fi hotspots to offload mobile data will triple in the next five years, say researchers at ABI Research (News - Alert), and will represent 48 percent of all mobile data consumption by 2015.
What that suggests is that the Wi-Fi hotspot business model is about to change.
About 10 years ago, there were serious debates about whether public Wi-Fi hotspot networks could become a viable alternative to mobile broadband services. That might sound odd now, but it was a somewhat serious issue back then. In other words, the public Wi-Fi business model was seen as analogous to that of mobile broadband: user fees and subscriptions.
But it soon proved difficult to entice enough users to pay for such "out and about" connections.
What ultimately happened was that public Wi-Fi access became, in part, a niche service for traveling workers and in part a retention tool for major cable and telco broadband providers.
In its latter configuration, fixed broadband customers got "no extra charge" Wi-Fi hotspot access as an amenity for being a customer. The indirect business model was enhanced customer retention.
These days, another evolution is occurring. In addition to helping service providers retain their existing customers, public Wi-Fi now is becoming a way to defray mobile network investment, shift huge amounts of traffic to the landline network and create more-affordable ways to support bandwidth-intensive services such as video.
To some extent, Wi-Fi hotspot availability also creates a platform for service creation, in particular services mobile operators want to support, but not too much. Mobile VoIP is one example.
AT&T, for example, allows mobile VoIP on the iPhone (News - Alert), but only from hot spots.
Verizon Wireless, on the other hand, takes the opposite approach and only enables use of its embedded Skype application on the wireless network, not Wi-Fi.
According to ABI Research, about 16 percent of mobile data is diverted from mobile networks today, and that is expected to increase to 48 percent by 2015.
The impact might be greater than those figures indicate. Data traffic itself will have grown by a factor of 30, meaning that offloaded data will expand 100-fold, according to ABI Research.
The point is that the public Wi-Fi business model is changing, again. Where one might have argued that the business model was "fixed broadband customer retention and acquisition," the additional, and possibly more-important model, is as a major wireless access method and service platform.
Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.
Edited by Patrick Barnard

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