MAKING WIFI WORK
Free WiFi has been a selling point for years. But are there ways telcos can still make money from a free service?
There’s certainly a lot of potential for growth with WiFi. ABI Research predicts that by 2020, there will be about 41 billion active wireless connected devices. Qualcomm estimates that by the same year, the average number of WiFi connected devices per four-person household worldwide will stand at about 50. Further, Juniper Research estimates that about 60% of worldwide mobile data traffic will come from WiFi.
And then there’s this: according to a 2017 piece in TelecomLead by Spain-based telco Fon’s CEO Alex Puregger, we’re on track for more mobile phones to be in use by 2020 (about 5.5 billion) than bank accounts (5.4 billion), running water supplies (5.3 billion), or even fixed telephone lines (2.9 billion).
And also: according to Statista, there may be about 31 billion Internet of Things (IoT) devices with a market value of about US$8.9 trillion by 2020. That’s less than a year away.
Those statistics might suggest smooth sailing for telcos looking to make money off WiFi services. However, things are not quite that simple.
“Free WiFi” has been a selling point for a number of years now, be it at hotels, cafes, or as part of home and mobile packages bought by consumers. But the problem with offering a service for free, of course, is that it then becomes hard for companies to make money off of it, as customers become used to it and resist paying for a service they previously were getting for free (case in point: intense resistance to airlines increasing bag fees, leading to the airlines plummeting in customer satisfaction and loyalty surveys).
Or at least that’s what some believe. But Daniel Welch, senior consultant at Valour Consultancy and author of the report “The Future of In-Flight Connectivity,” says free WiFi can actually be a way to get consumers to spend more money on other services, such as data or apps.
He compares the model to that of some lowcost airlines, where while the base price of a seat might be inexpensive, other services such as baggage stowage, food and drinks on board, and even printing boarding passes can all add up to make it a workable business model.
For telcos, he says ideas can include capping data (and then offering more data for extra cost), limiting download and upload speeds (again, offering faster speeds at a higher cost), and limiting other services such as calling minutes or texting; once again, offering consumers the option of upgrading if they pay more.
Forbes recommends three approaches for businesses looking to increase their bottom lines through mobile, including WiFi. First, there needs to be a focus on customers – what they want, what services best suit their needs. Second, IoT needs to be embraced as a source of revenue. As Rajesh Ghai, research director for carrier network infrastructure at IDC, says: “On the business side, IoT can become very valuable in terms of eliminating waste and inefficiencies.”
He adds: “Imagine a large manufacturing facility with connected machinery and robots. In order to connect those machines, you need a strong network that WiFi can’t accommodate. A company won’t mind paying a few cents more a month to keep everything humming.”
Thirdly, Forbes advises, is “going horizontal” as opposed to doubling down on vertical offerings; in other words, to diversify by investing in services such as data infrastructure. Says Herbert Blum, a partner at Bain & Company and head of its telco practise in the Americas: “Connectivity is very much a horizontal model, but there are other horizontal opportunities.”
Blum says another horizontal opportunity for telcos, aside from data infrastructure, would be in security and lifecycle management. “Carriers have to be incredibly good at managing complex assets,” he says.
“The number of connection points that you need to manage is tremendously complex. IoT is only going to magnify that complexity.”
Another idea is special, limited-time offers to “hook” consumers. A recent example would be du and Etisalat offering free WiFi for 10 days, a promotion geared around the United Arab Emirates’ National Day. The free WiFi offer was valid only for a certain period, and to receive it, one needed to already be a du or Etisalat customer.
There’s also offering free WiFi as an “add on” to another service and encouraging consumers to use one network. That’s part of the reason du has announced plans to offer free WiFi in every taxi in Dubai – more than 10,800 cabs – within the next year.
du CEO Osman Sultan says the WiFi in taxis plan will allow more access points for consumers – meaning more opportunities for them to use du’s services, some of which consumers will be willing to pay for.
Sultan’s views also align with what Fon’s Puregger believes. He says: “Operators must strive to assure that users are always connected to the best network without impacting their experience: In other words, in order to avoid poor connections, users should not have to make any changes to the network configuration on their devices manually.”
Fredrik Jejdling, executive vice president and head of business area networks at Ericsson, echoes Puregger too. He also says 5G will impact telcos’ WiFi strategies.
He says also: “As 5G now hits the market, its coverage build-out and uptake in subscriptions are projected to be faster than for previous generations.”
Jejdling says more. He adds as technology continues to change, so too must telcos’ WiFi strategies. “At the same time, cellular IoT continues to grow strongly,” he says.
“What we are seeing is the start of fundamental changes that will impact not just the consumer market, but many industries.”
Imagine a large manufacturing facility with connected machinery and robots. In order to connect those machines, you need a strong network that WiFi can’t accommodate. A company won’t mind paying a few cents more a month to keep everything humming.”