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?

Comms MEA - - Special Report - by Ben Mack

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.”

Ra­jesh Ghai

Newspapers in English

Newspapers from UAE

© PressReader. All rights reserved.