European operators embrace Wi-Fi offloading with a hint of caution
The worldwide success of cellular telephony engendered a culture within the community that all other wireless technologies were somehow inferior.
This blinkered approach has been understandable given the level of sophistication that cellular networks were able to bring to the market, as well as their ability to then evolve to support technology as complex and demanding as today's smartphones.
Wi-Fi was certainly positioned by the cellular industry as being largely irrelevant, best suited to providing primitive in-home networks.
Roll forward to today, and the picture is very different. Operators and equipment vendors are rushing to invest, develop and deploy Wi-Fi as its value as a data offload technology become widely acknowledged, together with its ability to enable new business models.
Wi-Fi offloading: necessary but not perfect
According to Thomas Wehmeier, an analyst at Informa Telecoms & Media, the offloading of data traffic from 3G networks has been at the very centre of operator thinking over the past six to 12 months, "and any self-respecting network director should be looking to include Wi-Fi as part of a more holistic network strategy."
"Operators have been questioning how they can efficiently and most profitably manage the flow of data traffic across their network," Wehmeier said. "Our discussion with operators has indicated that the current enthusiasm for Wi-Fi will not be dampened by the move towards LTE. Even when operators deploy LTE they will not neglect Wi-Fi investments, given the need for both weapons due to the explosive growth in data traffic."
France Telecom Orange is already actively investigating the need to use Wi-Fi to relieve the strain on its 3G networks, according to Bertrand Waels, the company's head of UMA, WiMAX, access points and CDMA skill centres.
"We would definitely provide Wi-Fi coverage to support the cellular network in areas were there is congestion," he said. "If we can identify the right location to install Wi-Fi hotspots then the technology is the best candidate for the job."
France Telecom is embracing Wi-Fi offloading.
However, Waels admits that it is critical to find the best possible location for the Wi-Fi access points, "otherwise the service will be useless, or provide a very poor customer experience."
Hans Beijner, Ericsson's head of product marketing management, also said that the QoS provided by Wi-Fi is very dependent on how it is deployed and what backhaul techniques are used. "It's possible to get close to ‘carrier-grade' performance with Wi-Fi for data services, but not good enough for voice," he said. "Also, the technology doesn't have the same admission controls that you have with cellular, which can result in complete congestion."
Regardless, Ericsson is confident that Wi-Fi does have a bright future, an opinion very much shared by O2 UK.
O2 UK pushes for Wi-Fi partnerships with retailers
Gavin Franks, the managing director of O2's Wi-Fi division, said the operator has adopted a disruptive offering based upon the premise that trying to sell a vanilla Wi-Fi access service is dead. "We've recognised that Wi-Fi has to be free to the end user, and it must add value to the venue where it's deployed," he said. "The venue owners must realise some of the benefits from this, given they've been neglected by only receiving a small percentage of the revenue."
The O2 business model is based upon offering smartphone users (which can be subscribers to rival networks) a personalised experience when they enter a venue equipped with O2 Wi-Fi. This would include a welcome page where the venue can place relevant content.
Franks said that its service can also provide the venue owners with store foot traffic data along with the percentage of visitors using iPhones, iPads or Android-based handsets, and which web sites the visitors access when at the venue.
"It's about using the Wi-Fi data to create value for the venue owner," claims Franks. "But the really exciting pieces are the campaigns we've been running based upon our O2 Media platform using location services and geofencing-leading to a personalised media campaign so that we and the venue owner can connect to the customer."
An indication of how O2 might develop its Wi-Fi offering comes with its mobile wallet integration plans. Franks said that the O2 Wi-Fi service will allow venue owners, retailers and major brands to run targeted consumer marketing campaigns using profiling techniques. "We would then transact all the payments via our m-wallet services on the handset," he said.
While O2 only has around 500 Wi-Fi access points today, Franks hinted that several very large deals with major venue owners were close to being signed that would see the number quickly rise to above 15,000.
However, while the company seems committed to deploying large numbers of Wi-Fi hotspots, Franks is adamant that data offload is not part of the business model.
"We're not installing access points as an alternative to our 3G network, and we don't want to follow the model of Wi-Fi being used for traffic offload," he said,
However, this approach cuts against what others within the industry believe is happening.
Kelly Davis-Felner, the marketing director of the Wi-Fi Alliance, is insistent that operators are only interested in using Wi-Fi for data offload, not market differentiation. "Operators have been very clear that they need to include Wi-Fi within their network strategy and, in particular, for data offload," she said.
This viewpoint is shared by Luis Serrano, senior vice president for Boingo Wireless, a provider of wholesale and retail Wi-Fi services, who believes that O2 UK has an offload issue and has just decided to approach it differently.
"They need to expand their footprint, and Wi-Fi does indoor coverage very well," he said. "I don't know if the O2 Wi-Fi economics will work, but I don't think it matters. It's all about retaining customers by providing good coverage and connectivity."
However, this new-found enthusiasm for Wi-Fi is little more than a toehold for the technology in the cellular market, and Orange's Waels is blunt about the improvements needed before the technology becomes a true member of the community.
"The first issue is that Wi-Fi must find a universal way to make access control much easier for the user," Waels said. "If Wi-Fi becomes a widespread success then we need the industry to devise a method to mitigate the interference issue, which could be a challenge given its use of unlicensed spectrum. And we also need to integrate the technology into the existing cellular infrastructure to ensure QoS."