with Dave Hagan, Boingo Wireless president and CEO
Boingo Wireless was once considered an enemy to cellular operators because the company's growing network of Wi-Fi hotspots had the potential to compete with licensed cellular operators. Today, however, Boingo could potentially help wireless operators manage their mobile data traffic by becoming a Wi-Fi offload solution. Boingo recently inked its first Wi-Fi offloading deal with the Competitive Carriers Association to provide white-label Wi-Fi offloading service to CCA members. FierceBroadbandWireless Editor-in-Chief Sue Marek recently talked with Boingo President and CEO Dave Hagan about Boingo's offload strategy, the security of its network and how Wi-Fi offloading fits into the company's business model.
FierceBroadbandWireless: Boingo recently announced a Wi-Fi offloading deal with the Competitive Carriers Association. Is this the first Wi-Fi offloading deal for Boingo?
Dave Hagan: It is the first true carrier offload deal. The CCA came to us and were very interested in helping their members figure out a carrier offload solution. That was the premise of the deal. When I say "true" I mean that we have a relationship with Verizon that we have had for a number of years, but they haven't used it that way. They have used it as a product add-on for FIOS customers and for their 3G data card customers. They haven't done it in the handset at this point.
AT&T (NYSE:T) is doing Wi-Fi offloading with their own network because they bought Wayport and won the Starbucks business directly. They are doing it on their own network. What's exciting about this for us is that it is helping CCA members get their own true carrier offload solution.
FierceBroadbandWireless: The press release says you will help carrier customers connect via a single account. What does that mean?
Hagan: Boingo has networks both where we are network operator and where we build and manage the network. But we also partner with network operators around the world [through] carrier aggregation or a roaming network. This deal with the CCA means a CCA member can rollout a Boingo managed network or an aggregated network and use the CCA member's brand. Their customers can get onto all these Wi-Fi networks without having to do anything differently. It's one account with their carrier's brand.
FierceBroadbandWireless: How do you make money from this?
Hagan: The carriers will pay us wholesale traffic fees for putting traffic on our network.
FierceBroadbandWireless: We know Wi-Fi offloading has become an important part of managing traffic on the network. Do you envision other carriers signing similar deals with you?
Hagan: We do. We are in discussions with operators globally. It has become a hot topic. We have been talking about it at Boingo for a number of years. The good news is it is becoming real. The carriers are engaged with industry specifications like Hotspot 2.0 and Passpoint. It used to be that Boingo would participate in these standards bodies, and we'd talk about standards for Wi-Fi to cellular. But, until the carriers got involved, it was kind of outsiders looking in trying to get something done. Now the carriers are driving it, and it shows the commitment of the carriers to truly implementing a carrier offload solution.
FierceBroadbandWireless: We've heard that carriers often have concerns about network security when using Wi-Fi networks other than ones they own. The other issue is quality of service; they say they can't guarantee the service when customers are using other Wi-Fi networks. How do you address those concerns?
Hagan: Yes, those topics always come up. With QoS, we sign up for a level of service that we can deliver. We commit to it contractually. It's pretty easy to get past the QOS issue. We commit to it, and we have consequences if we don't.
On the security side, it really depends on the level of security and authentication that a carrier wants to use. We always use secure connections. And I think carriers are getting confidant that you can do the same things on Wi-Fi that you do on cellular--it's just as secure. It's just a different approach.
They definitely have those issues and in general they also have control issues. They are used to managing traffic on their own network and now they have to get comfortable and confident with a partner that they know can deliver to a standard that they expect. We pass that grade with the CCA carriers and I think we will pass that grade with other carriers in the future.
FierceBroadbandWireless: There was a time when Wi-Fi providers like Boingo was the enemy.
Hagan: But if you recall, we were always saying that we weren't the enemy. We always said Wi-Fi was complementary to cellular. They do go together. It has taken the cellular industry longer than we expected to come to that conclusion. It really was the iPhone and how it changed the mobile data consumption levels that it became necessary for operators to consider Wi-Fi differently.
FierceBroadbandWireless: How has your business model changed? Is Wi-Fi offloading now a big focus for your business?
Hagan: We have always had a robust wholesale business; it's about 50 percent of our business. When I say wholesale I mean private-label--which is what we have with Verizon (NYSE:VZ) and SK Telecom and others. But that is not Wi-Fi offloading. That's marketing our product under their brand to the customer.
We think carrier offload, because it's automatic, meaning the customer doesn't have to do anything, and its free to the customer, is going to happen in the background and will save them money will change our business dramatically in terms of volumes.
When we talk to Wall Street about our business and carrier offload, we think it is going to be a big expansion for our wholesale business in the next several years.