The new data offloading industry

I'm thinking there is going to be a rather large industry segment that will be emerging as mobile operators become overwhelmed with data traffic on their 3G networks. I call it, in not so eloquent terms, the mobile data offloading market.

Data traffic, especially video traffic, is skyrocketing and will soon, if it already hasn't, grow much faster than revenues. Operators are looking for ways to offload that traffic onto WiFi, femtocells and even WiMAX. Maravedis analyst Adlane Fellah believes that because WiMAX has a head start in many countries, it will be used as a way to offload 3G traffic, even if those operators offloading the traffic plan to use Long Term Evolution technology (see story below).

Of course, we're already seeing a boom in WiFi traffic coming from smartphones sporting WiFi. The iPhone is causing a surge in WiFi traffic. AT&T said the number of WiFi users and connections has dramatically increased on its 20,000-some domestic hotspots, totaling 10.5 million in the first quarter 2009. That number is more than triple the 3.4 million connections the carrier recorded in the first quarter of 2008, and more than half of AT&T's 20 million total WiFi connections for all of 2008.

WiFi vendor Ruckus Wireless has been selling WiFi to operators and making the case that WiFi, particularly its brand of WiFi, should be used as a 3G offloader. China Telecom and PCCW in Hong Kong have been bundling mobile broadband with WiFi hotspot coverage. Telenor in Switzerland is moving into the WiFi managed services space.

Mobile billing company Bango reported this week that more than 20 percent of people visiting sites to purchase content using their mobile phones are now connecting via WiFi. It concludes WiFi is appearing more frequently as the primary connection method across a growing range of handsets.

The desire to move traffic in a seamless manner across multiple networks will translate into opportunities for solutions providers.

Stoke is already playing in this market, scoring a deal recently with Japan's NTT Docomo. The company provides a common IP session management over a range of network access technologies. Stoke's seamless multi-network access solution is designed to enable this offload in a way that allows a continuous session without requiring additional network hardware.

And there will be a need for carriers to have more control over WiFi connections via remote WiFi device management. Bango said WiFi presents a major challenge to both content providers and operators as these mobile visitors are unrecognized by the networks, making it difficult to sell and market mobile services to them and significantly impacting mobile content revenues.

It will be interesting to see if WiMAX operator Clearwire finds a niche in being a 3G offloader.--Lynnette