Does Wi-Fi Compete with Mobile Access?

With all the talk now of “heterogeneous networks” integrating traditional mobile with Wi-Fi access, it is not hard to understand why many find irresistible the notion that Wi-Fi could become a substitute for mobile broadband. That refrain has been heard, off and on, for decades.

The issue seems to be arising anew because cable operators contemplate using Wi-Fi as their “wireless” strategy.  But most major mobile service providers think Wi-Fi complements mobile, especially by offloading traffic that does not need to use the “mobile” network because users are stationary.

According to Signals Research Group, mobile data traffic in the United States alone is forecast to grow between 53 and 153 times from 2010 to 2020, compared with projected growth in U.S. cellular capacity of only 25 times over the same period.

To meet this demand, mobile service providers are adding macro network capacity by increasing cell site density, investing in new cellular technology, such as long term evolution, or LTE and LTE Advanced,and acquiring additional spectrum, and also offloading traffic to Wi-Fi networks.

To be sure, cable operators hope their own public Wi-Fi networks will offer their customers an “untethered” out of home experience without offering full mobility services under their own brand names, at least for the moment.

But most of the mobile industry sees Wi-Fi as complementary to mobile networks, and not as a competitor.

“Tariffs have consequences,” researchers at the Yankee Group rightly note. And tariffs, and the shaping of retail offers, can have a powerful effect on user behavior, in ways that can shape consumption of data overall and moderate and shape capital investment.

The mobile operator’s business objectives are only sometimes and partly related to improving mobile coverage) at specific locations. An equally important objective, in some instances, is the ability to supply more bandwidth without loading the mobile network.

The former business objective (coverage) can be provided either using a small cell, dividing macro cells or offloading to Wi-Fi networks. The latter objective (offload) is better satisfied, where possible, by encouraging use of Wi-Fi.

Softbank in Japan has tested the offload potential of dense Wi-Fi deployments and apparently has concluded that less than 25 percent of mobile data traffic can be offloaded to public Wi-Fi in the long term.

Those estimates correspond with figures Boingo suggests. Boingo believes about 22 percent of mobile traffic will be offloaded to Wi-Fi by about 2016.

Others might disagree. Cisco analysts say as much as 30 percent of mobile traffic could occur on Wi-Fi networks. And analysts at Juniper Research think more than 60 percent of mobile device traffic could be offloaded to Wi-Fi means by about 2015.

Others say studies show as much as 70 percent of smart phone traffic uses a Wi-Fi connection.

The larger point, though, is that Wi-Fi still is not a “competitor” to “mobile” networks and service, even as cable operators plan to use their own public Wi-Fi networks.