Will Wi-Fi First Lead to Retail Prices 25% Lower Than Current Prices?

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Mobile service providers necessarily have a mixed attitude towards Wi-Fi. As always, mobile service providers prefer licensed spectrum to support the core of their operations, in part because it allows them to better control quality of service, and also in part because licensed spectrum is scarce.


Because licensed spectrum is scarce, it offers scarcity value, creating a barrier to competitor entry, for example.

On the other hand, Wi-Fi allows mobile service providers to offload substantial amounts of traffic, increasing end user value while also allowing investment in the core mobile network to be substantially lower than otherwise would be the case.






Some attacking mobile service providers have even more reason to like Wi-Fi, as it has a substantial positive effect on the cost of a wholesale approach to supplying mobile services.


The concept of using a fixed network for mobile service actually is not new. Before firms such as Sprint and T-Mobile US got spectrum to support their mobile networks, there was speculation about how a fixed network could be adapted to support untethered, if not fully mobile services.


In other cases, there was speculation new spectrum could be used to create new services that might offer full call handoff between cells, but only when users were moving slowly between cells (walking along a sidewalk), rather than traveling in cars, for example.


When able to employ a “Wi-Fi first” access approach, the amount of wholesale capacity the attackers have to pay for is reduced.


Some have estimated a “Wi-Fi first” approach could save about 35 percent of capital investment that otherwise would be required to create a mobile capability.


And that might allow a firm such as Comcast to offer mobile service about 25 percent lower than other mobile service providers.


That, in fact, is why Republic Wireless, Scratch Wireless, BT, Comcast and Free Mobile all rely on Wi-Fi networks, or plan to rely on Wi-Fi networks, to underpin mobile service efforts.


Doing so requires efficient and reliable call handoff, in addition to a dense network of Wi-Fi hotspots, in tandem with wholesale access to mobile service, for times when no Wi-Fi connection is possible. That is the importance of the Passpoint 2.0 initiative of the Wi-Fi Alliance.


Passpoint aims to provide seamless call handoff between Wi-Fi zones and mobile networks.


Some might argue there are several ways this approach leads to lower costs for the service provider. For starters, the suppliers save the cost of investing in their own spectrum.


In other cases, the suppliers are able to leverage the cost of already-installed fixed network infrastructure.


Comcast, for example, is able to use customer-supplied power as well as piggyback on Wi-Fi gear installed at the customer premises to support high speed access. In other words, Comcast is able to create a wide area communications capability on the back of its consumer entertainment and communications business.


Comcast already offers access to the Wi-Fi network to KDDI and Taiwan Mobile, for example, to support mobile access when customers of KDDI or Taiwan Mobile are traveling in the United States.  


The advantage, presumably, is lower per-minute or per-megabyte roaming charges for the customers using the roaming access.


Comcast aims to have eight  million hotspots activated by the end of 2014, covering 19 of the 30 largest U.S. cities.


In 2013, according to Cisco Systems Inc.’s Visual Networking Index, mobile service providers offloaded 45 percent of all mobile data traffic onto a fixed network using Wi-Fi or some other “small cell” method.


By 2018, Cisco predicts, there will be more data traffic offloaded from moble networks using Wi-Fi than remain on the mobile networks.


There still are challenges, but the “Wi-Fi first” method is becoming a realistic way for service providers to get into the mobility business without using a licensed mobile spectrum approach.

Wi-Fi is combined with wholesale mobile access in ways that reduce the overall cost of supplying mobile network access.
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