Tuesday, July 12, 2016

Wi-Fi Value is High, Direct Revenue is Not

Even if roughly 70 percent of U.S. mobile consumers say they are interested in Wi-Fi-only data plans, there remains scant evidence that Wi-Fi-only is a big and present segment of the mobility market. Cablevision Systems Corp., for example, launched such a service in its territory, but appears to have found only modest interest.

Wi-Fi carries around 80 percent of mobile data traffic, says Mobile Experts Principal Analyst Joe Madden. He predicts that 90 percent of mobile data will be carried over Wi-Fi and other unlicensed spectrum by 2020.

Such statistics show the nuances of value in the access services space. One might be tempted to suggest that, with that much traffic offloaded to Wi-Fi, much more access revenue “ought” to accrue to Wi-Fi hotspot networks, or the fixed line Internet access services, than to the mobile network.

But, as so often is the case in telecommunications, usage and revenue are different matters. It often happens that usage is indirectly related to revenue. There is a connection, though. The business model impacts, for suppliers of mobile devices, fixed and mobile access services, are quite significant.

For many years, the primary value of a public Wi-Fi hotspot network was the incremental value generated for fixed Internet access services. Likewise, the ability to offload data consumption, as well as the ability to tether a mobile device to Wi-Fi, have been important contributors to the value of specific mobile service plans and devices.

That remains the case. The new issue is how much additional value can be wrung from Wi-Fi, as an access method supporting or replacing mobile access. Wi-Fi-only services have been quite rare. Cablevision Systems Corp. tried that, and will be shutting down its service.

On the other hand, Wi-Fi access, as well as the ability to “roll over” unused mobile data, might be quite important, at the margin, as features attractive to potential “switchers” in the U.S. market.

That is vitally important in any saturated mobile market, as most gains are possible only by taking a customer from another provider. So churn management is more important than ever.

“U.S. operators have ramped up incentives to lure subscribers from competitors and encourage their own to stay longer—their game plans have switched gears from ARPU growth to churn management,” said said Harry Wang, Parks Associates senior director.

Factors when Choosing Next Mobile Service Provider

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