Tuesday, February 5, 2013

The Hotspot that came in from the cold

 It is amazing the steps we take to put our smartphones on to Wi-Fi rather than burn through precious data plans.  Short of forcing consumers into a game of Twister, there are few things more convoluted (or frustrating) than using a smartphone to type usernames, passwords or credit card numbers, while sitting in an airport lounge or coffee shop juggling a hot drink.   Still, this learnt behavior can be seen anywhere a smartphone is out in public. 

This complexity was meant to have been solved years ago with a protocol called WISPr – a first attempt at standardizing and automating connectivity to Wi-Fi such that, as consumers, we would never have to deal with pesky web login forms and endless service menus.   Unfortunately, this protocol never made the headway expected and as a result, only with isolated effort (think AT&T Wi-Fi access in the iPhone) has automatic Wi-Fi connectivity become available to consumers out-of-the-box.

In the absence of a concerted mobile operator, equipment and smartphone vendor push, independent Wi-Fi operators and app developers stepped into the fray providing proprietary “islands” of automated connectivity.    Consumers typically download an app to their smartphone, sign-up for a plan and then hope that where they go, service is available.    Some of the networks are big – Boingo have 600,000 hotspots, Fon have over 5 million through crowd sourcing, and Devicescape claim 12 million “curated” hotspots – each company with a slightly different business model.   Operators such as T-Mobile, Orange and PCCW have all built-out their own large-scale Wi-Fi networks, often available independent from a mobile contract, always with accompanying iPhone and Android applications.

This is all set to change with the somewhat low-key arrival of new standards and products wrapped-up in what is known variously as Hotspot 2.0, 802.11u and Passpoint.  All are, confusingly, part of the same initiative – an industry accepted method for automatically authenticating and connecting Wi-Fi users using the SIM cards of their smartphones (or cameras, toys or cars for that matter).    There are a number of additional compelling features too.   Encryption to the hotspot comes as standard and there is a hotspot advertising feature which allows venues or locations such as stadiums or shopping malls to provide location specific Wi-Fi that might connect you to a specific web site through an icon that appears on your smartphone.

What’s different this time around and why we should see traction is that the industry, through the Wi-Fi Alliance, has been busy certifying infrastructure products from companies such as Aruba, Ruckus, Cisco and BellAir, along with chipset and handset vendors such as Intel, Qualcomm, Marvell, LG and Samsung.

Of course, just because products are now available doesn’t mean we can get connected tomorrow.  Niels Jonker, Chief Scientist at Boingo, speaking at CES last month claimed that roll-out would likely take from now through 2015.    Importantly though, having the entire ecosystem participate should mean that when you purchase a smartphone with an operator contract, any Wi-Fi hotspot which has a roaming agreement with your operator should (over this time period) allow automatic and seamless connectivity.

This brings us to an interesting position for mobile operators and their focus on Wi-Fi.  The assumption has been that consumers with smartphones will pay for both a voice and a data plan.   Increasingly, this is turning out not to be the case, especially in countries such as India, China and Indonesia where smartphones are becoming every bit as popular as the US and Europe.   Consumers are buying the same pre-paid voice plans as before, but exclusively leveraging Wi-Fi for their data.   

This is creating a “dammed if you do / dammed if you don’t” moment for operators.  Remember – the master industry plan involves delivering LTE to everyone everywhere and Wi-Fi expenditure by operators today is a fraction of the tens of billions being poured into 3G & 4G network upgrades.   From the operator’s perspective, the best consumer buys service but doesn’t use it – a good reason operators have encouraged Wi-Fi off-load but a strategy that might be working a little too well.    If consumers have unlimited Wi-Fi and limited 3G/4G data – more automated and ubiquitous Wi-Fi will lead to less revenue for the operators.

For this reason, we are likely to see changes in how mobile operators bill for Wi-Fi as the lines between 3G/4G and Wi-Fi blur.   To put this another way – Wi-Fi has been a method for keeping users off precious 3G/4G connections but going forward, it will be integrated into seamless service where the consumer won’t know or care if they are on LTE or Wi-Fi.    Further, as voice services migrate to VoLTE – which by the way works just fine on quality WiFi networks – Wi-Fi and/or LTE deployment will be a cost choice decision for the operators based on cell size, density and available frequency bandwidth. Operator Wi-Fi will finally come in from the cold.

This leaves Wi-Fi only players in a different position too.   They will need to leverage their global alliance networks to become full-service players and deliver voice too.   Last month’s FCC announcement by Julius Genachowski to free-up unlicensed spectrum for Gigabit Wi-Fi will surely aid in this progression and lower costs for entry, at least here in the US.

In many parts of the world, we will likely see LTE and Wi-Fi go head-to-head, especially in high bandwidth and small cell deployments where cost is a primary consideration.   Indeed, I am reminded of the battle fought in the 90s over desktop connectivity.   Numerous vendors bet against Ethernet, with Token Ring, Fiber Channel and even ATM.   They lost not because they had inferior technology but because Ethernet price points and the ubiquity of Ethernet devices ruled the day.    In the “Internet of things” the volume of connected devices will be many times more than the volume of smartphones and these “things”, for cost and availability reasons will likely have Wi-Fi, not LTE.   Putting the next billion Wi-Fi devices on service contracts is the next open space.

For reference, below is a link to a list of Passpoint products certified by the Wi-Fi Alliance:

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