Reality Check: Next-generation hotspot – the road to seamless offload

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Editor’s Note: Welcome to our weekly Reality Check column where C-level executives and advisory firms from across the mobile industry share unique insights and experiences.

Despite predictions from some industry analysts that mobile devices are reaching saturation in developed markets, it seems that every fall we get a fresh reminder that the appetite for the latest mobile devices – and for consuming copious amounts of data via these new devices – is continuing to grow.

In the past couple of months, it’s been Apple season. Consumers lined up for the iPhone 5S and 5C in September, with the phones selling more than nine million units in the first weekend alone, and the iPad Air got off to a better start that its predecessor with more than five-times the adoption level of the iPad 4, according to analytics firm Fiksu.

The new crop of Apple devices are just the beginning. Worldwide smartphone penetration stands at just over 20%, according to Mary Meeker’s latest “Internet trends” report, and is primed for growth among the more than five billion global cellphone users. New devices that will utilize Wi-Fi, like smartwatches, “fitbits” and even Google Glass will consume ever more data as adoption increases.

We’ve all heard that there is an innovative solution to the data crunch on the horizon: next-generation hotspot using Hotspot 2.0. The next-generation hotspot specifications hold the promise of providing seamless, secure connectivity to consumers without any user action required; passive revenue to owners of venues like airports and stadiums; and cost savings, happier customers and a “pressure relief valve” for cellular carriers and their networks.

Recently, the Wireless Broadband Alliance and Senza Fili Consulting made a compelling business case for carrier migration from legacy to next-generation hotspot networks. They found that integrating NGH Wi-Fi into networks lowered per-bit costs and increased spectral efficiency, allowing carriers to spend less and provide greater capacity to more customers. They estimate that global service revenues allocated to NGH Wi-Fi will grow to 9% of total service operator revenues, or $150 billion by 2018.

So why isn’t next-generation hotspot widely available today?

Though the Hotspot 2.0 technical specification has been adopted by major device manufacturers, and the next-generation hotspot standards are in late stage trials with world’s leading carriers, a confluence of factors have to come together to kick-off widespread adoption.

Arguably, the most significant and widespread progress in adopting the standards and validating them for consumer deployment is being made today by device manufacturers. Samsung, the world’s number one smartphone manufacturer, launched its flagship Galaxy S4 in May with support for the Hotspot 2.0 spec, enabling seamless and secure access. Apple announced shortly thereafter that iOS 7 would support the spec. Cut to four months later, and more than 200 million devices are running iOS 7, or an estimated 71% of all iOS devices. This population of Hotspot 2.0-ready devices is a fundamental building block for an effective NGH ecosystem.

With millions of devices now ready for seamless offloading, upgrading existing Wi-Fi networks with Passpoint-certified equipment to enable the seamless connectivity is paramount. The major network equipment manufacturers have delivered Passpoint-compliant access points and controllers, and major operators are beginning to upgrade networks to prepare them for Passpoint-enabled traffic. Boingo has upgraded many of our largest locations and made them Passpoint-ready, but many carriers will need to perform the same upgrades to create an NGH-ready ecosystem.

Finally – and perhaps most importantly – carriers and other operators will need to choose to roam via NGH. The WBA created the Interoperability Compliance Program to streamline and provide standards for roaming agreements and implementation, with major carriers achieving compliance, including AT&T, BT and NTT DoCoMo, among many others. As part of these roaming agreements, carriers and operators will need to consider their priorities in various aspects of user experience, monetization and network prioritization. Phase three of the WBA NGH trials – which are more focused on managing the consumer experience – will help address some of those concerns, such as enabling continued consumer touch points via location based services and advertising, while still ensuring a seamless connection without user intervention.

WBA has also partnered with 13 operators, including China Mobile, AT&T, BT and Boingo to create a live “NGH Experience” at the Beijing WBA Wi-Fi Global Congress this month, creating a similar live, public demonstration network for NGH access.

The results of these real-life and industry trials may prove to be the tipping point for the industry. But the real race to adoption may jump start the industry if a non-carrier – like a cable company or a device manufacturer – decides to embrace Hotspot 2.0 as a standards-based method to become a primary data provider for their customers using seamless public Wi-Fi. Because Hotspot 2.0 capabilities are embedded in the devices themselves, these atypical “carriers” could push a link to users and enable out-of-home data access quickly and easily, providing additional value to their customers via connectivity solutions.

After years as an industry “buzzword,” next-generation hotspot is very nearly a reality – but it may not be the reality the industry anticipated. Stay tuned for dispatches from the WBA Wi-Fi Global Congress in Beijing in late November.

As President, Nick Hulse is responsible for maximizing revenue and driving company growth through the sales, marketing, product and business development teams. He brings 25 years of executive experience in sales, marketing and operations positions to Boingo, including extensive experience in the wireless, Internet and digital media sectors. Hulse most recently served as chief revenue officer for digital media company Rubicon Project, where he was responsible for all company revenues, client services, marketing, technical operations, and international teams. He serves as an advisory board member for MetaMarkets, a real -time analytics company for online advertising. Hulse holds an HND in Finance and Marketing from Northumbria University in Newcastle, United Kingdom.

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Dan Meyer

Editor-in-Chief, Telecom Software, Policy, Wireless Carriers
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Dan Meyer started at RCR Wireless News in 1999 covering wireless carriers and wireless technologies. As editor-in-chief, Dan oversees editorial direction, reports on news from the wireless industry, including telecom software, policy and wireless carriers, and provides opinion stories on topics of concern to the market such as his popular Friday column “Worst of the Week.”

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