2016 Predictions: MSOs advance from experiment to service with Wi-Fi first offerings

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Mitel expects further advances in Wi-Fi first services

Editor’s Note: With 2016 now upon us, RCR Wireless News has gathered predictions from leading industry analysts and executives on what they expect to see in the new year.

The year ahead promises some interesting developments in the U.S. mobile market, particularly around the maturing of voice-over-Wi-Fi offerings and introduction of “Wi-Fi first” services by multiple service operators. Expect some major operators to debut mobile offerings, combining mobile virtual network operator approaches with the widespread availability of MSO-powered Wi-Fi deployments across both residential and public locations. Driving this development are the competitive market dynamics, technology availability and the impact of disruptive, Internet-based players such as Google with its Project Fi.

Unbundling continues while access technology loses its grip on voice and messaging

A look at the competitive landscape shows mobile carriers moving further into content distribution, continued unbundling of traditional, premium cable content and more service delivery over the top of broadband connections. With digital content and individual components of subscriber’s communications fast becoming a pick-and-mix aggregation of services, purchasable from many different providers, it’s a natural evolution for voice and messaging to form part of that unbundled set of capabilities.

Technology-wise, the timing couldn’t be better for MSOs to get into the mobile communications game. Where voice and messaging were once tightly integrated with the wireless access technology, the evolution of mobile networks to IP means Voice over Internet Protocol can now be consistently implemented across all of the available pipes reaching a subscriber. The ways in which voice was previously delivered – in a desktop environment, over a mobile device or landline telephone – all used fundamentally different technologies, so the economies of scale in creating a converged service offering were limited. Convergence meant more complexity rather than less. VoIP and IP multimedia subsystem have changed this dynamic.

The advantages of Wi-Fi first vs. services from non-traditional OTT providers

Carrier VoWi-Fi service differs in a number of key ways from the over-the-top offerings of disruptive players such as WhatsApp, Skype, Line and Viber. Firstly, it leverages the native dialer on the most desired handsets in the market today (i.e., Apple and Samsung) to provide a seamless service across cellular or Wi-Fi networks. Secondly, there is no “secondary” identity on the mobile device. A mobile phone number is used whether the subscriber is on Wi-Fi or cellular and a new number does not have to be created to benefit from the offering. In addition, there are continuing developments of network selection intelligence within the device, allowing the strongest and most reliable signals to be leveraged with handoff between Wi-Fi and cellular networks as needed.

A new communications world order brings new opportunities

Along with competitive dynamics and IP-based networking, another impetus prompting MSOs to reconsider their services and how they bring them to customers is the rise of Internet-based companies like Google and Apple. Google essentially remade the search industry, in terms of monetization models, and with services like Gmail, demonstrated that having visibility into a subscriber’s communication behavior is something from which value can be derived. Drastically different from the pay-for-the-service-you-use model, today you can pay for many services by simply granting access to personal information.

For the MSO, the opportunity here is not to create “me too” services or a lower cost version of an existing service. Rather, they have options to bundle services differently and find new ways to layer value on top of that bundle, cementing a long-term relationship with the subscriber. Millennials don’t want to pay for a bundle if they only use a few services in the package. Communications for them is more about social media than making phone calls. That doesn’t mean they don’t ever want to make a phone call or be reachable by voice. If an MSO can offer them a service built around compelling personal experience and offer traditional voice in a way that complements what they’re purchasing, a mobile provider’s entry-level, prepaid bundle appears much less enticing.

On the enterprise side, MSOs have long provided broadband connectivity to businesses. That broadband connectivity is now mobile within the enterprise as in-building Wi-Fi networks. Being able to offer office-wide mobility, freeing the employee from the physical structure of the desk while providing a full set of PBX features hosted in the cloud or by the MSO, presents another very attractive opportunity. It gives an MSO the chance to expand its business with the enterprise and is a stickier proposition than a broadband bundle, which may be re-contracted to the lowest bidder in 12-months.

Additionally, if a business has a cellular provider and a broadband provider they’re probably spending $70 to $80 per month, per user on cellular service, plus they’re paying for broadband for the enterprise. Rolling these together they’ll spend significantly less on cellular and only nominally increase what they pay their broadband provider for the cloud PBX capability.

What could potentially impact an expected MSO Wi-Fi first launch

Over the past several months, MSOs have been very active in trials and technology evaluation, and some are exercising their options around MVNO relationships with cellular providers. These precursor moves indicate at least one major U.S. player announcing a mass-market mobile service launch in 2016. The one thing that could change or disrupt these plans relates to the ongoing discussions around mergers and acquisitions. Of course, it’s an ongoing game of chess, where the threat the MSO presents to the mobile carrier by entering the market with a Wi-Fi first proposition can also be part of a negotiation strategy for an associated M&A activity.

While much remains to be seen on future pairings of MSOs and carriers as the U.S. market works towards consolidation, two things are certain: when an MSO heavyweight steps into the ring, great pains will have been taken to ensure its Wi-Fi service meets customer expectations for quality of experience; and, the redrawing of the competitive landscape for communications service provisioning will officially be underway.

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