XCellAir sees Wi-Fi-first as cable providers best bet against mobile operators
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.
Wi-Fi-first mobile services are not a new proposition. Republic Wireless made the first move in the U.S. in 2012, inspired by French mobile virtual network operator Free, and have since been joined by the likes of FreedomPop and Scratch. These MVNOs default to Wi-Fi whenever possible and fallback to a mobile network whenever Wi-Fi is not available. This model provides for wide differences in quality of experience – generally good when on the mobile network and unpredictable when on Wi-Fi. However, the MVNOs’ business models can only survive if they maximize the time spent on Wi-Fi versus paying steep fees to their MNO partners.
These small MVNOs have found some success, but haven’t seized a huge portion of the market. Often, their most successful marketing is through word-of-mouth, buoyed by providing excellent customer service and prices that appeal to cost-sensitive customers. Wi-Fi first is not without problems; customers must enable Wi-Fi on their devices at all times, which can drain batteries quickly, and it is almost impossible for these operators to guarantee good quality of service over networks they do not control. Wi-Fi’s advantage is also its greatest disadvantage: anyone can use it. So while an MNO can plan and optimize an LTE radio network to minimize interference, the Wi-Fi-first MVNO cannot guarantee that a coffee shop’s new free Wi-Fi will not start using the same channel next door tomorrow to one of its access points.
These smaller players have recently been joined by some bigger fish. Google has soft-launched its Fi service – currently invite-only and limited to owners of its Nexus 6 handset – and Cablevision’s Freewheel launched this year. Freewheel is also limited to one device available through Cablevision and does not fall back to a mobile network if Wi-Fi is unavailable. This sort of service is unlikely to gain wide adoption, and will more likely be used by teenagers or those with very light mobile use. In their current form these services do little to worry the incumbent mobile operators, and, like the rest of the current Wi-Fi-first market, are more of an interesting side note than a disruptive force. – for the moment.
That being said, in 2016, there is an incredible opportunity for cable providers to shake up the market. Many cable companies have a huge existing Wi-Fi footprint they can leverage. For example, Freewheel users in the New York tri-state area have access to 1.1 million Cablevision Wi-Fi hot spots. Additionally, this sort of coverage is growing very rapidly with the introduction of “home spots” – Wi-Fi routers combining both a customer’s private network and the operator’s public network. Just as mobile network operators like to boast of widespread coverage, cable providers are able to make similar claims based on their Wi-Fi coverage.
But it’s not all rosy. Cable providers, generally speaking, are not currently enjoying excellent customer ratings. Comcast has polled highly in Consumerists annual “worst company” poll. The same website also reported back in July that Time Warner Cable had the lowest customer satisfaction score not only of all cable companies, but of all companies in the “American Customer Satisfaction Index.” They are also finding their services under attack – on-demand pay-TV providers, such as Amazon Prime and Netflix, are increasingly popular compared to TV channel packages, and landlines are increasingly irrelevant thanks to the ubiquity of smartphones. A whole movement of “cord cutters” wants to ditch cable companies entirely with an almost religious fervour.
With their market dominance and customer dissatisfaction, it might seem cable providers are ready to be disrupted, but the opportunity to disrupt actually lies with them. By offering an “out-of-home” service that matches the service customers receive on their own Wi-Fi networks, cable providers could beat mobile operators at their own game. It’s an opportunity not only to protect their market share and sell additional products, but also to repair some of that damaged reputation. By not only going toe-to-toe with the MNOs, but also extending their own services via Wi-Fi “beyond the doorstep,” cable providers become the plucky upstarts looking to provide an alternative. If cable providers can guarantee the same experience out-of-home as in-home, they can displace similar services users are being offered by mobile operators thanks to their ever-faster networks. People are used to being cellular-first when on the move, due to availability – but cable providers could make Wi-Fi-first the default. This means they can deliver their services to customers both in the home and on the move, making them far more valuable and sticky.
Our research, in conjunction with Real Wireless, estimates Wi-Fi has the potential to save cable providers $3.8 billion in MVNO charges. There is also potentially $675 million in revenue from delivering additional services through Wi-Fi – better access to video services means better convergence of voice, mobile, broadband and video content, driving uptake of quad-play services and reducing churn.
Vital to this is making sure the customer enjoys a good quality of experience. The cable operators will need to tune and optimize their Wi-Fi networks in much the same way MNOs do. If customers cannot connect as easily to available access points and enjoy a good connection just as they do with mobile networks, then the appeal of Wi-Fi-first will remain limited to price-sensitive and light-use customers.
It’s a smart move for cable providers – and one they may regret if they hesitate. Google’s Fi service may be invite-only for the moment, but the combination of this service with Google’s expanding fiber provision may prove more popular than anything the cable companies can respond with in their current form.
