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For much of Wi-Fi’s history, technologists and mobile industry executives viewed it as the “poor cousin” to licensed mobile communications. Today, all that is changing with the explosive demand for mobile data, the proliferation of new and powerful devices, and shifts in customer behavior and usage.  Increasingly, Wi-Fi is seen by technologists and consumers alike as a partner to licensed mobile, enabling expanded wireless access.

Based on research and engagements with leading operators throughout the globe, the Cisco® Internet Business Solutions Group has identified six important trends that we believe are redefining this new world of Wi-Fi:

 1.     Predominance of Wi-Fi for Wireless Access

Almost all mobile devices, including smartphones, now have Wi-Fi as their core access technology.  And people are using these mobile devices to access increasingly data-intensive applications.  Recent research by Cisco IBSG found that roughly half of mobile users are now watching video on these mobile devices. Today, mobile is less about walking or driving and more about the convenience of a “nomadic” lifestyle—moving, sitting/stopping and connecting, then moving on again. Such nomadic locations are ideal for high-speed Wi-Fi, which easily handles those data-hungry applications.

2.     Proven Ways to Use Wi-Fi to Improve the SP Business

The explosive demand for mobile traffic has left mobile operators scrambling for ways to meet this demand, while overcoming spectrum constraints and managing CapEx expenditures. Offloading some mobile-data traffic to Wi-Fi promises savings to carriers of $2 to $5 per GB in deferred CapEx and lower operating expenses. Providers that bundle access to a public Wi-Fi network with their home broadband service are finding significant improvements in customer retention and acquisition. Privately, SPs report churn improvements of 10 to 15 percent through the strategic use of Wi-Fi, delivering a substantial impact to the bottom line.

3.     Growing Use and Importance of Public Wi-Fi

IBSG’s mobile research found that one-third of mobile users access public Wi-Fi at least weekly.  Many expect to find Wi-Fi in key locations such as airports, stadiums, town squares, coffee shops, and retail sites. Overwhelmingly, they expect this public Wi-Fi to be free or, at least bundled as part of their broadband or mobile service.

4.     “Land Grab” of Key Locations to Deliver Public Wi-Fi

As with retail, public Wi-Fi is all about “location, location, location.” A public Wi-Fi provider needs to provide access in key Tier 1 locations such as airports, cafes, and hotels. Increasingly, people also expect Wi-Fi in the other locations where they spend their time. Tier 2 locations, such as hospitals, schools, sporting venues, and public transportation hubs, are increasingly near the top of network deployment lists of Wi-Fi network providers.

5.     Consolidation of Public Wi-Fi Providers to Deliver SP Wi-Fi

As recently as five years ago, most public Wi-Fi was managed independently, by the venue owner or by a start-up Wi-Fi provider such as Wayport or The Cloud. As SPs begin to see the strategic importance of Wi-Fi, they are acquiring these independently managed Wi-Fi providers and becoming the predominant providers in many markets. At the same time, the venue owners realize that they need to provide much better Wi-Fi service, meet more complex technical and business requirements, and conform to increased regulatory demands. Many are looking to service providers to remove much of this complexity and manage the services for them.

6.     Providers Seeking Ways to Make Money From Wi-Fi

SPs recognize that mobile-data offload and broadband-churn improvement provide very compelling business cases for Wi-Fi investments. Beyond that, they are looking for ways that those investments can deliver new sources of revenue. Research by Cisco IBSG revealed a number of new business models that operators can exploit to profit from the rise of Wi-Fi. Premium access, managed services, business solutions, roaming, and wholesaling are some of the key models that providers are currently experimenting with to deliver new revenue from Wi-Fi. Of particular interest and potential is providing value-added services to enhance core Wi-Fi connectivity. Many retail and venue owners, for example, are looking to combine Wi-Fi capabilities with customer location to provide data analytics, enhanced customer experience, and hyper-targeted and relevant advertising.

As we have seen, Wi-Fi’s days as a “poor cousin” are over. Service providers that ignore the compelling cases for Wi-Fi will risk drop-offs in efficiency, profits, and customer satisfaction. Those who treat Wi-Fi as a preferred partner will thrive.