Is Wi-Fi Friend or Foe of Airtel / Vodafone / Idea ?

Wi-Fi Friend of TelcoWiFi can do the heavy lifting on mobile data traffic. The way your Android devices are configured by default says more about this – all your App updates have to happen through Wi-Fi network, thus can be used as a service differentiation tool.

WiFi usage is gaining a lot more traction – as unlimited 3G data packages become rare for consumers and WiFi is often considered ‘free’. Operators benefit from offloading traffic from macro networks. But not every telco can do this – fixed line connectivity is still critical, hence integrated telcos are relatively better positioned.

WiFi deployment has been widely considered as a cost avoidance / saving strategy, with little evidence of stand-alone revenue contribution so far. Gartner estimates that WiFi opex and capex can be 1/10th that of a macro-cell – which is a significant value proposition especially as smartphone penetration rises.

Monetizing Wi-Fi by Airtel / Vodafone / Idea – Tricky
Telcos also haven’t directly focused on monetizing WiFi traffic, but instead have (or are) focusing on monetizing total data traffic. But monetizing WiFi could become a rising focus going forward, particularly for wireless operators as WiFi networks carry more and more traffic.

An increasing amount of free WiFi service offered by non-telco players (especially in public areas) has further led to users’ diminishing willingness to pay. But not all WiFi is equal – telcos offer better quality and service, we think. Telcos now offer WiFi either as a bundle of existing data plans and/or as stand-alone offers, but the take-up rates of stand-alone offers are still very low.

WiFi – benefits and challenges
With various industry estimates suggesting another 4-10x increase in data traffic in the next few years, existing networks, spectrum, and technologies have struggled to keep up. Of many ways to manage traffic growth, offloading traffic to WiFi has been one of the strategies. It also allows the telcos to improve coverage issues, which could be hard to address entirely by a macrocell network.

Cost advantages – lack of spectrum and/or network congestion is a common problem for most telcos and there aren’t easy ways to address these. WiFi is a much cheaper and quicker alternative than installing another macro-cell. WiFi uses unlicensed spectrum, it reduces macro network congestion for telcos. Also, in case of consumer home /enterprise WiFi, power and backhaul costs are borne by the customer. With higher frequencies, indoor coverage is becoming a larger issue and also a bottleneck as LTE deployment are occurring in 2.3GHz or
higher bands.

On the Negative Side of Deploying Wi-Fi, issues such as network coverage uncertainty, complicated authentication process which can impact user experience. WiFi hotspots can only support a fraction of users (1/10th) that a macro cell can support. The life of a WiFi hotspot is 2-3 years, much lower than for a macrocell, at around 7-10 years. Monetising data is a rising focus for all telcos – various initiatives are being undertaken to find the right pricing model. But widespread presence of WiFi and data offload behavior could in fact negate the impact of carriers’ data monetization efforts. Here we find integrated telcos may be better positioned with bundled fixed broadband offerings.

Thus Indian Telcos are likely to offer a Heterogeneous Mix of Wireless Data Connectivity from 3G/ 4G-LTE to Wi-Fi Networks for a truly Wired Life.

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