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Integrated Wi-Fi access can differentiate service and generate new revenues
Mobile Data (92% CAGR) Fixed/Wired (24% CAGR) Fixed/Wi-Fi (39% CAGR)
Traffic
Subscriber experience No visibility Network selection Policy Security Traffic management Monetization Differentiation
Not implemented over Wi-Fi traffic No visibility outside operators own Wi-Fi hotspots Very limited Difficult because of lack of visibility or control over Wi-Fi traffic Same functionality across networks
Figure 2: Monetization opportunities for mobile and fixed operators. Source: Senza Fili
Services
Targets
2 - Cellular or Wi-Fi?
Flexibility and choice for a personalized service
For most of todays mobile devices, Wi-Fi and cellular connectivity coexist as parallel, but mostly separately, functioning modes. When using Wi-Fi, data caps no longer apply and the throughput increasesso most subscribers try to be in a location with Wi-Fi access when they want to use Skype, Pandora or YouTube, or want to download software upgrades. Mobile operators also encourage this approach; in some cases, they make Wi-Fi the default interface for services such as upgrades. The prevailing model is a user-driven pull, where the subscriber makes an active decision to switch to Wi-Fi, with a possible exception when the subscriber is within the coverage area of a hotspot owned by the mobile operator. This model is effective, because most subscribers have clear incentives cost and performanceto switch to Wi-Fi. It does not, however, maximize the offload potential, because most users use only a fraction of their mobile allowance, or may use applications like email or social networking that require little bandwidth. In both cases, switching to Wi-Fi grants little advantage, and turning Wi-Fi on shortens the battery life of the device. Many of these subscribers are not likely to use Wi-Fi offload even when available. With the introduction of faster LTE networks, the performance incentive to move to Wi-Fi will be greatly reduced. Unless operators take a more active role, we may see a drop in the percentage of Wi-Fi traffic where LTE is available. With a user-driven pull model, mobile operators benefit from Wi-Fi access mostly as a cost-cutting and customer-retention tool. With Wi-Fi offload, per-bit costs go down (especially when using private access) and customer satisfaction increases (better performance for Wi-Fi users, less congestion for everybody else). But the monetization opportunities are minimal, because Wi-Fi access is a free add-on. Operators can change this by switching to a nudge model that creates the appropriate incentives for subscribers to use Wi-Fi where available, but eschewing a heavy-handed push model, in which the operator automatically switches all subscribers to Wi-Fi where this is cost effective. Not only is a push model unlikely to be well received by subscribers, it also would be ineffective at optimizing the use of network resources (more on this in the next section). Of course, charging subscribers for private Wi-Fi access is going to remain a difficult proposition, because the subscriber owns the access point and pays for backhaul. (In the US, though, T-Mobile charges for voice-over-Wi-Fi calls the same way it does for calls over the mobile network.)
A more effective approach is to avoid a tonnage-based charging model for Wi-Fi access, with the exception of roaming, where we expect that access fees will continue to prevail, and move to a policy-based, personalized approach to Wi-Fi access management that enables mobile operators to more effectively segment the market and meet different preferences among its subscribers.
a policy-based, personalized approach to Wi-Fi access.... enables mobile operators to more effectively segment the market and meet different preferences
3 - Traffic management
Increasing the efficiency of network resources
The coexistence of mobile and Wi-Fi interfaces can be used to provide a personalized, flexible service in which subscribers can choose the policy for Wi-Fi use that best fits their needs and willingness to spend. At the same time, the choice between mobile and Wi-Fi networks is a very important tool for operators to increase the utilization of network resources, when it is combined with real-time traffic management across the network interfaces. The two approachesservice personalization and network usage optimizationnicely complement each other: the operator can prioritize traffic, finding the best tradeoff between subscriber preferences and availability of network resources. In most cases, todays Wi-Fi offload is driven by static policies that are not affected by location, time of day, application, or, even more importantly, real-time traffic load of networks available to the device. In an environment where Wi-Fi provides lower-cost, better-performance connectivity but limited coverage, this is a simple, easy-to-implement approach that works reliably well. As we move to new scenarios where the Wi-Fi network might be more overloaded than the cellular network (as most subscribers move to the Wi-Fi network hoping for a faster connection) and where cellular capacity might be much higher due to the use of wider LTE channels and/or small cells, the current approach will quickly become insufficient for managing traffic effectively. Operators will want to maximize the use of their cellular networks while avoiding congestion, and encouraging Wi-Fi offloading might leave them with precious mobile capacity unused. Subscribers, used to moving to Wi-Fi for better performance, might in fact find that the cellular network is now preferable. Of course, leaving subscribers in charge of network selection, as is the case today, eliminates the opportunity to fully monetize the opportunity offered by multi-tier, multi-interface networks where relative performance varies as a function of location, subscriber load, and infrastructure availability. This is where the options presented in the previous section become more powerful. In addition to providing choice, they also are a way to efficiently allocate network resources and maximize revenues. In the example on page 8, the operator would prioritize traffic to best-performance subscribers in most cases, but keep an eye also to the freedom subscribers. So, for instance, voice calls can be kept on the LTE network for both types of subscribers, but high-throughput video streaming from a fixed location could be moved to a Wi-Fi network if there is sufficient capacity and the traffic flow can be prioritized. At the same time, low-cost subscribers will be assigned to the network with the best residual capacity after traffic from other subscribers is taken into account. As a result, these subscribers can get as good a connection as higher-paying subscribers at off-peak times and locations, but will experience slower connections when the Wi-Fi or mobile network is at capacity. The adoption of integrated real-time traffic management across the Wi-Fi and mobile networks will also widen the scope for dynamic pricing that allows operators to provide faster connectivity or additional traffic allowances, charging fees that are determined by real-time traffic load (e.g., the operator could charge a premium during peak hours at congested locations, but provide free, unlimited access during the lowest traffic hours in the middle of the night to encourage scheduling of non real-time services such as downloads and software upgrades when capacity is virtually free).
ACRONYMS
2G - Second generation 3G - Third generation 3GPP - Third Generation Partnership Project ANDSF - Access network discovery and selection function BYOD - Bring your own device CAGR - Compound average growth rate DPI - Deep packet inspection DSL - Digital subscriber line IT - Information technology LTE - Long Term Evolution NGH - Next Generation Hotspot PCRF - Policy and charging rules function QoS - Quality of service SIM - Subscriber identity module VoIP - Voice over internet protocol WPA2 - Wi-Fi Protected Access II
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