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1. Trends in Mobility #3: The Mobile Paradox
Posted by Stuart Taylor on Jul 22, 2013 11:29:47 AM
Today’s world is characterized by what I call the “mobile explosion”—an environment
defined by mobile cloud becoming a platform for delivering everything. It is a world of
heterogeneous networks, licensed macro small cell networks, and unlicensed small cell
networks (Wi-Fi for example), all seamlessly combined. In this world, however, I believe
we are facing a mobile paradox: on the one hand, there is a staggering demand for data
from our smartphones, tablets, and other connected devices; on the other hand, the
telecommunications industry is grappling with business and monetization challenges
around profitability, how to build up these networks fast enough, and competition from
over-the-top (OTT) operators. But, operators are struggling with building the business
case and understanding how to make Wi-Fi pay.
The much quoted Cisco Visual Networking Index (VNI) predicts that global mobile data
traffic will increase 13-fold from 2012 to 2017, reaching 11.2 exabytes per month. In
parallel, the use of unlicensed small cell networks (Wi-Fi) for Internet access is
exploding as more mobile devices are Wi-Fi-enabled, the number of public hotspots
expands, and user acceptance grows. Until recently, most technologists and mobile
industry executives viewed Wi-Fi as the “poor cousin” to licensed mobile
communications. And they most certainly never saw any role for Wi-Fi in mobile
networks or their business. The explosion of mobile data traffic has changed all of that.
Most mobile operators now realize that offloading data traffic to Wi-Fi can, and must,
play a significant role in helping them avoid clogged networks and unhappy customers.
In the “Business Models and Monetization Video” in Big Thinkers in Small Cells, my
colleagues and I discuss revenue opportunities and challenges mobile operators face
today with small cells, both licensed and unlicensed. Mobile operators understand the
business case behind offloading data traffic to cheaper Wi-Fi—deferring significant
capital expenditures for further build-out of the licensed network. However, operators
around the world are asking if there is more to Wi-Fi than just data offload (the simple
answer is “yes”). Or, more appropriately, how do they actually make money from Wi-
Fi—turning a cost of doing business into profitable business models?
The Cisco Internet Business Group (IBSG) has identified and built business cases with
service providers around additional ways to benefit from Wi-Fi, beyond data offloading.
Our recent white paper (Wi-Fi: Service Providers Can Make Money with New Business
Models) describes each of these business models in more detail – laying out the
economics and providing case studies of success operators.
As the pervasiveness and customer adoption of Wi-Fi continue to grow exponentially,
these new business models provide meaningful opportunities for service providers. For
example, we are seeing home broadband providers improve their customer retention by
10 to 15 percent by bundling their broadband service with access to free public Wi-Fi. In
addition, we believe that operators can generate $10 to $15 per business user monthly
by establishing a Wi-Fi-enabled “Business Anywhere Service.” Or, the could drive an

2. incremental $100-$150 per retail store by delivering enhanced, value-added retail
experiences, on top of the $50-$250 that operators charge per wireless access point to
run a managed Wi-Fi service for retailers.
But, don’t just take my word for it. End users tell us that they want these new Wi-Fi
business models and truly see value in them. Unique Cisco IBSG customer
research revealed that mobile users not only appreciate the lower cost and unlimited
data usage of Wi-Fi, but also greatly value the flexibility and convenience that it offers.
In particular, customers were very interested in the national/international roaming
business model and the Wi-Fi value-added retail offering that would make them more
efficient, save them money, and enhance their shopping experience. Remarkably,
among U.S. broadband subscribers we surveyed who have free public Wi-Fi as part of
their subscription, 61 percent said the inclusion of Wi-Fi was “very” or “extremely”
important in their choice of broadband provider. Wi-Fi is a good way not only to attract
subscribers, but to keep them as well.
Of course, not all business models are attractive to all service provider segments. In
addition to aligning the business models to different industry segments, providers need
to set priorities and plan where to start.
We feel that Cisco IBSG’s research, insights, and approach arm SPs with guidelines for
setting priorities and determining which approach is best for making real money from all
small cell technologies. Click here to learn more about what additional Big Thinkers in
Small Cells have to say about Business Model and Monetization Opportunities.
This is blog 3 of a new blog series Trends in Mobility on the Cisco SP Mobility
Community. The next blog will be coming next week on Wi-Fi Technology Value.
About the Author
Stuart Taylor's further industry research, insights and perspectives can be found at his
blog The Connected Life
Follow Stuart Taylor on Twitter: @STaylorCisco
More Resources
Trends in Mobility #1: The Next Generation of the Internet is Mobile By: Stuart Taylor
Trends in Mobility #2: The Future of the Mobile Industry By: Stuart Taylor
White Paper: The New Mobile World Order - Perspectives on the Future of the Mobile
Industry
POV Paper: The Next Generation of the Internet Revolutionizing the Way We Work,
Live, Play, and Learn (PDF)
For more discussions and topics around SP Mobility, please visit our Mobility Community:
http://cisco.com/go/mobilitycommunity