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Profiting from the Rise of Wi-Fi

By Bill Gerhardt, Director, IBSG Service Provider

As you’ve probably noticed, mobile computing is exploding. My home has close to 10 mobile devices, and my kids want even more! According to the Cisco Visual Networking Index, this insatiable demand for smartphones, tablets, and other connected devices will double globally in 2012 and increase another 78 percent by 2014.

At the same time, Cisco IBSG is seeing a similar rise in the worldwide popularity of Wi-Fi. In fact, according to In-Stat, the number of Wi-Fi hotspots is expected to reach 2.7 million, with usage growing 200 percent, by 2014.

Given this, how can service providers—who must bear the burden of increased traffic—actually profit from the rise of Wi-Fi?

To answer this question, Cisco IBSG consulted with leading service providers from around the world to develop and evaluate 16 business models. While I won’t give away everything here (see our recently published paper, “Profiting from the Rise of Wi-Fi”), I will describe a couple of the models.

The first business model, “Bundled Wi-Fi,” combines a Wi-Fi service with other services such as home broadband or mobile, typically at no additional cost to the consumer. We estimate this model can decrease fixed broadband churn by 10-15 percent.

The “Cellular Data Offload” model suggests that service providers sell Wi-Fi network access to mobile operators on a per-user or per-MB basis. This approach allows you to offload some of the mobile data traffic without needing to build a Wi-Fi network yourself. Fees from mobile network operators can be $3-$10 per gigabyte.

To help you select and implement the best model for your business, our paper includes a table with quantifiable benefits as well as a cluster-analysis chart that helps you know where to focus your Wi-Fi efforts. Additionally, the models are divided into four categories: (1) business effectiveness, (2) end-user services, (3) inter-carrier wholesale, and (4) value-added services.

From our work, the question is no longer “Can service providers make money from Wi-Fi?” Rather, it is “Where should you focus your efforts and when should you deploy?” It’s clear that now is the time to profit from the rise of Wi-Fi.

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