Carrier Wi-Fi: The Industry that Apple Built (...one launch at a time)
By: Bernard Herscovich
Since the introduction of the iPhone in 2007, it seems that every time Apple launches a new category-redefining product, Wi-Fi becomes more important to both users and carriers. In this blog I'll focus on the progressively more significant role that Wi-Fi has taken on for carriers following the successive iPhone, iPad and iCloud launches. (Disclosure: As this Reuters article, "Canada's BelAir Networks rides iPhone wave", from earlier this year makes clear, BelAir Networks has directly benefited from the trend I'm about to discuss.)
Before the iPhone, mobile broadband essentially meant laptops with dongles. It was broadband, certainly, but not very mobile. Of course, there were smartphones before the iPhone, but they tended to be more about mobility than broadband - certainly none before could match the rich mobile broadband experience that iPhone users enjoyed. But, as soon became clear, all that mobile broadband traffic generated by the hugely popular and iconic device, came at a price to the mobile network. And the first mover carriers to adopt the iPhone, like AT&T, were the ones who had to pay it. As the company acknowledged in April: "AT&T's mobile data volumes surged by a staggering 8,000% from 2007 to 2010".
Luckily, the iPhone was Wi-Fi enabled from Day One and, as Michael Morgan of ABI Research later pointed out: "the iPhone led people to use Wi-Fi to a degree never seen before." This foresight on Apple's part had two huge impacts on carriers. The first was that carriers realized that Wi-Fi could be used to augment mobile broadband capacity - a process often referred to as 3G offload - in areas of high user concentration. For example, AT&T launched a series of Wi-Fi hotzones in busy areas of New York City, San Francisco, Chicago, Charlotte and most recently, Austin. But, Wi-Fi on the iPhone, and the many smartphones that emulated its success, also allowed operators to get into the mobile broadband business without using licensed spectrum. Comcast, Time Warner Cable and Cablevision have all deployed Wi-Fi in their respective coverage areas and negotiated a roaming agreement allowing all of their customers to benefit from their combined coverage in NY, NJ, Connecticut and throughout Philadelphia. The cable strand mounted variant of Wi-Fi access points (AP) that these operators use has created a Carrier Wi-Fi market segment known as Cable Wi-Fi.
But, if the iPhone put unlicensed Wi-Fi on a more equal footing with its licensed band counterparts, the introduction of the iPad started tipping the balance, further increasing Wi-Fi's importance to carriers. Two key iPad features were instrumental in this continued shift. The first was its screen size. The iPad is ideal for viewing video on the go. Though video is supported on smartphones, their small screens made them more appropriate for clips than feature films. (Of course, they're also ideal for video calling, which Apple revolutionized with FaceTime, an app only available over Wi-Fi.) The iPad's relatively large screen made video viewing much more of a mainstream app. Video drives huge bandwidth requirements, compounding the congestion issues initiated with the launch of the iPhone. This alone would have been enough to highlight the increasing importance of Wi-Fi to carriers, but there was another iPad innovation that really underlined Wi-Fi as a critical carrier technology, namely the availability and ensuing popularity of Wi-Fi only versions. As I noted in a Wireless Week article, Wi-Fi: The Other Small Cell, back in February, industry analysts, Ross Rubin and Chetan Sharma, estimated that Wi-Fi-only iPads constituted greater than 60 percent of iPad sales with Wi-Fi-only usage accounting for 75 percent or more. The latest figures from comScore (for May 2011) reveal that 91.9% of iPad traffic occurred over Wi-Fi. Without a compelling Wi-Fi strategy, mobile carriers risk losing touch with their iPad-wielding customers. Conversely, carriers offering Wi-Fi can gain access to iPad users, even ones that aren't their mobile customers.
The only way to make Wi-Fi more important to carriers would be for Apple to launch a new revolutionary product that would predominantly rely on Wi-Fi connectivity. Enter iCloud. So now, carriers who don't offer Wi-Fi stand to lose the opportunity to connect (and connect with!) their customers whenever they're using iCloud for music, photos, or apps on any of their Wi-Fi enabled devices. As Lynnette Luna noted in FierceBroadbandWireless, "the notion of Wi-Fi hotzones is about to accelerate."
Carriers have many reasons for deploying Wi-Fi. They may want to offload data from 3G/4G, improve the profitability of their networks, offer a great mobile broadband experience, stay connected to their own customers or get connected to some new ones. But, whatever their reasons, chances are Apple had something to do with it. As I write this, Philip Elmer-Dewitt, Editor of Apple 2.0 at Fortune reports that "The Street has fallen back in love with Apple (AAPL)" and quotes Ticonderoga's Brian White: "Apple holds the hottest hand in the tech world". Nuff said, as they say.
So, now that Apple has made Wi-Fi critical for carriers, what are carriers demanding of Wi-Fi? BelAir Networks CTO, Stephen Rayment offers some insight into the demanding requirements inherent in Carrier Wi-Fi.
Reprinted from the BelAir Networks Blog