The Shannon-Hartley theorem, otherwise known as Shannon’s Law, describes the maximum rate at which an amount of data can be transmitted within any given portion of spectrum. 4G technology is rapidly approaching the limits of Shannon’s Law meaning that it has reached the physical limit of wireless capacity of any given cell.
One answer is to build more cells but it is not a strategy that is likely to work. On the current trajectory, there will be a capacity deficit by 2014/15 and while mobile network operators (MNOs) are doing everything they can to bolster their networks, the fact is that a new direction is needed to cope with the data explosion.
Wi-Fi: The obvious solution
The solution to the problem is perhaps less progressive than one might first expect. MNOs are turning to a technology which has historically been a competitor of the mobile network; they are turning to Wi-Fi.
In a sense, Wi-Fi is a solution that has been right under the industry’s nose since the signs of a mobile data crisis first emerged. The benefits of offloading mobile data traffic to fixed wireless networks are exhaustive.
To start, there are widespread existing deployments of Wi-Fi just waiting to be utilised for the purposes of mobile data offload. ABI Research estimated that by the end of 2012 there were 4.9 million commercial Wi-Fi hotspots around the world, with this figure set to increase to 6.3 million by the end of 2013. These figures do not include the number of hotspots that are riding on the back of people’s home networks. For example, FON, the company that has spearheaded the notion of crowdsourced Wi-Fi, says that it now has over five million hotspots in operation around the globe. From home networks to commercial hotspots, Wi-Fi already has a global footprint, the likes of which no other technology can rival.
Perhaps the most significant benefit, from the perspective of the MNO, is how cost effective Wi-Fi infrastructure is. Thanks to the commercialised nature of Wi-Fi technologies, operators are able to roll out large scale networks at a fraction of what it would cost to deploy traditional mobile infrastructure.
The total cost of ownership (TCO) would be dramatically reduced using Wi-Fi offloading, thanks to a much lower CAPEX and OPEX. Wireless 20/20 carried out an in-depth simulation using New York as the model and found that a carrier would experience a positive return on investment with as little as 20 per cent geographical coverage and 24 access points (APs) per square kilometre. However, by increasing this coverage to 42 APs per square kilometre, Wireless 20/20 found that an operator could reduce its number of macro LTE capacity sites from 1,879 to 432. This translates to cumulative TCO savings of $250 million.
Completely seamless Wi-Fi roaming
There have been two significant stumbling blocks for the uptake of Wi-Fi offload and they are:
- The business case for such a radical change in infrastructure
- The ability to offer a truly integrated and seamless experience
Fortunately, the Next Generation Hotspot (NGH) initiative from the Wireless Broadband Alliance addresses both these concerns.
The ambition, which is quickly becoming a reality, is to allow users to securely roam amongst Wi-Fi hotspots much the same way that a mobile device currently does on the cellular data network.
The Wi-Fi Alliance’s Passpoint programme provides device standards of compliance while the Wireless Broadband Alliance’s NGH focuses on developing standardised frameworks for operator policies and roaming agreements between different providers.
As the work of these global initiatives comes to pass, new relationships will be forged between MNOs, established Wi-Fi providers and other operators in the wireless sphere. It is on the back of these relationships that the monetisation of Wi-Fi networks will be built. Established Wi-Fi providers will be able to cash in on their existing infrastructure, as mobile operators piggyback on the networks.
More than just an offload tool
NGH turns small cell infrastructure from a tool purely designed for data offload into a revenue generation tool. MNOs will not only generate a ROI from the deployment of a Wi-Fi network, but they will generate profit from new services. In much the same fashion that customers are offered roaming packages today, they will offered Wi-Fi roaming packages thanks to NHG. How far this model can go remains to be seen but an example of a monetisation might be to offer subscribers a tiered service, where they have varying levels of access and speed to the Wi-Fi network depending on their subscription choice.
NGH transforms the Wi-Fi network from a mere offload tool, into a desirable service capable of generating profit.
The future is still bright
Over-the-top services have had a devastating impact on MNO profits and with the need for continued investment in infrastructure, operating margins are in dangerous territory for many. While it is evident to most that the future lies in small cell deployments, what has been missing from the equation is how small cell infrastructure will generate profit. Next Generation Hotspots answers this conundrum by allowing the MNOs to build a premium service around their Wi-Fi networks.
