Making money from Wi-Fi

Making money from Wi-Fi
Once the preserve of hotels, coffee shops and airport lounges, Wi-Fi is now an increasingly ubiquitous service and has become an essential part of the communications services provider (CSP) portfolio. James Savelli-Holt looks at how cable and fixed-line telcos can start monetising their Wi-Fi assets.

With the US cable industry establishing more than 12 million Wi-Fi access points throughout the US – has the time finally come for cable operators to start making some money from Wi-Fi? AT&T’s link up with Australian based NetComm for the supply of a fixed-wireless broadband highlights a transitional shift of cable operators looking to marry up with wireless networks. But why? Is there a competitive advantage?

Looking at customer behaviour and in spite of the ubiquity of public Wi-Fi zones (in cities, commercial districts and shopping centres) there is a continued perception that public access Wi-Fi, offered even as a free perk, misses the mark and fails to drive customers to use it for anything more than out of necessity or convenience. The general rule of thumb being that customers are not willing to pay for public access Wi-Fi services – regardless of hosting platform or performance, and certainly recent security concerns surrounding resilience against exploitation have not helped.

But, with the compelling need for operators to expand their existing services portfolio and continue with their replacement of legacy network infrastructure with IP based roll-outs there may be a business model for Wi-Fi - but it is not a traditional one. CSPs are now obliged to think outside the box and adopt a wide variety of approaches to monetise their hotspot offerings.

Location-based services offer this potential route – with smartphone-savvy customers and existing users of legacy IT systems now driving more location content and services to virtual environments, resulting in the outdoor Wi-Fi market rising from an estimated $15bn a year to $37bn by 2018 (excluding the wider M2M market) – creating a very addressable market.

One such application is through proximity marketing. By engaging and partnering with commercial retailers, coupled with a smartphone’s Near Field Communication (NFC) or Wi-Fi interface, subscribers can then be sent alerts, promotions or coupons as they enter a store or a particular part of the store - creating customer value, loyalty and if an existing subscriber, reducing the likelihood of churn. Wi-Fi is particularly well suited to this application due to its performance and limited range. However, this approach has yet to take off in any meaningful way but could provide cable operators a useful weapon – particularly against mobile networks.

Also related to the hyper-local nature of Wi-Fi, a potential opportunity is for CSPs to perform analytics for the venue owner, partner or third-party marketer. The importance of ‘big-data’ analytics as a potential revenue stream tracks nicely against the recent ‘big data’ movement in the wider industry. This offering would provide a useful stream of bankable work for newly minted ‘big data’ teams to report on.

Whilst public Wi-Fi perhaps does not offer a direct route to revenue generation in its purest sense - operators will need to assess the opportunities and challenges in detail. Targeted advertising and the associated data analytics to identify trends, response rates and conversions may prove to be the most promising areas for cable operators to exploit.