SEAMLESS WI-FI OFFLOAD: A BUSINESS OPPORTUNITY TODAY APTILO NETWORKS WHITE PAPER
SEAMLESS WI-FI OFFLOAD: A BUSINESS OPPORTUNITY TODAY APTILO NETWORKS WHITE PAPER By Claus Hetting, Senior Consultant & Analyst © Copyright Aptilo Networks v2 03-13 ABSTRACT Seamless Wi-Fi offload is the new mass-market business opportunity for mobile network operators. MNOs can tap into a vast market for both SIM and non-SIM Wi-Fi enabled connectivity by building own carrier-class Wi-Fi networks or through partnering. Seamless carrier-class Wi-Fi cuts down on CAPEX and can significantly reduce the need for more licensed spectrum. WHY WI-FI OFFLOAD Interested in HOW? Read our other white paper “Seamless Wi-Fi Offload: From vision to reality” SEAMLESS WI-FI OFFLOAD: A BUSINESS OPPORTUNITY TODAY EXECUTIVE SUMMARY Seamless Wi-Fi offload is the new mass-market business opportunity for mobile carriers: MNOs can provision combined carrier-class Wi-Fi and mobile services today and profit from offering consumers a vast service improvement with convenient ‘always-on’ data connectivity. With clientless EAP-SIM / AKA1 authentication and carrier-class Wi-Fi offload, smartphone and tablet users can enjoy seamless connectivity to match nomadic digital lifestyles while MNOs gain a significant competitive edge in the market. Embracing Wi-Fi today means that MNOs in addition to SIM-based Wi-Fi offload also can tap into a vast market for Wi-Fi connectivity of non-SIM devices. Carrier-class 802.11n Wi-Fi with traffic capacity to spare empowers MNOs to benefit from multiple business models by provisioning Wi-Fi services for wholesale customers, Wi-Fi venue owners, enterprises, communities, roaming partners and even other MNOs2. Adopting seamless Wi-Fi now allows MNOs to reclaim lost ground and reduce the risk of OTT disruption. Progressive MNOs across the globe are leading the paradigm shift towards seamless Wi-Fi offload and the results are already promising. Some cell sites such as airports are today offloading 50% of smartphone traffic and even higher offload rates are expected as 3GPP / Wi-Fi interworking matures. In many markets Wi-Fi is becoming a preferred high-capacity solution for MNOs. For consumers around the world, Wi-Fi is already the preferred low-cost data connectivity service. Carrier-class Wi-Fi is an attractive complement to 3G / LTE small cells. Some vendors such as Ericsson have launched multi-radio small cell products with both Wi-Fi and 3G / LTE. Vendor Models show that carrier-class Wi-Fi deployments allow MNOs to save 30-40% on network CAPEX while gaining several thousand percent in radio network capacity in typical indoor deployments. Seamless Wi-Fi offload keeps the need for expensive and scarce 3G / LTE licensed spectrum low while enabling MNOs to satisfy the surge in demand for wireless data connectivity well into the future. 1 For more about the technology of seamless Wi-Fi offload see the Aptilo White Paper: ”Seamless Wi-Fi offload: From vision to reality.” 2 In this paper the term ’mobile network operator’ (MNO) is widely used. Many of the business opportunities and solutions described herein apply equally well to MVNOs or fixed broadband operators considering the deployment of carrier-class Wi-Fi. 2 SEAMLESS WI-FI OFFLOAD: A BUSINESS OPPORTUNITY TODAY 1 CAPITALIZING ON THE POPULARITY OF WI-FI There is no question that Wi-Fi offload is one of the mobile industry’s most hotly debated business opportunities right now. Many of the world’s biggest carriers already recognize Wi-Fi as a businesscritical, strategic technology and some are in the early phases of testing or commercially deploying seamless Wi-Fi offload solutions. A few progressive new operators entering the mobile arena today even consider Wi-Fi their primary technology using mobile networks as a secondary coverage layer. The drivers for Wi-Fi offload are well known: Wi-Fi-capable devices are everywhere and more than a billion of them are equipped with SIM cards. For many users of tablets, smartphones and laptops, studies indicate that Wi-Fi has become the preferred wireless technology. Razor-sharp competition is forcing many MNOs to cut spending while looking for new ways to stand out in the market. Wi-Fi also has an important role to play as a technology for relieving mobile traffic congestion given that smartphone traffic is expected to surge at a growth rate of more than 50%3 per year and licensed spectrum is becoming increasingly scarce. Meanwhile industry organizations and standardization bodies are working to ensure that 3G / LTE and Wi-Fi technology are on an evolution path towards full interworking. The path to fully seamless Wi-Fi / 3G / LTE services and full Wi-Fi network integration has already been mapped out. Aptilo is playing a critical role across both Wi-Fi and mobile industries as an enabler of the new unified wireless broadband paradigm. This paper highlights some of the most important drivers and arguments for MNOs to embrace seamless Wi-Fi and carrier-class Wi-Fi in general as a new business opportunity. SEAMLESS WI-FI OFFLOAD: ENHANCING THE USER EXPERIENCE Wi-Fi has existed for years but technology and standards for seamless interworking between mobile networks and Wi-Fi has emerged only recently. Connecting to public Wi-Fi services from a smartphone, tablet, or laptop is often a tedious affair involving credit card numbers, email verifications, logins, codes, and passwords. Standards such as EAP-SIM authentication and Hotspot 2.0 are today replacing dated authentication and payment schemes with consumerfriendly seamless Wi-Fi access. At the same time Wi-Fi radio technology continues to evolve. Carrier-class 802.11n-based Wi-Fi today offers a user experience exceeding that of 3G / HSPA and delivers data rates close to those of LTE. Today a single 802.11n Wi-Fi Access Point can deliver 50 or even 100 Mbps of throughput using smart antenna techniques and interference mitigation. Wi-Fi Sessions Figure 1: Real statistics from the network of a commercially deployed seamless Wi-Fi offload Aptilo customer. The customer is a major international mobile carrier with seamless offload of 3G smartphone traffic to its own nationwide carrier Wi-Fi network. Measurements show a ten-fold increase in number of Wi-Fi sessions in the course of only six months as the number of SIM-based Wi-Fi sessions grows steeply. 3 According to Cisco VNI 2012 3 SEAMLESS WI-FI OFFLOAD: A BUSINESS OPPORTUNITY TODAY The overwhelming success of GSM and 3G owes a great deal to the concept of SIM-based automatic network access when moving in the network or roaming internationally. This is the principle of being connected regardless of time and place without doing anything except for having the device turned on. Seamless Wi-Fi offload solutions – such as those provided by Aptilo – are all about enabling precisely this mass-market feature of the mobile world. Figure 2: A simplified view of the inner workings of seamless Wi-Fi authentication. The EAP-SIM protocol allows smartphones and other SIM-enabled devices to authenticate with the HLR of their home mobile service provider and in this way access Wi-Fi services without user interaction and without the need for a client or app in the device. THE SEAMLESS SMARTPHONE & TABLET USER EXPERIENCE: • Always-on Wi-Fi (when in range) • No interaction with device necessary • No app or device client necessary • Billing via your home mobile service provider Seamless Wi-Fi is often marketed as an offload solution but carrier-class Wi-Fi for MNOs is not only about relieving network congestion. It is also about offering the smartphone user a better overall data service experience. In an industry where competition between mobile carriers is fierce and often based on price such new service differentiators represent major business opportunities. First-movers offering seamless Wi-Fi to smartphone subscribers stand to gain a significant competitive advantage. CHANGES IN USER BEHAVIOR FAVORING WI-FI Research shows that broadband usage patterns and user behavior are changing. While the early days of mobile were all about personal telephony on the move people today expect to be connected to quality data networks while working and living nomadically. The mobility aspect – meaning efficient handovers at speed – is less important for data services. More important is the availability of quality wireless broadband connectivity at home, in the office, and on the road. RESEARCH FACTS: THE SMARTPHONE USER’S PERCEPTION OF WI-FI • 52% of smartphone users prefer WiFi to mobile or have no preference • Wi-Fi is considered less expensive, easier to use, faster, and more reliable • 85% believe that mobile to Wi-Fi handover is an “important feature” A recent study of Western markets4 indicates that 70% of smartphone owners supplement their mobile data services with Wi-Fi. It may be surprising to some that more than half of the world’s smartphone users reportedly prefer Wi-Fi over mobile or indicate no preference between the two. Meanwhile a whopping 80% of laptop, tablet and eReader users prefer Wi-Fi to mobile. The majority of users also think of Wi-Fi as less expensive, easier to use, faster, and – this may surprise a few MNOs – more reliable. The same study shows that 85% of users consider seamless handover (offload) between mobile and Wi-Fi networks to be important. The cost of consumer 3G / LTE services is also driving the change. The recent departure from allyou-can-eat mobile broadband data bundles is making Wi-Fi an increasingly attractive low-cost option. In Europe typical 3G / LTE bundles are no longer unlimited and some are designed to penalize users for exceeding data limits by reducing data rates. Adopting Wi-Fi services and the convenience of automatic SIM-based authentication into the mainstream of mobile services is a major new business opportunity. 4 Cisco ISBSG Consumer Research Report, May 2012 4 SEAMLESS WI-FI OFFLOAD: A BUSINESS OPPORTUNITY TODAY 2 GROWING THE MNO BUSINESS WITH WI-FI: NON-SIM USERS Carrier-class Wi-Fi is also a business opportunity for MNOs in its own right. Whether MNOs choose to partner with existing Wi-Fi service providers (WISPs) or build their own carrier-class Wi-Fi networks, Wi-Fi gives MNOs the opportunity to address a vast market for connectivity of general Wi-Fi enabled devices. Since 2009 more than 9 billion Wi-Fi devices have been shipped and in 2012 alone this number exceeded 1.5 billion, which is nearly twice the number of devices shipped in 20115 . Today’s mobile broadband subscriber typically owns 3 or 4 Wi-Fi enabled devices and a couple of these probably do not include SIM-cards. By offering Wi-Fi services for all devices the subscriber is more likely to be loyal to the service and the MNO may as a result reduce churn. As carrier-class Wi-Fi service using the IEEE 802.11n standard (and future 802.11ac) becomes increasingly competitive from a quality and speed point of view, new business opportunities arise. Here are some of the most important and timely ones: • Carrier-class Wi-Fi in traditional hotspots: Many existing hotspots -– such as transport hubs, hotel chains, restaurants, shopping centers, etc. – are overloaded with traffic and offer poor Wi-Fi quality. MNOs may see an opportunity in approaching hotspot owners with the promise of high quality carrier-class Wi-Fi services for MNO subscribers as well as venue customers and ad-hoc users. • Offering quality, ad-hoc Wi-Fi services to Wi-Fi users in new types of locations: These may include sports stadiums, retail outlet chains, university campuses, city parks, and inner-city street level networks. A recent study6 indicates that 70% of American consumers believe that access to an enhanced shopping experience in retail outlets with Wi-Fi is highly desirable. • Carrier-class enterprise Wi-Fi services: Managed Wi-Fi services to enterprises can be offered on the same Wi-Fi infrastructure serving a number of other customers including those of the MNO, other carriers using a wholesale business model, retail partners, free community services, sponsored services, and more. Service providers can offer managed Wi-Fi services with guest Internet access for enterprises while utilizing the same Wi-Fi network for mobile data offload. • Cooperate with Wireless Internet Service Providers (WISPs): Through partnerships with WISPs or Wi-Fi hotspot aggregators (such as iPass or Boingo) a large Wi-Fi service footprint can be enabled quickly. • Utilizing excess capacity in residential broadband: By enabling public Wi-Fi access in set-top boxes in their subscribers’ homes, fixed broadband service providers can build huge public Wi-Fi networks virtually overnight. Using policy control this can be done without reducing the residential subscriber’s Wi-Fi quality. This network can be used for offloading by the MNO in the same group or sold as wholesale to other carriers. 5 According to ABI Research forecasts, December 2012 6 By SapientNitro, U.S.A, December 2012 5 SEAMLESS WI-FI OFFLOAD: A BUSINESS OPPORTUNITY TODAY All of the above strategies for generating more MNO revenue can be combined with seamless EAP-SIM authentication to achieve a ‘best-of-both-worlds’ approach to convenient and combined Wi-Fi and mobile broadband. When ad-hoc users experience the high quality of carrier-class Wi-Fi they may even be attracted to becoming subscribers of that MNO thus growing the subscriber base further. The provisioning of services must use established and field-proven Wi-Fi service management platforms – such as the Aptilo Service Management Platform™ – to enable user authentication, policy enforcement, and payment through a wide variety of schemes in addition to EAP-SIM. These include SMS-based one-time-password, portal-based access and payment, redirection to portals for advice of charge, and more. To make the MNO attractive to venue owners, the Wi-Fi service management platform should also support specific B2B features such as Enterprise Guest Access, BYOD (users register their own non-SIM devices for Wi-Fi) and integration toward hotel billing systems. 6 SEAMLESS WI-FI OFFLOAD: A BUSINESS OPPORTUNITY TODAY 3 SEAMLESS WI-FI DEPLOYMENTS ACROSS THE GLOBE Opportunities for MNOs to deploy and profit from seamless Wi-Fi services vary across the world. In emerging markets fixed broadband is less developed and shared Wi-Fi is often the primary means of connectivity. Extending 3G / LTE networks to provide seamless low-cost Wi-Fi services in cities can be a profitable means of reaching low-ARPU consumers in parts of Latin America, Asia, and Africa. In the big Asian markets the move to seamless Wi-Fi is already underway. China Mobile has deployed more than two million7 Wi-Fi access points and in some cities offers seamless access across 3G (TD-SCDMA) and Wi-Fi networks using a client in SIM-enabled devices. As a result nearly 70%8 of China Mobile’s data traffic is today carried over Wi-Fi. In 2011 KDDI of Japan chose Ruckus Wireless of the US – a regular partner of Aptilo - to deliver 100,000 carrier-class WiFi hotspots for ad-hoc and seamless client-based services for Android devices. Both major Asian MNOs have adopted carrier-class Wi-Fi and seamless offload as business-critical technologies. Leading MNOs in Latin America are not far behind in providing mass-market seamless Wi-Fi offload. TIM Brasil – a pioneer of SIM authentication – chose Aptilo’s seamless Wi-Fi solution in December 2011 and is in the process of rolling out a large-scale carrier-class Wi-Fi network to offload 3G and to reach previously underserved communities in the cities of Rio de Janeiro and Sao Paolo. TIM Brazil’s solution offers automatic EAP-SIM authentication of smartphones and SIM-enabled tablets combined with portal-based ‘bill shock prevention’ where users can authorize a daily charge with a single click. In the fall of 2012 US carrier AT&T announced plans to deploy 40,000 small cells across the USA all of which will include carrier-class Wi-Fi capability and seamless offload using a client in AT&Tprovided devices. AT&T has succeeded in offloading 5-20% of mobile traffic onto their own Wi-Fi networks. Markets in Europe and the US are more challenged in that a sizable part of total Wi-Fi traffic runs on private home or office Wi-Fi networks as a wireless extension of fixed broadband. Regardless of this many leading MNOs still consider carrier-class Wi-Fi critical to their continued success. 7 According to China Daily, December 24th 2012 8 According to Analysys-Mason, U.K., August 2012 7 SEAMLESS WI-FI OFFLOAD: A BUSINESS OPPORTUNITY TODAY 4 A CLOSER LOOK AT SMARTPHONE WI-FI TRAFFIC So how important is Wi-Fi to smartphones users? Hundreds of millions of subscribers are already using Wi-Fi on e.g. iOS or Android SIM-enabled devices. The next step in enhancing the end-user experience is to offer Wi-Fi seamlessly without device clients or apps. Using standardized EAPSIM / AKA authentication MNOs can automatically connect smartphones and other SIM-enabled devices to their own or to other preferred carrier-class Wi-Fi networks. As of late 2012 some 1.1 billion smartphones were in operation worldwide and this number is expected to grow to 3.3 billion by 2018. Smartphone traffic on 3G / LTE networks is projected to grow by 50% year-on-year reaching 2.7 GB per user per month in 20189. But this is only the tip of the proverbial iceberg because the data traffic generated by smartphones on mobile networks is only a small part of the total. WHAT SMARTPHONES ARE EAP-SIM / AKA ENABLED? Most new smartphones are capable of EAP-SIM authentication including the Apple iPhone and newer devices using the Android operating system. With a typical smartphone replacement cycle of 18 months, mature markets should not need to wait long before most of the installed base of smartphones is EAP-SIM / AKA capable. As of writing the following is a partial list: iPhone, iPad, Nokia (Symbian), Windows 8, Blackberry, Samsung Galaxy (most models). The mobile industry may have been neglecting what is by far the biggest proportion of smartphone traffic and that is Wi-Fi. According to a recent Nielsen study10, Android owners in the UK transfer more than three quarters of their Internet content over Wi-Fi. Although Wi-Fi markets in other regions are different this number gives an indication of the appeal of easy-to-use Wi-Fi to smartphone users. Another study11 has found that smartphones using Apple’s iOS in specific markets generate up to 10 times more data on Wi-Fi than on mobile networks. The ratio of 3G / LTE to Wi-Fi traffic on SIM-enabled devices across various markets ranges from about 1:1 to 1:4 or higher. The lower of the two ratios appears to be predominant in regions where the use of private Wi-Fi APs in homes and offices is less developed due to the lack of fixed broadband connections. Wi-Fi proportion of smartphone traffic 3 GB How much can you monetize? 1 GB Mobile data proportion of smartphone traffic Figure 3: Wi-Fi traffic on smartphones and tablets represents a significant MNO business opportunity. Smartphones in mature markets today – evidenced by another UK study – on average consume as much as 3 to 4 GB per month per user when including Wi-Fi traffic. Meanwhile, the 3G share of this traffic is - typically less than 1 GB per month. Overall, one vendor12 estimates that 36% of all Internet traffic is delivered over Wi-Fi while mobile broadband represents just 10%. 9 Source: Ericsson 10 ”Wi-Fi delivers over three-quarters of UK smartphone data”, Nielsen.com press release November 15th, 2012 11 Informa Media & Telecoms White Paper: ”Understanding today’s smartphone user: Demystifying data usage trends on cellular & Wi-Fi networks”, February 2012 (commissioned by Mobidia) 12 Ruckus Wireless, USA 8 SEAMLESS WI-FI OFFLOAD: A BUSINESS OPPORTUNITY TODAY 5 EMBRACING WI-FI REDUCES THE RISK OF OTT DISRUPTION The Wi-Fi traffic numbers above may be disturbing to MNOs: A large part of smartphone traffic is not in any way controlled, billed, or otherwise managed by the MNO. With 3G / LTE and Wi-Fi interworking more and more seamlessly this trend can be alleviated or even reversed. As an enabler of OTT services Wi-Fi may disrupt the dominance of mobile broadband if the opportunity to include Wi-Fi into the mainstream of the mobile industry is disregarded. So should carrier-class Wi-Fi be the primary MNO technology with mobile as a coverage supplement? At least one new MVNO has adopted this strategy. In November 2012 Republic Wireless of the US launched a $19 unlimited smartphone service based on Wi-Fi for data and 3G voice roaming with Sprint. There is some evidence in support of the claim13 that MNOs may be effectively losing traffic to Wi-Fi networks even though smartphone and other SIM-enabled traffic continues to grow on mobile networks because Wi-Fi traffic on smartphones is likely growing at a faster rate than mobile traffic. This will continue to happen unless carriers start embracing Wi-Fi in new and progressive ways. This trend can also be viewed as an opportunity: Large amounts of traffic from smartphones not carried on 3G / LTE networks represents a likely value of billions of dollars in services that MNOs thus far have had few means of profiting from. Seamless Wi-Fi solutions – and the eventual convergence of 3GPP and IEEE standards by industry consensus – are today setting mobile carriers on a course to correcting this. 13 The one piece of indirect evidence in support of this statement is the fact that the Wi-Fi network equipment industry is growing at a faster rate than that of the mobile equipment industry. This means that the amount of Wi-Fi capacity in the world is increasing faster that the amount of mobile network capacity. Cisco recently reported a sales growth of 100% year-on-year on Wi-Fi service provider solutions. 9 SEAMLESS WI-FI OFFLOAD: A BUSINESS OPPORTUNITY TODAY 6 THE BUSINESS CASE: WHAT IS THE VALUE OF WI-FI OFFLOAD? MNOs may view seamless Wi-Fi as an opportunity to create new revenue or as a defensive tactic to cut costs (primarily network CAPEX / OPEX and licensed spectrum costs) and retain customers. Either point of view is valid but when choosing the opportunistic view reductions in cost and lower churn rates are likely to follow as an inherent result of embracing carrier-class Wi-Fi as a technology of choice. The Wi-Fi offload business opportunity map for mobile carriers Defensive: Cut costs Seamless & automatic: Value of everyday convenience International roaming: Lifestyle & lower costs + Opportunistic: Boost revenues Relieve congestion Lower network CAPEX/OPEX Retain customers Reduce churn Additional services Attract new customers Figure 4: The multiple seamless Wi-Fi offload business opportunities for MNOs. NEW MASS-MARKET WI-FI OFFLOAD SERVICE TYPES There are two ways in which MNOs can provision Wi-Fi services: By building own carrier-class Wi-Fi networks or by partnering with existing Wi-Fi service providers (WISPs) or Wi-Fi network aggregators such as iPass or Boingo. The two methods are largely equivalent from a seamless service provisioning point of view14 although having many WISP partners requires more policy and payment coordination. With today’s EAP-SIM authentication and Wi-Fi offloading schemes EAP-SIM capable smartphones will automatically prefer Wi-Fi services to mobile broadband, which is why careful planning of carrier-class Wi-Fi deployments is necessary. As seamless Wi-Fi / 3GPP interworking evolves over the next few years the ability of MNOs with Wi-Fi networks to fine-tune network selection will vastly improve. The details of seamless services provisioned across 3GPP and Wi-Fi networks will vary according to the competitive environment but here are a few examples that can be efficiently implemented using the Aptilo EAP-SIM solution including the Aptilo Wi-Fi Service Management Platform: • Combined seamless Wi-Fi / 3G data service with a cap on total data volume • Volume-capped 3G services with unlimited (possibly free) seamless Wi-Fi at MNO or partner hotspots • Low-cost Wi-Fi services for 3G subscribers without a 3G data plan • Ad-hoc and / or subscription-based Wi-Fi services on the MNO carrier-class Wi-Fi network 14 The question of how to provision Wi-Fi offload is treated in more depth in the Aptilo White Paper: “Seamless Wi-Fi offload: From vision to reality.” February 2013. 10 SEAMLESS WI-FI OFFLOAD: A BUSINESS OPPORTUNITY TODAY WHERE & WHEN TO OFFER WI-FI OFFLOAD SERVICES In European markets and in the US MNOs may benefit from offering seamless Wi-Fi services during the hours of the day when users are outside of home or office (private) Wi-Fi coverage zones. With the urban nomadic, always-connected lifestyle becoming more common, such Wi-Fi services may capture a sizable amount of Wi-Fi traffic and offer a significant outside-the-home Wi-Fi convenience to the consumer. A recent study15 of the US market indicates that users spend roughly 3.5 hours using their mobile Wi-Fi device in their usual work or home location while other locations – such as transport hubs, retail outlets, restaurants and outdoor venues – with Wi-Fi represent about 2.5 hours. The graphic below shows how the smartphone traffic is split between 3G / LTE and Wi-Fi in the U.K. Figure 5: The distribution of mobile and Wi-Fi data over time during a 24-hour weekday period for a smartphone user in the UK16. MNOs may benefit from offering seamless Wi-Fi offload when the typical user is away from home and office typically during late afternoon and morning hours. Assuming a flat traffic distribution across 16 hours of the day (from 8 am to 12 midnight) a carrierclass Wi-Fi network may as a starting point capture 2/16 or about 12% of the total smartphone Wi-Fi traffic on average. Through partnerships with the right WISPs and by concentrating own carrier-class Wi-Fi deployment on specific high-traffic areas Wi-Fi offload can reach much higher levels. Aptilo Wi-Fi offload customers typically report offload rates of 20-30% and up to 50% for specific 3G cells. In some cases the number of Wi-Fi sessions has grown by several hundred percent once smartphone users start accessing the service seamlessly. Within a few years ANDSF and Hotspot 2.0 functions controlling network selection will give MNOs more tools to optimize offload performance across time, traffic load, and location. The above example will not apply everywhere as regional market conditions vary across the globe. In Asian markets – for example in Japan – private home and office Wi-Fi is not as common as in Europe and America. The opportunity to benefit from building their own Wi-Fi networks alongside 3G / LTE has already been evidenced to be even greater in these markets as is the opportunity to cut network CAPEX / OPEX and reduce the need for costly licensed spectrum. 15 Cisco IBSG Consumer Research Report, May 2012 16 Adapted from Mobidia/Informa: ”Understanding Today’s Smartphone User”, January 2012 and Nielsen reports. 11 SEAMLESS WI-FI OFFLOAD: A BUSINESS OPPORTUNITY TODAY HIGH VALUE: INTERNATIONAL WI-FI ROAMING MNOs may16also add value to consumer lifestyle by offering EAP-SIM-enabled seamless Wi-Fi as a form of international data roaming. There is little technical difference between this and the local Wi-Fi offload services. Given the high tariffs for mobile data roaming seamless Wi-Fi connectivity for smartphones abroad seems an obvious opportunity although few have implemented such services. The few Wi-Fi roaming offers in existence differ in significant ways. US carrier AT&T recently17 launched a Wi-Fi roaming service for $60 a month for 300 MB of Wi-Fi data. The service covers a handful of international locations. KDDI of Japan launched a similar Wi-Fi roaming service in June 2012 using the aggregated global Wi-Fi network of iPass that spans many thousands of WISPs across the globe. But most importantly both of these services require a device client. Aptilo’s EAP-SIM-based Wi-Fi offload requires no client or downloaded app in the device. With a growing number of EAP-SIM-capable Wi-Fi networks across the globe Wi-Fi roaming will gradually become both seamless and clientless. International Wi-Fi roaming is a high-value, high-traffic opportunity. According to a study by iPass18 business travellers typically consume up to 400 MB of data traffic per day while on the road. Anything that offers convenient, always-on quality Wi-Fi services at a rate lower than today’s 1 EUR or more per MB for mobile data roaming is likely to be attractive. Given that the cost of providing one MB of data over carrier-class Wi-Fi is perhaps 10% of that of mobile, seamless WiFi roaming will likely be profitable even at a fraction of current roaming tariffs. MEETING WI-FI DEMANDS FROM ‘FREE’ TO WHOLESALE In the US and Europe many think of Wi-Fi as a free service offered by, for example, retail shopping outlets, restaurants and even some airports. Although users can be attracted to venues through the promise of free Wi-Fi, carrier-class Wi-Fi with SIM-authentication need not be free of charge. In a recent study by the Wi-Fi Alliance 72% of respondents said that they were ready to pay more for a mobile data service that automatically connects to Wi-Fi networks19. The reason is the high value of convenience. Free Wi-Fi at Starbucks or McDonald’s is very different than a seamless carrier-class Wi-Fi service with the user always connected across a large combined Wi-Fi and mobile coverage footprint. MNOs may occasionally be required to provide free Wi-Fi on their Wi-Fi infrastructure for example as a community service obligation in return for using public sites for Wi-Fi installation or to meet the needs of venue owners. The solution is to configure multiple virtual Wi-Fi network services on the same APs by the use if multiple SSIDs. Some Wi-Fi equipment vendors support up to 16 virtual APs that can be configured and managed as separate services. Using this scheme MNOs can even choose to partner with other MNOs in building the Wi-Fi network and services. Figure 6: Offering Wi-Fi services to many clients in a single carrier-class Wi-Fi AP using multiple SSIDs 16 17 January 2013 18 The iPass Wi-Fi Cost Index 19 ”Easy-to-Use” Wi-Fi: An Essential Offering for Service Providers”, Wi-Fi Alliance, May 8th 2012 12 SEAMLESS WI-FI OFFLOAD: A BUSINESS OPPORTUNITY TODAY 7 REDUCING NETWORK COSTS WITH CARRIER-CLASS WI-FI MNOs are under increasing pressure to deliver enough network capacity to satisfy the boom in data demand from smartphones and other devices. MNOs can apply three technical mechanisms to meet the surge of data capacity demand: Acquire more licensed spectrum, improve the efficiency of radio networks or densify base station site builds. As licensed spectrum becomes increasingly scarce and as LTE technology nears the theoretical (Shannon) bounds for bits-per-Hertz efficiency, radio network densification with 3GPP-based small cell technology including Wi-Fi is becoming the strategy of choice for many leading MNOs. Carrier-class Wi-Fi using 802.11n is a real alternative to deploying 3G or LTE small cells for several reasons: The raw traffic handling capacity per 802.11n-capable Wi-Fi AP is beyond that of a 3G / HSPA small cell and is in some cases comparable to LTE. Meanwhile an initial form of seamless mobility between mobile and Wi-Fi networks has been enabled with automatic EAP-SIM authentication. The third reason is cost: Carrier-class Wi-Fi APs cost perhaps a third or a fifth of 3G / LTE small cell base stations and require little maintenance. Much of the cost of deploying carrier Wi-Fi is attributed to installation, backhaul, and system integration. One research study20 has concluded that the TCO (per bit of capacity) of using carrier-class Wi-Fi is as little as 10-25% of 3G macrocells and at least 30% lower than equivalent 3GPP-based small cells. The example below21 confirms the latter result. High-Density traffic offload example: Wi-Fi versus LTE Figure 7: Comparing the cost and capacity of building indoor high-capacity data connectivity networks. Carrierclass Wi-Fi offers large CAPEX savings and very high capacity gains to meet long-term data traffic demand. 20 “The economics of small cells and Wi-Fi offload” by Senza Fili Consulting, November 2012 21 Source: HETTING Consulting Report: “Seamless Wi-Fi/3G/LTE Offload in High-density Areas” 13 SEAMLESS WI-FI OFFLOAD: A BUSINESS OPPORTUNITY TODAY To serve a typical airport with 1,000 concurrent smartphone users consuming 50 MB of downlink data in the busy hour (BH) 110 Mbps of capacity is needed. This requires about 6 LTE picocells and a distributed antenna system (DAS) at an estimated total cost of $170,000. The airport can be serviced by one hundred 802.11n Wi-Fi APs at a total installed cost of $100,000 and delivering a total of 5 Gbps of capacity22. This example can be applied to any identified high-density traffic area and of course not only airports. Offloading the smartphone traffic to Wi-Fi saves 40% in CAPEX but more importantly Wi-Fi offers 40 times more data traffic capacity compared to the LTE-based system. This means that the Wi-Fi offload solution will be able to serve the data needs of smartphones and tablets for many years into the future even at high data traffic growth rates. Because the amount of excess capacity is large this scheme would also allow the MNO to share the Wi-Fi network with other service providers or even other MNOs and still have plenty of capacity to spare for e.g. ad-hoc airport services, international Wi-Fi roaming, and more. 22 AP prices and performance data are adapted from Ruckus Wireless White Paper, ”The Business Case for Service Provider Wi-Fi”. Cost estimates for LTE: $8,000 per installed pico-cell eNodeB and 6 DAS systems at $20,000 per unit including equipment and installation. 14 SEAMLESS WI-FI OFFLOAD: A BUSINESS OPPORTUNITY TODAY 8 REDUCING THE NEED FOR ADDITIONAL LICENSED SPECTRUM As the surge in mobile data continues increasing amounts of spectrum is needed. Mobile carriers often invest heavily in perhaps 2 x 20 or 30 MHz of licensed band while (in most countries) more than 600 MHz23 of spectrum is available for unlimited free use with Wi-Fi. This fact alone should weigh heavily when carriers map out their plans for building radio network capacity. Some studies indicate that the need for MNO licensed spectrum in the busiest markets will exceed 2 x 100 MHz by 201624. Other research results25 are more dramatic citing a need for 53 times more mobile capacity in the USA by 2020 (compared to the capacity levels of 2010) while cellular network capacity is only expected to grow by a factor of 25 in the same period limited by lack of available spectrum. If these studies turn out to be true MNOs will have little choice but to build network capacity with either carrier-class Wi-Fi or very low-cost LTE small cells if they want to fully satisfy consumer demand. The need for more mobile broadband capacity is localized: A few percent of mobile sites in heavy traffic areas are congested while the majority of the MNOs service area may be well served by macrocellular sites and existing spectrum. Congested mobile sites are found not only in inner city areas but all across the mobile coverage footprint and even in a small percentage of rural sites. Case study: High density 3G/LTE/Wi-Fi offload The above example shows what the savings in licensed spectrum could be in reality for a highdensity urban scenario. In the sample case a single (one sector) 3G / HSPA+ or LTE site covers an area of 1 km2 and serves from 250 to more than 300 SIM-enabled devices. The percentage of Wi-Fi traffic offload starts at 10% but grows to 80% as solutions for seamless offload evolve. The effect on licensed spectrum need is dramatic. 23 The 600 MHz of unlicensed Wi-Fi band is typically not used in a single block but should be viewed as a pool of available frequencies from which Wi-Fi service providers select a number of sub-bands also known as Wi-Fi channels. In the 2.4 GHz band carrier-class Wi-Fi deployments typically use 3-4 channels of 20 MHz bandwidth each. In the 5 GHz band most service providers today will use up to a maximum 9 channels of 20 MHz. These channels are then arranged into a frequency reuse pattern. By selecting from a large pool of available channels, Wi-Fi service providers can keep interference low to achieve high service quality and throughput. 24 “Mobile Broadband Capacity Constraints And the Need for Optimization”, Rysavy Research, 2010 25 By Signals Research Group, 2010 15 SEAMLESS WI-FI OFFLOAD: A BUSINESS OPPORTUNITY TODAY 3G/LTE spectrum need with and without Wi-Fi offload Figure 8: Spectrum needs for 3G & LTE network in a sample high traffic density area with and without Wi-Fi offload. Wi-Fi offload dramatically reduces spectrum needs and keeps licensed LTE spectrum below 20 MHz in the downlink. The conclusions can be summarized as follows26: • The LTE spectrum need for a single-sector site can be kept below 20 MHz (download only) if the proportion of traffic offloaded to Wi-Fi increases from 10% to 80% over five years. This amount of LTE band is typical for LTE operators in many markets. • The 802.11n carrier-class Wi-Fi network of 30 outdoor APs (assumed to deliver 20 Mbps of capacity per AP over an line-of-sight distance of about 100 meters) can deliver 600 Mbps of capacity. This is four times the peak capacity need for smartphone traffic in Year 5. Given the capacity excess, the Wi-Fi network is likely to deliver excellent data rate performance to individual users. • 3G / HSPA+ technology will be challenged to meet the capacity demand from Year 1 and is likely only suitable as a coverage layer for voice or basic data services. 26 Source: HETTING Consulting Report: “Seamless Wi-Fi/3G/LTE Offload in High-density Areas” 16 SEAMLESS WI-FI OFFLOAD: A BUSINESS OPPORTUNITY TODAY 9 SEAMLESSNESS IN NETWORKS AND DEVICES Automatic smartphone authentication with EAP-SIM is a critical enabler of combined Wi-Fi and mobile services but it is only the first in a series of network and device advancements. This evolution is reflected in the Aptilo case study above as the percentage of mobile traffic offload to Wi-Fi may start at 10-20% but is expected to rise to much higher levels as the technology develops. The path to full Wi-Fi / 3GPP service continuity has been mapped out and during the next few years MNOs will be able optimize networks and services by more direct control over carrier-class Wi-Fi networks and services. Some of the most important advancements over the next few years will be: • Multiple methods for optimizing Wi-Fi traffic flows: Today Wi-Fi traffic from EAPSIM-capable smartphones or tablets is typically routed to the Internet locally close to the Wi-Fi access point (by local breakout). Some vendors – such as Aptilo – already today offer options for directing Wi-Fi traffic to MNO core networks. This gives MNOs gradually increasing control over subscriber usage policies, charging, security, and the management of combined Wi-Fi and mobile services. • Controlling Wi-Fi / 3GPP network selection: ANDSF (Access Network Discovery and Selection Function) of the 3GPP together with Hotspot 2.0 of the Wi-Fi alliance, will allow MNOs to control when, where, and how mobile traffic is offloaded to Wi-Fi and vice versa. The result is a better user experience and optimal use of network resources. ANDSF solutions in networks and devices are expected to become commercially available in the course of 2014-2015. • Multi-technology device intelligence: New devices are over the coming years expected to play an active role in making intelligent decisions regarding real-time network selection (based on measurements) and the splitting IP traffic flows between 3GPP and Wi-Fi carriers. Device features will include simultaneous active 3G / LTE & Wi-Fi sessions, IP-address consistency across networks, and more. The eventual goal is to enable IMS-based services over both 3GPP and Wi-Fi networks. 17 SEAMLESS WI-FI OFFLOAD: A BUSINESS OPPORTUNITY TODAY 10 THE APTILO WI-FI OFFLOAD VISION Aptilo believes that Wi-Fi and mobile industries are on a path of convergence enabled by advances in standards, technologies and systems for seamless 3GPP / Wi-Fi interworking. Already today MNOs and carrier-class Wi-Fi service providers alike can benefit economically from technologies such as EAP-SIM authentication and Wi-Fi / 3GPP core integration. Over the next few years a new paradigm of unified Wi-Fi and mobile will emerge enabling MNOs to profit from combined Wi-Fi & mobile broadband services and new cross-industry partnerships. Unified Wi-Fi and mobile networks will meet the demand for wireless data connectivity worldwide well into the future. ABOUT APTILO Aptilo Networks has provided service management solutions to Wi-Fi and WiMAX service providers since 2001 serving more than 90+ Wi-Fi service providers in 60 countries. Today, Aptilo is a recognized industry leader in enabling the seamless service delivery across Wi-Fi and 3GPP-based network systems. Aptilo Networks routinely partners with leading carrier-class Wi-Fi and 3GPP equipment vendors to deliver end-to-end carrier-class solutions to the global wireless market. Aptilo Networks is headquartered in Stockholm, Sweden, with regional offices in Kuala Lumpur, Dallas and Toledo. Aptilo Networks is privately held with Norvestor Equity as the majority shareholder. Policy & Charging 90+ Wi-Fi Service Provider Deployments 18 SEAMLESS WI-FI OFFLOAD: A BUSINESS OPPORTUNITY TODAY ABOUT WI-FI OFFLOAD, ONLOAD, AND ROAMING The mobile industry has chosen the somewhat negative term ‘offload’ to mean nearly any form of interworking between Wi-Fi and mobile 3G / LTE technology. The word is to some extent a misnomer because it only covers one of many opportunities arising as the technologies merge. When mobile carriers build own Wi-Fi networks many will agree that it would be misleading to say that data traffic is being offloaded to Wi-Fi. It is rather being onloaded to the carrier’s own Wi-Fi network instead of being handed off to a Wi-Fi network belonging to someone else. Another option is to hand traffic over from your 3G / LTE network to a known and approved Wi-Fi service provider with whom the MNO has a defined technical and commercial agreement. This may be considered offload but the important aspect is that the mobile carrier retains a degree of control with subscriber traffic and can bill for it as required. MNOs will agree that keeping subscriber data traffic on their networks – or maintaining some degree of control over it – is highly desirable. In contrast ‘offload’ indicates getting rid of traffic MNOs do not want. Better phrases would be Wi-Fi seamless interworking or Wi-Fi seamless roaming. 19
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