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Global Developments

in Public Wi-Fi

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About the Wireless Broadband Alliance

Founded in 2003, the aim of the Wireless Broadband Alliance (WBA) is to secure an outstanding user experience through the global deployment of next generation Wi-Fi. The WBA and its industry leading members are dedicated to delivering this quality experience through technology innovation, interoperability, and robust security.

Today, membership includes major fixed operators such as BT, NTT

Communications, Comcast and Time Warner Cable; seven of the top 10 mobile operator groups (by revenue) and leading technology companies such as Cisco, Google and Intel.

These members serve over 390 million customers and have rolled out over 290,000 hotspots worldwide. They also work with international operators to drive innovation, deliver seamless connectivity and optimize network investments. The WBA Board includes AT&T, BT, Boingo, Cisco, Deutsche Telekom, KT, NTT DOCOMO, Orange France, True Internet and TMN/Portugal Telecom.

Wireless Broadband Alliance – Head Office 3 Tai Seng Drive #04-00

Singapore 535216

www.wballiance.com www.twitter.com/wballiance

ABOUT INFORMA TELECOMS & MEDIA

Informa Telecoms & Media is the leading provider of business intelligence and strategic marketing solutions to global telecoms and media markets.

Driven by constant first-hand contact with the industry, our 60 analysts and researchers produce a range of intelligence services including news and analytical products, in-depth market reports and datasets focused on technology, strategy and content.

Informa Telecoms & Media – Head Office Mortimer House, 37-41 Mortimer Street London W1T 3JH, UK

www.informatandm.com www.twitter.com/informatm

CONTENTS

3

Executive Summary

4

An overview of today’s Wi-Fi

ecosystem

7

Q&A: An interview with Chris Bruce,

Chair, Wireless Broadband Alliance &

CEO, BT Openzone

9

WBA milestones and achievements

11

Operator best-practice case studies

11

Operator case study: Boingo

12

Operator case study: China Mobile

14

Operator case study: Orange France

15

Operator case study: True

17

An overview of WBA member

companies

19

Wi-Fi ecosystem survey analysis

© Informa UK Limited 2011. All rights reserved.

The contents of this product are protected by international copyright laws, database rights and other intellectual property rights. The owner of these rights is Informa UK Limited, our affiliates or other third party licensors. All product and company names and logos contained within or appearing on this product are the trade marks, service marks or trading names of their respective owners, including Informa UK Limited. This product may not be copied, reproduced, distributed or transmitted in any form or by any means without the prior permission of Informa UK Limited.

Whilst reasonable efforts have been made to ensure that the information and content of this product was correct as at the date of first publication, neither Informa UK Limited nor any person engaged or employed by Informa UK Limited accepts any liability for any errors, omissions or other inaccuracies. Readers should independently verify any facts and figures as no liability can be accepted in this regard - readers assume full responsibility and risk

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1.

This paper uncovered

unprecedented growth in Wi-Fi hotspot deployments which are predicted to rise 350% by 2015. It found that 58% of operators - including 47% of mobile operators - believe Wi-Fi hotspots are either very important or crucial to enhance their customers’ experience; offload busy mobile broadband networks; and provide a value-added services platform. The paper looks in detail at the plans of four operators – Boingo, China Mobile, Orange France and True.

2.

It found that a key factor in this deployment activity is the rise in mobile data. Global mobile data traffic is expected to reach 16.84 million terabytes by 2014 which operators plan to manage through pricing strategies followed closely by use of Wi-Fi-based offload. It also revealed that smartphone connections to hotspots will soon overtake laptops globally. Laptops now represent less than half (48%) of the connections to hotspots, with smartphones now encompassing 36% and tablets already on 10%. In APAC, smartphones already outnumber laptop connections while in North America and Latin America, smartphones and laptops represent the same number of connections.

3.

The paper also highlights several barriers to further adoption and usage of public Wi-Fi. These include cumbersome authentication procedures, the costs to access the networks, user discovery of available networks and security. However, the report highlights that several of these challenges will be overcome by the Next Generation Hotspots currently being trialled around the world, which allow users to seamlessly roam between cellular and Wi-Fi networks using their mobile handset’s SIM card as authentication, thereby alleviating concerns surrounding authentication, network discovery and security. The research also found that operators are already overcoming the issues surrounding the cost of access by increasingly bundling public Wi-Fi access as part of broadband or cellular packages.

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Wi-Fi has firmly established itself as the most heavily-used wireless technology ever deployed in terms of the volume of data traffic transmitted over networks using Wi-Fi, according to Informa Telecoms & Media. The ever-growing ubiquity of Wi-Fi networks combined with the integration of low-cost Wi-Fi chipsets into a vast and mature ecosystem built of thousands of devices and the explosion of applications has ensured that hundreds of millions of users worldwide now make regular use of Wi-Fi to access the Internet. This has meant that developing a Wi-Fi strategy has become an imperative for virtually all operators globally. According to Thomas Wehmeier, principal analyst at Informa Telecoms & Media, “any network director seeking to efficiently and profitably manage the follow of data traffic across their network should be looking to include Wi-Fi as part of an holistic customer-centric network strategy”.

After successfully establishing itself firmly as a must-have feature in virtually every smartphone and an increasing number of lower-cost mass-market feature phones, the second wave of Wi-Fi has truly emerged. In 2010 alone, more than 1,950 device models supporting Wi-Fi were certified by the Wi-Fi Alliance, including almost 250 Wi-Fi enabled smartphones (see fig. 1). In total, the Wi-Fi Alliance has issued more than 9,000 product certifications.

Support for Wi-Fi has come from executives from the world’s largest operator groups. In fact, eight of the 10 world’s largest operators by

revenue have deployed their own public Wi-Fi networks.

Connections to Wi-Fi networks have historically been dominated by the laptops of the mobile workforce, but the rise of smartphones means that they are set to take over as the primary device connecting to public Wi-Fi networks. Operators around the globe are reporting that the mix of devices connecting to their public Wi-Fi networks is changing rapidly – on an almost daily basis – and, according to the joint WBA/ Informa Telecoms & Media industry survey, connections from smartphones and tablets already account for almost 51% of the total on average. There has always been a strong community actively supporting the Wi-Fi ecosystem through bodies such as the Wireless Broadband Alliance, although these typically represented business units historically linked to the fixed divisions of major operator groups, such as France Telecom, Deutsche Telekom, KT, NTT,

Telefonica and Portugal Telecom. As mobile data markets develop – and

as the penetration of smartphones, tablets and other connected devices increases, there is widespread expectation that almost all operators will be required to enter the Wi-Fi space in some way to remain competitive.

Operators have chosen a variety of different strategies to meet customer demand for Wi-Fi with their choices typically dependent on the existing status of the local Wi-Fi market and their own market position and network strategy. A large number of operators, such as Thailand’s True, South Korea’s SK Telekom and China’s three operators, have chosen to invest heavily in building out their own extensive networks, while others have preferred to purchase wholesale capacity from existing players or build partnerships with some of the major Wi-Fi aggregators, such as iPass or Boingo.

An overview of today’s Wi-Fi ecosystem

We urge all handset manufacturers to

provide [an] embedded Wi-Fi connection

and make it a default function

Wang Jianzhou, Chairman, China Mobile, February 2011

0 200 400 600 800 1,000 1,200 1,400

1,600 Feature phones Smartphones Other devices

2010 2009 2008 2007 2006 0 5 10 15 20 25 30 35 40

Mobile devices as % of all

devices

Product launches

Source: Wi-Fi Alliance

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In the era of explosive mobile data traffic growth (see fig. 2), data offloading has rightly been positioned at the very front and center of industry thinking, but the business models that have driven – and continue to drive – Wi-Fi investments are extremely varied (see fig. 3). In the UK, one of the world’s most advanced markets for Wi-Fi, investments are being underpinned by a range of divergent business models:

• BT, the UK’s fixed incumbent, is using Wi-Fi as a means to differentiate and add value to its fixed-broadband offerings • Telefonica is using Wi-Fi to

build a location-based services strategy

• BSkyB has acquired The Cloud and moved to build a multiscreen content-delivery strategy for its core satellite TV business that relies on its extensive public Wi-Fi assets.

The upshot of this widespread interest in Wi-Fi is that the number of public Hotspots is set to proliferate, growing from 0.8 million at the end of 2010 to 5.8 million by the end of 2015, according to Informa Telecoms & Media (see fig. 4). This research does not include the 4.5 million community Wi-Fi public hotspots provided through FON and its successful partnerships with leading operators, such as BT, SFR Softbank and MTS.

Much of this growth will come from emerging markets such as China, India and Brazil where some of the largest-ever mass deployments of public Wi-Fi are being undertaken by incumbent and new entrants to the market: The world’s largest mobile operator, China Mobile, is planning to deploy a total of one million Wi-Fi Hotspots throughout China. This spread of public Wi-Fi networks will be a truly global phenomenon and operators in all regions and all types of markets have declared their

intention to move into Wi-Fi. Recent announcements of new rollouts span markets as diverse as Romania, Namibia and Qatar.

The expansion of public Hotspots is not only being led by the land grab for key venues, such as hotels, stadia and airports, being witnessed in new markets, but also by the increasing density of Wi-Fi networks in established markets. Wi-Fi is increasingly moving beyond the traditional prime locations to the next generation of Hotspot locations, such as retail outlets, local- and wide-area outdoor Hotzones, as merchants and Wi-Fi network operators alike begin to understand the variety of profitable business models that can be underpinned by deployment of Wi-Fi.

What’s happening in the public Wi-Fi market is being matched equally by continued penetration of Wi-Fi into private households and businesses.

0 2 4 6 8 10 12 14 16 18 Africa/Middle East Europe Asia Pacific Latin America North America 2014 2013 2012 2011 2010 2009 2008

Terabytes per annum (mil.)

Source: Informa Telecoms & Media

Fig. 2: Global mobile data traffic, 2008-2014

0 1 2 3 4 5 6 2015 2014 2013 2012 2011 2010 2009 5.8 4.5 3.3 2.1 1.3 0.8 0.5

Public Hotspots (mil.)

Source: Informa Telecoms & Media

Fig. 4: Global number of public Hotspots, 2009-2015

Enhanced user experience Data offloading Improve indoor coverage Value-added services platform Churn reduction tool Customer acquisition tool Wi-Fi access revenues

Fig. 3: Business drivers for Wi-Fi investments

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Hundreds of millions of Wi-Fi enabled households and offices are expected to emerge in the coming years, according to Informa Telecoms & Media’s forecasts (see fig. 5).

Although the Wi-Fi experience has improved with the deployment of 802.11n and the implementation of authentication based on 802.1x, there is unquestionably still much to be done to grow the adoption and usage further and to build a first-class user experience. Challenges that must still be overcome include simplifying the authentication and sign-on process, establishing a truly global roaming footprint and addressing concerns around security and privacy.

Just as fixed and cellular technologies are not standing still, the common standards that underpin Wi-Fi technology are evolving in parallel, with sometimes interweaving paths. Vendor,

operators and Wi-Fi industry bodies, such as the Wireless Broadband Alliance and the Wi-Fi Alliance, are responding to changing demands from end users to develop new standards and frameworks to further enhance the Wi-Fi user experience in terms of authentication, speed, capacity, security and user

experience. Both operators and users have come to rely on Wi-Fi, so it has been compelled to grow smarter. Carrier-grade Wi-Fi with telecoms-grade reliability has become almost a must. The focus today is on simplifying the Wi-Fi user experience and aligning it as closely as possible with the mobile experience in terms of connection management, authentication and sign-on, charging and billing, and – importantly – security and privacy.

Although authentication methods have improved in the latest

Wi-Fi-enabled devices, evidence suggests that additional simplification and automation is needed to drive adoption of public Wi-Fi usage outside the home. O2 UK has reported that only 20% of the potential base of users currently access free public Hotspots provided by its partners. This is despite the fact that O2 has a customer base that is tech-savvy and has been bundling Wi-Fi for free in smartphone tariffs since June 2008. The UK has dense public Wi-Fi and Wi-Fi awareness is very high – precisely the conditions one would expect to drive leading levels of public Wi-Fi usage.

As a result, support for SIM-based authentication is expected to proliferate with the strong support of the operator community. Standards such as EAP-SIM and EAP-AKA are set to be included in a greater variety of smartphones and tablets and as more OEMs include Wi-Fi in their devices.

In spite of the spread of sponsored Hotspots that offer access for free on a national basis to the end user, users will continue to show willingness to pay for Wi-Fi where no alternative form of connectivity exists or where Wi-Fi is perceived as the best available form of connectivity. The willingness to pay and the amount paid is likely will be proportional to the perceived quality

of the network performance on offer, as well as perceptions of usability, security and privacy, and will also be focused on obtaining access in key venues with high traffic demand, such as airports, hotels and urban Hotzones. The need to meet these user expectations will be a strong driver towards additional investment into Wi-Fi networks and a move towards Next Generation Hotspot deployments based on common standards. The good news is that the industry has come together to develop these standards. The Wi-Fi Alliance developed the Hotspot 2.0 specification that is being used to certify products, and the Wireless Broadband Alliance is using Hotspot 2.0 certified products to run its Next Generation Hotspot trials to demonstrate interoperability between operators, roaming partners, and CPE and device vendors. The results of the trials will be published to the Wi-Fi Alliance and the GSMA to continue to inform and improve standards and specifications.

The combined effort of the Wi-Fi ecosystem to build the next

generation of Hotspots and a variety of new business models that exploit the enhanced capabilities of Wi-Fi networks and devices will ensure that Wi-Fi continues to dominate as the most important wireless technology in terms of data traffic transmitted.

Private Hotspots (mil.)

0 100 200 300 400 500 600 700 2015 2014 2013 2012 2011 2010 2009 646 571 492 416 345 282 233

Source: Informa Telecoms & Media

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Q:

What is the role of the Wireless Broadband Alliance (WBA) in the telecom industry in general and in the Wi-Fi industry in particular?

CB:

The WBA is focused on driving the next generation of Wi-Fi services for the benefit of consumers. We’re removing the barriers to deployment and take up – which means ensuring ease of access, robust security and interoperability. In short, we’re the organization that establishes the specifications and roaming mechanisms that help consumers enjoy a seamless and interoperable Wi-Fi experience anytime, anywhere.

Q:

How do you think users’

connectivity needs are evolving and what role do you think Wi-Fi has

to play in changing everyday user behavior?

CB:

With smartphone use set to increase by 150% by 2015 and mobile data usage continuing to grow exponentially, Wi-Fi clearly has a big role to play helping operators manage demand. In terms of usage patterns, we are seeing a greater emphasis on quick-to-consume “snackable” content on the go and this clearly plays to the strengths of next generation Wi-Fi offerings. But the point here is that the general public doesn’t care about acronyms like 3G, 4G or Wi-Fi, as long as they receive the right communications experience. The future of media and telecoms involves hiding complexity from the user and seamlessly employing the wide spectrum of technologies at our disposal to provide the best possible experience in a world where data demand is insatiable. So it’s not a question of Wi-Fi or any other access technology changing user behavior. It’s about our industry as a whole delivering a compelling and seamless user experience, regardless of the location or delivery mechanism. The WBA has a key role to play making this happen.

Q:

How do you think these changes have shaped the industry’s

perception of the importance of Wi-Fi?

CB:

I think there’s a growing awareness that Wi-Fi is fundamental to fixed, wireless and mobile networks, and this is reflected in the growing membership of the WBA. In

particular, we’ve seen a big change in mobile operators that now see Wi-Fi as a complementary access network able to intelligently offload much of the rapidly growing volumes of data traffic. For fixed-line operators, Wi-Fi offers a means to bundle wireless access for customers when away from base.

Q:

What do you think have been the WBA’s most notable achievements during the past year?

CB:

At the top of our agenda is our Next Generation Hotspot (NGH) initiative launched in June 2011. This is a program born of our conviction that public Wi-Fi can only meet its true potential if users can seamlessly and securely access hotspots, thereby avoiding today’s challenges around finding available networks and then successfully logging into them. These challenges are set to be addressed by the Next Generation Hotspots being trialed around the world that securely and automatically log users into available Wi-Fi networks, drastically simplifying the user experience. I see the completion of the NGH trial as a key milestone in the WBA’s goal to drive wireless broadband adoption globally by developing a common commercial and technical framework for interoperability across networks, technologies and devices. I’m delighted that other industry bodies like the Wi-Fi Alliance and the GSMA have recognized the value of this initiative and are now working with us to help ensure its success.

Q&A:

An interview with Chris Bruce, Chair,

Wireless Broadband Alliance & CEO, BT

Openzone

Chris Bruce, Chair

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Q:

Cellular standards are evolving to LTE and LTE-Advanced, but at the same time Wi-Fi standards and technology are not standing still either. How do you see Wi-Fi technology developing and evolving in the future?

CB:

Once again I think it’s more important to focus on service delivery than the technologies that sit behind it. Our aim should be to make it as easy as possible to connect to public networks, such as those in airports, cafes and other high footfall locations, as to a person’s home Wi-Fi network. This is why the WBA is driving services that will be more seamless, secure and with better coverage through next-generation hotspots. For the foreseeable future, Wi-Fi will co-exist with LTE as operators need

to maximize the use of all available spectrum to meet the public’s ever increasing capacity demands.

Q:

How is the WBA changing to address the consumer and industry developments you’ve described?

CB:

We’ve become more active, more collaborative and more focused on communicating the strategic imperatives associated with driving next generation of wireless services worldwide. We’re continually working with a wide variety of organizations including the GSMA and the Wi-Fi Alliance amongst others. We’ve grown our membership to almost 70 leading companies which include major fixed operators such as BT, Comcast and Time Warner Cable; seven of the top 10 mobile operator

groups (by revenue) – AT&T Group, China Mobile, Deutsche Telecom Group (T-Mobile), France Telecom Group (Orange), NTT DOCOMO Group, Telefonica Group and Verizon Wireless - as well as leading technology companies such as Cisco, Google and Intel.

I think what is exciting is the diversity of businesses that recognize the value and opportunities associated with working with the WBA. For example, the latest intake of new members include a mix of leading Wi-Fi, mobile and broadband network operators; service providers; and media players from across the Americas, Europe & Asia Pacific, as well as technology providers and partners.

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A unique industry forum strategically focused on public Wi-Fi, the WBA has delivered several critical enablers since 2003 to facilitate seamless Wi-Fi user experience and interoperability for the operators worldwide.

WBA launched its award winning WRIX – Wireless Roaming Intermediary eXchange, a compressive set of Wi-Fi roaming best practices & specifications, in 2007 which has since been widely deployed by an ecosystem of leading operators, roaming hub/ interconnect providers and aggregators globally.

Having successfully built the foundation to support global Wi-Fi roaming, the WBA launched its Next Generation Hotspot (NGH) Program in 2011. The vision of NGH is to facilitate a cellular-like seamless, secure and easy to use Wi-Fi experience and

interoperability across operators. NGH will offer an improved user experience through • Automated selection of approved Hotspots • Reuse of mobile login credentials • Protection against loss of critical user data • Protection against fraud.

Growing industry interest in

Wi-Fi – 24 new members join the

WBA in 2011

With the growing interest in Wi-Fi roaming and data offload, the WBA has seen a significant surge in membership with 24 new members joining the alliance since the beginning of 2011 and bring it to total of 68 members globally. The mix of new members includes leading Wi-Fi, mobile and broadband network operators and service providers from across Americas, Europe & Asia Pacific as well as technology providers and partners.

WBA’s Next Generation

Hotspot (NGH) program gains

momentum

An ecosystem-wide NGH Trial was launched in June 2011 for the end-to end inter-operator testing and validation of key standards – 802.1x, 802.11u and EAP-SIM/AKA & EAP-TLS/TTLS authentication. The NGH Trial participants include a group of major global operators, equipment vendors and roaming Hub providers who will exercise key NGH requirements for secure and seamless auto-authentication and connectivity on home and roaming partners’ networks. The phase-1 NGH Trial results, expected in 1Q12, will include detailed instructions for a NGH-based roaming lifecycle and feedback on Hotspot 2.0 specifications to the Wi-Fi Alliance. The NGH program will also develop comprehensive operators’ guideline to help operators migrate from legacy to Next Generation Hotspots.

WBA milestones and achievements

2003

2004

2006

2007

2008

2009

2010

2011

• Established WBA, started Wi-Fi roaming trials

• First commercial Wi-Fi roaming announced among members

• Wireless Roaming Intermediary eXchange (WRIX) development started

• WRIX commercially deployed; WRIX wins WBI 2007 Awards! • Launch of User Experience Program for UAM

• Seamless authentication work with FMCA & WiMAX Forum • 802.1x /EAP-SIM trial between FMCA and WBA members • Findings of the 802.1x Trial published

• WISPr 2.0 development initiated • EAP over WISPr 2.0 Trial launched

• User Experience for Smartphone work launched • Next Generation Hotspot Program (NGH) announced • Launched NGH Trial & NGH Operators’ Guidelines projects

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The phase-1 of the NGH Operators’ Guideline is expected to be published in 4Q11.

Completion of the NGH Trial will be a key milestone in the WBA’s goal to drive wireless broadband adoption globally by developing a common commercial and technical framework for interoperability across networks, technologies nd devices.

WBA goals and objective for

2012

Building on its foundation of strong operator-heritage and a set of critical Wi-Fi roaming enablers created by it, the WBA now aims to focus on the following:

• Enable an industry ecosystem to promote the potential of Wi-Fi as a complimentary technology/ service to meet customers & public operators’ wireless broadband needs

• Tackle the barriers and further the adoption of Wi-Fi service

through (a) ease of use, (b) interoperability and (c) security. • Continue to drive the

development and deployment of NGH across the ecosystem and focus on ensuring interoperability though a compliancy programs for operators globally. • Leverage WBA’s existing

cooperation programs with GSMA and Wi-Fi Alliance and address gaps to facilitate standards based Wi-Fi roaming, 3G/4G interworking and data offload.

WBA and Wi-Fi alliance

to collaborate on Hotspot

innovations

During the WBA Roundtable in Paris in June 2011, the Wi-Fi Alliance and WBA announced a collaboration to harmonize their programs related to Wi-Fi Hotspot ease of use and roaming. The WBA's NGH Program & Wi-Fi roaming efforts and Wi-Fi Alliance's

planned certification program for Wi-Fi equipment are being worked on with close coordination between the two groups to help ensure the best user experience.

WBA and GSMA cooperating on

Wi-Fi roaming

GSMA and WBA have started a joint Wi-Fi Roaming Taskforce with the intention of bringing together the Wi-Fi and 3G/4G ecosystem in a collaborative effort. Both, the GSMA and WBA members have a strong shared interest to improve the Wi-Fi experience for their respective customers and enable data offload and roaming. A White Paper being developed by 4Q11 by the joint taskforce, the goals of which include identifying gaps in available standards and make recommendations to address these gaps and define and deliver a common technical implementation of 3GPP to Wi-Fi interworking for both devices and network.

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Key points

• Boingo owns, manages and operates a global Wi-Fi-Hotspot footprint, the majority of which is deployed in major airports in North America, Europe and Asia, with the rest in stadiums, malls and restaurants.

• Boingo has successfully pursued a hybrid business model that sees it sell wholesale and retail access to its Wi-Fi network in a number of ways.

• The operator is evolving its business model by teaming up with consumer-product brands so they can deliver branded messages on the Boingo Hotspot landing page.

• Boingo sees a standards-based approach to Wi-Fi-network identification, authentication and quality of service as essential to accelerating use of the technology among consumers.

Overview

US-based Boingo is one of the main Wi-Fi operators in the US, offering high-density, carrier-grade Wi-Fi in public venues, with a historical emphasis on large sites, such as airports and stadiums. The operator began selling Wi-Fi access in 2001, focusing initially on the business-travel ecosystem, emphasizing airports and hotels. Boingo offers both retail and wholesale Wi-Fi and has about 25,000 Wi-Fi Hotspots in the US, paid and unpaid, and more than 125 roaming partners in 100 countries, offering access to about 400,000 Hotspot locations globally via a single account.

The company has grown through acquisitions: In 2006 it acquired

Concourse Communications, which managed and operated Wi-Fi services at 12 airports; in 2007 it acquired Sprint Spectrum’s Wi-Fi network of seven managed and operated airports and one nonexclusive airport; and in 2008 it acquired Opti-Fi Networks’ Wi-Fi network of 25 managed and operated airports and Washington State Ferries. The operator funded its Wi-Fi business with three rounds of venture funding before it became profitable. It has continued to expand its market presence and generated enough capital for growth and potential M&A with a May 2011 IPO.

Business model

Boingo owns, manages and operates a global Wi-Fi-Hotspot footprint, the majority of which comprises major airports in North America, Europe and Asia, with the rest in stadiums, malls and restaurants. Boingo has roaming partners in the US and abroad.

Boingo sells both retail and wholesale Wi-Fi access, and it sells retail access on subscription, daily and per-use bases.

Subscriptions are largely tied to a geographic area (e.g., North and South America, Europe or Asia) and offer unlimited amounts of Wi-Fi access to the Boingo global network in that region for a number of registered devices; the unlimited plans cost US$9.95-34.95 a month. Day-access rates start at US$6.95 in the US, while per-hour rates start at US$1.99 in the US and £2.99 (US$4.70) abroad. Boingo also offers a global plan that includes 2,000

minutes anywhere in the world for US$59 a month. In September Boingo launched an international version of its Boingo Wi-Fi Credits app on the iTunes App Store. The base price for a global one-hour Wi-Fi credit for iPad, iPhone and iPod Touch users outside the US is €2.99 (US$4.07) (see fig.). The app also enables users to see nearby Wi-Fi Hotspots.

For its wholesale business, Boingo sells access to its Wi-Fi network to operators, including Verizon and South Korea’s KT and LGU+. The operator generates revenue from these agreements using a variety of business models, including per-user, per-minute and per-megabyte revenue-share agreements. Operators are signing Wi-Fi agreements with Boingo to offload traffic from congested cellular networks, to offer cost-effective data-roaming services outside home networks, and to offer Wi-Fi

Operator best-practice case studies

Operator case study: Boingo

Source: Boingo

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where coverage is strong, such as in airports and stadiums.

Boingo gives away

Wi-Fi-management and -location software to retail customers and, as part of its wholesale business, offers it as a white-label service to operators with which it has Wi-Fi agreements, either in SDK or full app versions.

Results

Boingo had about 200,000 retail subscribers at end-2010, up from 140,000 at end-2009. Retail monthly churn decreased slightly in 2010, to 9.5%, from 9.7% in 2009. Total revenue grew from US$65.7 million in 2009 to US$80.4 million in 2010. The wholesale business contributed 45% to Boingo’s 2010 revenues, and its retail business contributed 50%, split 30% retail subscription and 20% single-use (day pass/hourly). Boingo has seen the mix of Wi-Fi traffic in its managed airports change dramatically since smartphone use took off, with smartphones overtaking laptops as the most widely carried Wi-Fi

devices in airports, even as the number of laptops continued to increase.

Between June 2007 and June 2011, Boingo saw 500% growth in the number of devices seeking Wi-Fi in its managed network of airports. The growth was largely driven by non-laptop devices, such as smartphones and tablets. IOS devices (iPhone, iPad and iPod Touch) now represent 83% of all non-laptop devices seeking Wi-Fi in the managed network.

The growth in device numbers has also been accompanied by a growth in data consumption. The average mobile devices used 114MB of data in May 2009 and 211MB in May 2011. Average megabytes per minute was 0.37MB in May 2009 and 0.89MB in June 2011, pointing to the increased consumption of higher-bandwidth content, such as streaming video and streaming audio. Future growth in this area is expected, and it will require continued investment in network upgrades to support the data demand.

Outlook

Boingo is teaming up with restaurant and shopping-mall chains and other retail-brand facilities to expand the number of venues in which it offers Wi-Fi access. Boingo is also teaming up with consumer-product brands so they can deliver branded messages on the Hotspot landing page. The advertising message could be linked to the users’ location through advanced location-based services, which advertisers could use to offer store discounts based on user proximity.

Boingo sees a standards-based approach to Wi-Fi-network identification, authentication and quality of service as essential to accelerating use of the technology among consumers. Making the 3G/4G-to-Wi-Fi handover seamless to the end-user will provide a viable data-offload solution for carriers while standardizing deployment for Wi-Fi operators and manufacturers. It will also make integration into mobile operators’ cellular networks easier and more cost-effective.

Operator case study: China Mobile

Key points

• Wi-Fi constitutes an important part of China Mobile’s network-traffic-management strategy, because of strains on network capacity.

• China Mobile uses Wi-Fi to augment its fixed broadband network and mitigate the impact of its competitors’ bundling offers and also to support its 3G network and compete better in mobile broadband.

• Two prohibiting factors are the limited number of Hotspots and occasional network-connection problems. Take-up is also

limited by the relative complexity of accessing Wi-Fi using

handsets.

• The operator, which has about 60,000 Wi-Fi Hotspots now, has an aggressive plan to deploy 1 million in the next three years across China.

Overview

China Mobile began deploying Wi-Fi in 2003, and its strategy underwent a significant change in 2009 when the operator saw smartphone penetration increase dramatically, along with the use of always-on applications. Wi-Fi constitutes an

important part of the operator’s network-traffic-management strategy: China Mobile, which has about 60,000 Hotspots now, has an aggressive plan to deploy 1 million Hotspots in the next three years across China.

The majority of China Mobile’s Hotspots are operator-owned. Most are in metropolitan areas: hotels; restaurants and cafes; transportation hubs; and campuses. The operator has some revenue-sharing deals, for example with some Universities and cafe chains.

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Wi-Fi plays a central role in complementing China Mobile’s GPRS/EDGE network and nascent TD-SCDMA network in data-intensive areas and will help the operator do several things: • Offload data from its mobile

network and deliver higher data throughputs to subscribers, thereby enhancing the user experience, which the operator hopes will lead to reduced churn. • Augment its fixed broadband

network and mitigate the impact of its competitors’ bundling offers. • Strengthen its 3G network and

be more competitive in mobile broadband.

• Maintain its superior network advantage, appeal to users and buy time for a full rollout of TD-LTE.

Market positioning

China Mobile is offering both a prepaid plan (at CNY0.05

[US$0.008] a minute) and a monthly subscription for Wi-Fi access from both handsets and PCs (see fig. 1) but provided free Wi-Fi trials in most cities from 2010 to mid-2011. The operator also bundles Wi-Fi minutes into some 3G plans.

The operator has begun marketing the Wi-Fi service on a large scale because of the limited number of Hotspots deployed. It hopes to encourage TD-SCDMA dongle users

to use the Wi-Fi network first and then prioritize marketing of high-bandwidth services, such as mobile video, mainly to Wi-Fi users rather than 2.5G-data-plan users. University campuses are the only places where China Mobile has really promoted its Wi-Fi service. The operator already has the strongest brand equity among university students with its youth sub-brand, M-Zone. Universities are one of the first areas where China Mobile has been actively expanding Wi-Fi coverage. The operator has also been working on a major initiative to enable automatic authentication on the Wi-Fi network. The operator offers special campus Wi-Fi pricing plans that are cheaper and provide more-generous minute bundles for Wi-Fi access in a cluster of local universities (see fig. 2).

Results

China Mobile’s internal report states that there were only 1.9 million users of its Wi-Fi service in 2010, indicating the operator has a significant opportunity to dramatically increase the number of its subscribers who access the service. One prohibiting factor is the limited number of Hotspots and occasional network-connection problems. Take-up is also limited by the relative complexity of accessing Wi-Fi-enabled handsets. The operator sees laptops generating most Wi-Fi usage at the moment. Seamless handover and

authentication of Wi-Fi and mobile networks is vital if Wi-Fi is to become mass-market, especially for the country’s low-end users, who make up the majority of people using mobile handsets to access the Internet.

Outlook

China Mobile wants a Wi-Fi authentication client to be loaded onto the smartphones it sells in the future and is talking to device manufacturers about enabling this. Because the Chinese government mandates that all Wi-Fi equipment conform to the local Chinese version of Wi-Fi, WAPI (Wireless LAN Authentication and Privacy Infrastructure), the operator might face a challenge in offering Wi-Fi roaming to customers.

China Mobile’s network-capacity strains mean that Wi-Fi has become urgent in its network-planning strategy. Wi-Fi will not only ease the operator’s 2G-network congestion problems but also help the operator maintain its technology leadership and offer a better customer experience in a cost-effective manner, even though it does not have a strong 3G network to compete with China’s other two operators. Revenue (CNY mil.) 0 2 4 6 8 10 12 14 64.2% 1H10 1H09 8.20 13.47

Source: Informa Telecoms & Media

Fig. 1: China Mobile's standard Wi-Fi rates

Monthly fee CNY20 CNY30 CNY40 CNY50 Duration 200 hours 300 hours 350 hours 400 hours Source: China Mobile

Fig. 2: China Mobile's campus Wi-Fi rates in Guangzhou

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The wide availability of Hotspots and quality of service are two key factors that will determine whether China Mobile’s Wi-Fi service is a success. China

Mobile should also accelerate the upgrades of its network and handsets to enable seamless authentication and handover of the Wi-Fi and cellular networks.

The removal of complex login and password details for users to connect to the network is critical if the service is to be taken to the mass market.

Operator case study: Orange France

Key points

• Orange France pursues a B2B and B2B2C Wi-Fi strategy, the foundation of which is its 2,100 premium (wholly run by the operator) Hotspot locations. • Orange sees Wi-Fi very much as

a complement to its 3G network, not as a way to substitute to rolling out 3G, nor in the future, its LTE network.

• Because Orange’s mobile broadband tariffs come with data, the operator doesn’t see that there is a reason for users, given the quality of its 3G network, to switch by themselves from 3G to Wi-Fi.

• Orange sees most of the Wi-Fi usage among its own subscribers coming from laptops: most smartphone data usage is on the 3G network.

Overview

French incumbent Orange is the leading fixed and mobile operator in France. It launched its Wi-Fi strategy in 2003 using a pay-as-you-use time-based model.

The second phase of Orange’s Wi-Fi strategy began in 2008, when it switched business models, including Wi-Fi, for certain subscribers. At this time, Orange also began a B2B2C Wi-Fi model, forming partnerships with venue owners so they could propose Orange-operated Wi-Fi networks with a paid or free model. The foundation of Orange’s Wi-Fi network is its 2,100 premium

(wholly run by the operator) Hotspot locations. Added to this network are around 40,000 Hotspots run by Orange’s business broadband customers that are able to activate a “Hotspot in a box” on their customer premises – hotels, transport hubs, stadia, cafes, etc. The operator has no plans yet to team with third-party Wi-Fi providers to augment its own French Wi-Fi network.

Orange has struck deals with Wi-Fi providers like operators and aggregators to enable their users to access the Orange network.

Market positioning

Both the coverage/capacity of its 3G network and B2B venue-owner customers has determined Orange’s Wi-Fi strategic goals: Because it has a widespread 3G network and has no capacity problems, it has not been aggressive in using Wi-Fi as a way to offload capacity from its 3G network. Orange sees Wi-Fi very much as a complement to its 3G network, not as a way to substitute to rolling out 3G, nor in the future, its LTE network.

Furthermore, because Orange’s mobile broadband tariffs come with data included, the operator doesn’t see that there is a reason for users, given the quality of its 3G network, to switch by themselves from 3G to Wi-Fi. Nonetheless, the operator continues to examine the benefits of 3G-to-Wi-Fi ubiquitous access in order to provide its subscribers with the best available experience. It

will also continue to support its B2B partners to provide connectivity on venue sites and improve its global data footprint.

Similarly, and again because of the quality of the coverage and capacity of its 3G network, the operator doesn’t perceive there to be any benefit in rolling out city-wide Wi-Fi mesh networks. Orange already bundles Wi-Fi access in all its mobile data broadband tariffs and highlights its Wi-Fi network as a key benefit of choosing it rather than its rivals. The operator also offers hourly and daily passes for access to its Wi-Fi network (see fig.).

Results

Orange doesn’t derive any direct Wi-Fi revenue from the majority of its mobile subscribers because Wi-Fi access is bundled into its broadband tariffs. The operator shares investments with venue partners to provide operator-class Wi-Fi services at destinations for its subscribers and ad hoc users. Orange also provides Wi-Fi services for in-bound roamers, opening its network to its roaming partners and allowing them to include Wi-Fi in their retail offer.

Orange sees most of the Wi-Fi usage among its own subscribers coming from laptops: most smartphone data usage is on the 3G network. However, among in-bound roamers, the Wi-Fi usage coming from smartphones is growing.

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Outlook

In France, the different

fixed-broadband service providers proposed a community-based Wi-Fi

network based on home hubs by enabling users to share their Wi-Fi signal with other users. Millions of users sharing their broadband access would considerably increase the operator’s Wi-Fi footprints. Orange is backing the WBA Next Generation Hotspot (NGH) initiative to standardize SIM-based Wi-Fi authentication. It sees this as crucial to provide device manufacturers with a single approach to Wi-Fi management, which will make it simpler for users to access the network. Price €1.50 €4.50 €15.00 €9.90 Duration 30 mins 1 hour 10 hour 24 hours Terms

Usable from 07:00 to 18:00 on the day of purchase from first connection

Connection available for 30 days after first connection Connection available for 30 days after first connection Connection available for 24 hours after first connection €30.00 30 days 30 days of connection available for 30 days after first connection

Source: Orange

Operator case study: Orange France

Operator case study: True

Key points

• True is Thailand’s leading Wi-Fi provider and has a robust strategy to consolidate its lead in the market.

• Seamless handover and Wi-Fi authentication have been key factors to enabling True to make a success of Wi-Fi, judged by the number of people who use the service.

• True has seen clear revenue benefits from its aggressive Wi-Fi strategy as well as cost savings derived from shifting network traffic from cellular to Wi-Fi. • The operator has aggressive

rollout targets and can be expected to continue to see success in signing up Wi-Fi users as smartphone and tablet penetration and use both accelerate in the market.

Overview

True is Thailand’s only fully-integrated communications company and the leader in convergence.Thailand’s True is a fixed, cable and mobile operator and also produces its own content that it offers to its subscribers on an exclusive basis. True is

third-placed challenger to AIS and DTAC on the mobile side; Thailand’s largest broadband provider; and also second in the country in terms of fixed-line market share.

True sees Wi-Fi as a key

differentiator. It has aggressively rolled out its Wi-Fi network to reach 40,000 Hotspots nationwide, focused on the Bangkok Metropolitan Area, having begun work on it in 2004. The operator is the largest Wi-Fi provider in the country and believes that operating its own network gives it a clear advantage over rivals that either don’t offer Wi-Fi access or that have teamed up with third parties for Wi-Fi access.

In line with its convergence strategy, True positions Wi-Fi as another way to deliver its exclusive content, including TV programs, games and news,, as well as a way to access the Internet, seeing increasing smartphone penetration and social networking as key drivers of usage. True began to see a clear need for Wi-Fi access with the launch of the

iPhone in 2007. The operator sees Wi-Fi as a key factor in the success it has had with the iPhone – it was the first operator to officially launch the device in Thailand and remains the largest iPhone operator-provider in the country – and also for its success with smartphones in general.

Today, around 60% of True’s Wi-Fi traffic is generated by smartphones, while tablet-originated Wi-Fi use is growing rapidly. In terms of specific usage, Web browsing, accessing True’s exclusive content and social networking are the most popular services that users access over Wi-Fi.

Strategic goals

True has four main strategic goals for its Wi-Fi network:

1. To differentiate from its rivals in terms of the quality, ease-of-use and coverage of its Wi-Fi network.

2. To enhance its customers’ experience.

3. To increase revenues. 4. To offload traffic from its 3G

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Market positioning

True’s mobile and broadband subscribers pay THB100 (US$3.30) per month to access the Wi-Fi network. The network is not open to those who are not True subscribers except with a prepaid package available on an online basis. However, the operator doesn’t market

this package very aggressively as it focuses overwhelmingly on positioning the network as a way to generate use from its subscribers and to attract fixed and mobile customers from rivals.

True markets its Wi-Fi network to complement its 3G network in order to communicate and differentiate its mobile broadband coverage, rather than emphasizing one or other in isolation (see fig.).

In July, True began to roll out an 802.11n network aimed at high-end subscribers. This network offers 100Mbps download speeds for a subscription of THB300 per month to True’s existing broadband and mobile customers. The operator aims to roll this network out to 700 locations by the end of 2011. For True, seamless MAC-address-based authentication will enhance its users’ Wi-Fi experience; it is a principal differentiator for the operator over rival Wi-Fi providers for the moment. Seamless handover between 3G and Wi-Fi networks is also an important differentiator; True sees it as the key to offering the best experience of accessing the Internet while on the go. True has been actively participating in the development of seamless authentication technology in various forums and organizations.

Results

True has around 800,000 Wi-Fi subscribers split roughly 50/50 between its fixed-broadband and

mobile user bases. Based on these figures, True’s monthly Wi-Fi revenues are around THB60 million (US$2 million).

True’s financial benefits from Wi-Fi also include the opex benefits derived from the technology as it enables the operator to offload a significant amount of traffic from the cellular network.

Outlook

True plans to expand its Wi-Fi network in tandem with its DOCSIS 3.0 broadband network, which it is in the process of rolling out nationwide. True will use the DOCSIS network to carry its Wi-Fi traffic in areas where both are rolled out.

The operator has very aggressive Wi-Fi targets – it plans to increase the number of its Hotspots from 40,000 to 100,000 by the end of the year. True sees Wi-Fi authentication as a crucial factor that determines users’ experience of the network, and plans to upgrade to Next Generation

Hotspot based technology once it is available and mature.

The operator has found striking international roaming agreements to be a challenge because there is no standards framework for connection and clearing in place. The operator has around five operators – each a WBA member – in the pipeline to offer Wi-Fi roaming in partnership with other operators on a bilateral basis. True says that it has found the WBA’s roaming framework beneficial to finalizing agreements with other operators. In terms of national roaming, True has signed a national Wi-Fi roaming MOU with CAT to further trial and monetize its network. With the number of Thai consumers adopting convergence lifestyles on the rise, True expects that the increasing smartphone and tablet penetration, along with the increasing need to access the Internet while on the go and in public spaces, will continue to drive Wi-Fi use in Thailand – and, as a result, increase the importance of its Wi-Fi network to end users.

True’s Wi-Fi and 3G marketing message

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The 68 member companies that make up the Wireless Broadband Alliance reflect the diversity and breadth of the entire Wi-Fi ecosystem, including a unique mix of operators, technology vendors, device manufacturers, roaming hub providers, content providers and other industry players. With over 40 operator members, including a broad range of integrated operators, mobile operators, broadband ISPs and pure-play Wi-Fi operators, the membership continues to reflect the strong operator heritage that has always characterised the WBA.

The membership of the Wireless Broadband Alliance has continued to grow at a strong pace during 2011 and this year has seen the single largest intake of new member companies with a total of 24 new members joining by October 2011. Major new companies that have joined the WBA during 2011 include Softbank Mobile, Time Warner Cable, TeliaSonera Mobile Networks, BSkyB and SK Telecom.

The recent intake of members during 2011 has continued to expand the geographical diversity of the WBA membership with joiners representing new countries including Canada, Israel, Malaysia, Philippines and Nordic countries. The United States remains the most heavily represented country in terms of member companies with 19 out of 68 members headquartered in the US, including 10 based Silicon Valley-based members.

An overview of WBA member companies

Non-operators: 24

Operators: 44

Source: WBA

WBA membership mix, operators vs non-operators

0 5 10 15 20 25 Vendors and other industry players Wi-Fi operators and aggregators Integrated operators Mobile operators

21

13

20

14

No. Source: WBA

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Wi-Fi operators/aggregators

Vendors & other industry players

Integrated & fixed broadband operators

Mobile operators

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Overview

The WBA/ITM survey carried out a survey during September to gauge the status of the Wi-Fi market. The survey drew 259 responses from the industry, with the majority coming from integrated operators (see fig.1). There was a broad geographic spread among the respondents to the survey (see fig. 2). Just under 30% of the responses came from Western Europe, 22.2% came from Asia Pacific, and 18.3% came from North America.

Market status

Wi-Fi is becoming an increasingly important part of operators’ mobile broadband strategies. Wi-Fi is deemed either very important or critical by 58% of the respondents to the WBA-ITM survey.

Additionally, 47% of the mobile operator respondents believe Wi-Fi is very important or critical as a source of value to their company underlining the fact that Wi-Fi is no longer seen as a threat by mobile operators.

This view is borne out by the way that the number of mobile operators incorporating Wi-Fi as part of their broadband-network strategies continues to grow. Large-scale deployments by the likes of PCCW in Hong Kong and Japan’s KDDI are using dense Wi-Fi coverage to provide fast wireless data access, offload peak data traffic from cellular networks and support the delivery of new content and value-added services. KDDI is planning to expand its Wi-Fi coverage from 10,000 Hotspots to 100,000 by next March.

China’s operators have raised the stakes further: China Mobile alone plans to deploy 1 million Wi-Fi Hotspots in the next two years. On a more modest scale, South Korea’s SKT opened 10,000 new Hotspots in 1Q11, and O2 in the UK has embarked on a large-scale program to build more than 15,000 Wi-Fi Hotspots in the next two-and-a-half years.

The amount of traffic that operators are carrying over their networks is increasing dramatically. US-based Wi-Fi provider Boingo has seen the type of smartphone use change

dramatically since the amount of traffic generated over its Wi-Fi networks leapt from 0.37MB per minute in May 2009 to 0.89MB per minute in June 2011, driven by the increase in the number of smartphone users accessing its networks. BT, meanwhile, aims to roll-out 500,000 Hotspots in Central London in time for the Olympics, and three million across the UK

Expansion of the number of Wi-Fi Hotspots will increase not just the footprint of the Wi-Fi networks, but also the amount of data that can be carried over existing areas of high

Wi-Fi ecosystem survey analysis

WBA-ITM Wi-Fi survey

Other: 9.7% Content provider: 1.5% Device vendor: 0.8% Chipset vendor: 3.1% Network equipment vendor: 13.1% MVNO: 0.8% Integrated operator (fixed/mobile): 22.4%

Cable operator: 3.1% Fixed-line operator: 3.9%

Mobile operator: 19.3% Consultant, industry observer, etc: 6.9%

Systems integrator: 6.2% Wi-Fi aggregator: 3.9% Pure-play Wi-Fi operator: 5.4%

Source: WBA-ITM survey, Oct-11

Fig. 1: What is your company’s primary area of business?

Asia Pacific 22.2% Africa 5.6% Middle East 6.3% Central & Eastern Europe

11.1% Western Europe29.8% Latin America 6.7% North America 18.3%

Source: WBA-ITM survey, Oct-11

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usage. Among the respondents to the survey, there is a broad spread of opinion in terms of how much expansion operators will undertake on the Wi-Fi networks over the next year but three quarters of respondents (77%) are planning to expand their networks in the coming 12 months, while one in four said they plan to expand Hotspot locations by more than 50% (see fig. 3).

As operators build out their networks, new Hotspot venue types are emerging as operators move beyond the traditional domain of hotels, airports and cafes. According to the survey, the three most important locations identified for expansion plans are: wide-area outdoor Hotzones; local-wide-area outdoor Hotzones; and transport hubs (air, train, bus, etc.) (see fig. 4). The focus on rolling out Wi-Fi to target larger public spaces has been very strong in the US with AT&T deploying hotzones across the country and Cablevision in the New York area.

Wi-Fi business models and

pricing strategies

In terms of pricing, it is becoming increasingly prevalent for

operators to offer Wi-Fi as part of some of their data plans or broadband packages. This model is intended to give customers additional value to their mobile or broadband packages, acting as both churn reduction and customer acquisition tools.

The WBA-ITM survey results reflect this proliferation in business models. However, bundling Wi-Fi with existing subscriptions is the most popular option by some margin (see fig. 5). The survey shows that operators have seen pricing levels remain broadly stable (see fig. 6).

Other (please specify): 6.0% Increase by more than 100%: 17.2%

Increase by 76-100%: 2.6% Increase by 51-75%: 5.2%

Increase by 26-50%: 8.6%

Increase by 11-25%: 19.0%

Increase by 0-10%: 24.1% Keep the same number of locations: 14.7% Reduce number of Hotspot locations: 2.6%

Source: WBA-ITM survey, Oct-11

Fig. 3: In terms of the expansion of your Wi-Fi network in the next 12 months, what growth do you expect to see in terms of Hotspot locations?

Other (please specify) 3.7% Wide-area outdoor coverage

21.5%

Local-area outdoor Hotzones 19.6%

Airports 4.7%

Transport (trains, planes, cars) 17.8%

Bars, cafes, restaurants 10.3%

Hotels 11.2% Retail 11.2%

Source: WBA-ITM survey, Oct-11

Fig. 4: Which Wi-Fi venue type do you expect to see greatest growth in terms of traffic demand in 2012?

0 5 10 15 20 25 30 35 40

Responses (%) Bundled as part of regular mobile/

fixed broadband subscription Free to end-user Time-based pay-per-use (e.g. per hour, day, week) Dedicated Wi-Fi subscription Bundled as part of other service (e.g. retail products/services) Other (please specify) Volume-based pay-per-use (e.g. per MB, GB) 36.7 20.2 18.3 9.2 8.3 4.6 2.8

Source: WBA-ITM survey, Oct-11

Fig. 5: What is the most popular way to pay for Wi-Fi on your network?

Decreased significantly 4.6% Decreased slightly

20.2%

Stayed the same 62.4%

Increased slightly 8.3%

Increased significantly 4.6%

Source: WBA-ITM survey, Oct-11

Fig. 6: In the past 12 months, how have retail prices for public Wi-Fi access developed in your market?

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This shows that Wi-Fi is being used both as a customer retention tool and as a way to increase the value the operators’ customers perceive they gain from them. The top three sources of value emerging that operators are deriving from Wi-Fi are: enhanced user experience; data offloading; and value-added services platform (see fig. 7).

The issue of free Wi-Fi Hotspot access is an important one for operators as they try and go some way to meeting the end-user perception that access to Wi-Fi should be without any additional cost to them beyond their subscription with the operator. PCCW in Hong Kong is taking an interesting approach to this by developing a new business model that focuses on generating additional revenue from Wi-Fi venues (high street retailers, coffee shops, etc). The survey found that the transition to Hotspots that offer notionally free access to the end user will continue. However, the majority of respondents believe the percentage of free Hotspots is expected to increase only moderately (see fig. 8). While access costs are zero to the user, the cost of supporting and offering the Wi-Fi Hotspot is always sponsored or supported by indirect associated revenue streams, such as customer loyalty, purchase of goods or through advertising. The mix of device types from which connections to Wi-Fi Hotspots originate is changing dramatically, with smartphones unsurprisingly a fast-growing source of Wi-Fi traffic. According to the survey responses from operators of public Wi-Fi networks, laptops now account for just 48% of connections on average, with smartphones already generating as much as 36% of all connections.

Despite having only really taken off with the launch of Apple’s iPad in 2010, tablets already make up more than 10% of connections. These results differ quite dramatically when looked at on a regional

basis; for example, smartphones generating an equal amount of traffic with laptops in North America (43%), while tablets have already reached 12.5% of connections on average (see fig. 9).

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Rating average

Enhanced user experience Data offloading Value-added service platform Customer acquisition tool Network cost reduction Wi-Fi access revenues

3.85 3.27 3.16 3.14 3.06 2.95

*On a scale of 1-5, where 1 = not important and 5 = critical

Source: WBA-ITM survey, Oct-11

Fig. 7: How important* are each of the following benefits from operating a Wi-Fi network as a source of value for your company?

Decrease heavily 0.4% Decrease moderately

9.3%

Stay broadly the same 26.5%

Increase moderately 46.9%

Increase heavily 16.8%

Source: WBA-ITM survey, Oct-11

Fig. 8: In the next 12 months, what do you expect to happen to the

percentage of “free” public Hotspots as a proportion of total public Hotspots in your domestic market?

0 10 20 30 40 50 60 Other devices Tablets Laptops Smartphones Asia Pacific Africa Middle East Easterrn Europe Western Europe Latin America North America Share of connections (%)

Source: WBA-ITM survey, Oct-11

Fig. 9: Approximately what percentage of connections to your Wi-Fi network is generated by the following devices, by region?

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How do operators differentiate their Wi-Fi networks? This is becoming an increasingly important question as more and more

operators add a Wi-Fi offering to their fixed and mobile broadband tariffs and also as more end users assess which operator to sign up to based on how strong its Wi-Fi offering is. According to the survey respondents, the principal means for operators to differentiate their Wi-Fi networks are: seamless connection to Hotspots; common standards; and enhanced security and privacy measures (see fig. 10).

Network strategies

In high-traffic areas, Wi-Fi’s potential as a means of offloading both data and signaling traffic is now being realized, assisted by the vendors’ efforts to deliver a consistent customer experience by integrating Wi-Fi with cellular networks more closely. Deployments are frequently aimed at applications beyond those geared toward notebook/ dongle users to provide an improved broadband experience for operators’ growing smartphone and tablet customer bases, since Wi-Fi is well-suited to the demands of applications that use data in bursts and for functions such as video and music streaming.

The survey respondents indicated that a large percentage of smartphone-originated traffic is now being offloaded to Wi-Fi. Again, there are clear regional differences in this, with Western Europe and North America showing the highest amount of average traffic offloaded from cellular to Wi-Fi networks (see fig. 11).

The impact of ongoing 3G rollouts and upcoming LTE rollouts are key considerations for operators

when considering their Wi-Fi strategy. Some operators, such as Orange France, don’t suffer from congestion on their 3G network, but see Wi-Fi as a good technology to improve indoor coverage, while other operators, such as True in Thailand and China Mobile, are deploying Wi-Fi to complement and

increase overall network coverage and capacity. The majority of the survey respondents do not expect the broader deployment of LTE to have an impact on investments in Wi-Fi, suggesting that operators will adopt complementary solutions to Wi-Fi and cellular rollouts (see fig. 12).

0 1 2 3 4

Rating average Wide selection of low-cost

Wi-Fi-enabled devices Enhanced security and privacy measures Availability of common standards Ease of roaming between operators Availability of cheaper Wi-Fi enabled handsets Deployment of “carrier grade ” Wi-Fi networks Seamless connection to Hotspots SIM-based authentication 3.23 3.75 3.79 3.35 3.02 3.51 4.02 3.37

*On a scale of 1-5, where 1 = not important and 5 = critical

Source: WBA-ITM survey, Oct-11

Fig. 10: How important* will each of the following sources of competitive differentiation be as competition between Wi-Fi operators evolves?

0 5 10 15 20 25 30 North America Western Europe Average 81-100 61-80 41-60 21-40 10-20 6-10 0-5 Response (%)

Source: WBA-ITM survey, Oct-11

Fig. 11: According to your best estimates, approximately what percentage of smartphone-originated traffic is currently offloaded via public and/or private Wi-Fi networks?

Operators will continue investing heavily in Wi-Fi in parallel with LTE 43.9%

LTE will not have any material impact on Wi-Fi investment levels

33.7%

The arrival of LTE will reduce investments into Wi-Fi 22.4%

Source: WBA-ITM survey, Oct-11

Fig. 12: What impact do you expect the deployment of LTE to have on Wi-Fi investments by operators?

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Wi-Fi-to-cellular offloading, small cell deployments, optimization and compression, and cellular network strategies are all key tools at the operators’ disposal to manage mobile network volumes. However, according to the survey respondents, over the next 12 months, data pricing strategies and Wi-Fi offloading will be the most significant factors in managing mobile network volumes (see fig. 13).

Industry challenges

The industry faces some key challenges to increasing Wi-Fi adoption and growing the amount of traffic on Wi-Fi networks. Alongside work on the technical evolution and performance of Wi-Fi, work on standards and a number of related industry initiatives are addressing aspects such as network discovery, identification, connection, authentication and security – all of which are critical for the successful and seamless integration of Wi-Fi with cellular networks. These are some of the challenges the WBA’s Next Generation Hotspot Initiative is working to overcome.

This work is primarily designed to improve and simplify previously time-consuming and – for users – often confusing processes such as Hotspot selection, manual user-authentication and log-in, and roaming-partner-network selection. It is being driven in the standards domain by the IEEE and industry bodies such as the WBA and the Wi-Fi Alliance. For instance, the WBA has published specifications on 802.1x roaming on its website. According to the survey respondents, the most significant barriers to further adoption and usage of Wi-Fi are authentication, access costs and security (see fig. 14).

Wi-Fi roaming is seen as very important by the respondents

and they believe that key barriers to a wider implementation of Wi-Fi roaming are seamless

authentication, lack of a common roaming standard and 3G/Wi-Fi interworking (see fig. 15).

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Rating average

LTE deployment Optimization & compression Data pricing strategy Small cell deployments (femtocells, picocells) Wi-Fi offloading 3.48 3.15 3.74 3.27 3.72

*On a scale of 1-5, where 1 = not important and 5 = critical

Source: WBA-ITM survey, Oct-11

Fig. 13: How important* do you think each of following strategies to manage mobile network traffic volumes will be?

0 10 20 30 40 50 60

Other (please specify) Device battery life (power managemen t) Network selection Roaming User awareness of Wi-Fi Security Network discovery Access costs Authentication Responses (%) 11.8 22.3 28.4 30.6 38.0 38.4 38.4 41.9 50.2

Source: WBA-ITM survey, Oct-11

Fig. 14: What do you consider to be the top three barriers to wider adoption and usage of Wi-Fi among end users?

0 10 20 30 40 50 60 70 80 Other (please specify)

Lack of device standards Cost of roaming

Inconsistent user experience 3G/Wi-Fi interworking

Availability of common roaming standard Seamless authentication 5.8 22.1 44.2 44.7 57.5 61.5 64.2 Responses (%)

Source: WBA-ITM survey, Oct-11

Fig. 15: What do you consider to be the three most significant barriers to a wider implementation of Wi-Fi roaming?

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