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November 2009 | Volume 12 / Number 11
Feature Story

Smartphones Put Wind Beneath Wi-Fi Wings

And Telcos Take Notice

By Paula Bernier (News - Alert)

For a while Wi-Fi was flying high. Road warriors and college students helped popularize use of the technology in public settings as access points popped up here and there, mostly in charming little locations such as coffee houses and book stores.

As access points and user numbers grew, Wi-Fi service aggregators Boingo (News - Alert) and Wayport were born. Large companies began to take notice.

Starbuck’s was early to jump on the Wi-Fi wagon by partnering with cellular providers T-Mobile (News - Alert) and, later, AT&T, which offer(ed) Wi-Fi for a fee at its coffee and cruller locations. McDonald’s followed suit in an effort to get customers to hang around and buy more Happy Meals. The big name book stores came on board as well.

Wi-Fi moved to the next level, though, when news broke of plans for citywide initiatives around the technology.

The municipal Wi-Fi effort in San Francisco probably got the most ink, no doubt because ISP pioneer Earthlink (News - Alert) and online search giant Google were involved. But there was plenty of action on the muni Wi-Fi front. Atlanta, Chicago, New York, Philadelphia and Portland, Ore. These were just a handful of the cities with tall Wi-Fi aspirations.

In the end, however, pretty much all such plans were scrapped due to the absence of viable business plans and a lack of involvement by service providers willing to shoulder the costs. Some cities, like Miami, use Wi-Fi in a limited way, like for public safety applications. But the once big dreams for municipal Wi-Fi became rubble.

So, despite the fact that Wi-Fi remained a great connectivity tool at certain high-profile retail locations, high-tech businesses, libraries, airports and homes, word on the street was that Wi-Fi was dead. So the communications industry turned its collective head and got bug-eyed about WiMax, the “next big thing” for wireless.

Of course, Wi-Fi never went away. And in recent months it has seen renewed interest – this time from tier 1 service providers, some of which were noticeably absent from earlier efforts to make Wi-Fi ubiquitous.

“In the past year and half we have seen a recognizable trend of service providers embracing Wi-Fi,” says Edgar Figueroa, executive director of the Wi-Fi Alliance (News - Alert).

Probably the biggest tier 1 Wi-Fi proponent in the U.S. these days is AT&T, which a year ago this month announced plans to buy Wi-Fi outfit Wayport for $275 million.

AT&T claims it operates the nation’s largest Wi-Fi network, which includes more than 20,000 hotspots. The company reported nearly 15 million Wi-Fi connections on its network in the second quarter of 2009. That was a 41 percent increase from the first quarter, according to AT&T. And it looks to be all uphill from there.

“Our Wi-Fi network is a competitive differentiator for AT&T and a major value for our customers,” says David Christopher, chief marketing officer for AT&T Mobility and Consumer Markets. “We include unlimited Wi-Fi access with the majority of our broadband and smartphone plans, and our customers are clearly taking advantage of it. It’s another reason that twice as many smartphone customers choose AT&T than any other carrier.”

As AT&T and others have noted, this growth is being fueled by the rising number of customers with Wi-Fi enabled smartphones. Indeed, Wi-Fi recently is becoming a must-have feature on smartphones.

A Growing Trend

The number of customers with Wi-Fi access as part of their AT&T (News - Alert) service continues to grow.

AT&T broadband connections — which include both wireline broadband and wireless LaptopConnect cards — grew by 209,000 in the second quarter to reach 16.9 million in service.

The company includes unlimited Wi-Fi access with qualifying AT&T High Speed Internet plans, 3G LaptopConnect plans and with select smartphone plans. IT

In a recent Wi-Fi-related news announcement Cablevision Systems (News - Alert) Corp. noted that Apple has sold more than 40 million Wi-Fi-enabled iPhones and iPods and that some BlackBerry smartphones such as the Curve, Bold, and Pearl can operate over Wi-Fi with cellular service providers such as AT&T, T-Mobile, and Sprint.

According to Ovum (News - Alert), 49 of the 77 smartphones released between the second quarter of 2008 and the first quarter of this year had on-board Wi-Fi. ABI Research says half the traffic from Apple (News - Alert) iPhone’s comes from Wi-Fi connections. And it forecasts that by 2014, 90 percent of smartphones will include Wi-Fi.

Pair that with Wi-Fi enabled laptops and the wide variety of other consumer electronics gear like cameras and even digital picture frames (see related story “M2M Shows Momentum in Consumer, Business Vertical Applications,” on page XX) that could soon be Wi-Fi-capable and you have a serious movement going.

That may help explain why Qwest (News - Alert), which is rarely early to the party, is offering free, unlimited nationwide Wi-Fi access to its high-speed Internet customers. The company recently commissioned a study conducted by Impulse Research Corp. that found nearly half of all respondents valued Wi-Fi because it provided them with the freedom and flexibility to stay connected beyond the home or office.

“Mobility is important to our customers, as is value,” Dan Yost, executive vice president for Qwest’s Mass Markets Organization, said in May as the new offer was revealed. “With free Wi-Fi, our high-speed Internet customers can extend the benefits of their Qwest broadband experience to the nation’s largest Wi-Fi network, powered by AT&T Wi-Fi.”

Even Verizon (News - Alert), apparently not a fan of Wi-Fi earlier on, now provides free Wi-Fi to customers whose bundles include an up-to-25/15 Mbps or faster connections, according to the company’s website.

That’s good news for both customers and the telcos, says Pejman Roshan (News - Alert), chief marketing officer at Agito Networks, which leverages Wi-Fi and cellular connections to enable applications involving enterprise voice, presence and unified communications.

He says as dual-mode smartphones are ushering in more widespread demand for Wi-Fi, telcos can leverage that by using Wi-Fi connectivity as a tool for subscriber retention, to offload traffic from overloaded cellular networks and to increase landline revenue loss.

However, the rise of Wi-Fi enabled smart phones paired with moves by competitor Cablevision seem to have forced Verizon’s hand on this front.

In a July 22, 2009 press release announcing the expansion of its Optimum WiFi (News - Alert) service, Cablevision wrote: “Verizon Wireless currently blocks Wi-Fi on most of its customers' smartphones, making it impossible for these customers to take advantage of the speed and convenience of broadly available Wi-Fi.”

Cablevision offers Optimum (News - Alert) WiFi, which spans thousands of access points, and offers wireless Internet capability across the company’s New York, New Jersey and Connecticut service areas. It provides the Wi-Fi service as a free enhancement to Optimum Online high-speed Internet customers.

Since its launch in September of 2008, Optimum Online customers have accessed the Internet more than three million times over Optimum Wi-Fi, and are averaging more than a million minutes online every day over the network, which delivers speeds of up to 3 Mbps downstream.

“Unlike many expensive cell phone data plans that can cost upwards of $100 per month, Optimum WiFi is free and more than twice as fast as many cellular networks,” says Kevin Curran, Cablevision’s senior vice president of wireless product development.

However, not all the big cablecos are focused on Wi-Fi in a big way.

“Our current wireless focus is on building out 3 and 4G networks and developing business products and services for those networks,” says Cox (News - Alert) Communications spokesman Todd C. Smith. “That said, we [will] pursue Wi-Fi contracts opportunistically in some markets. We have done a significant amount of in-room Wi-Fi deployments with the hospitality industry. We have large deployments at the Palms and Wynn hotels in Vegas, for example.

“We also have some deployments at apartment/condo developments in lobby/pool/common areas,” he adds. “We support a few public area free Wi-Fi hotspots. And we'll pursue wireless LAN opportunities with our customers when they have needs.” IT

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