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Friday, 05 August 2011 15:11

Where has all the WiFi gone?

By

Remember when carrier operated public WiFi hotspots were all the rage? Telstra, Optus and a handful of private operators were rolling them out in coffee shops, airports and on the street. Sure every other coffee shop today has free WiFi, but the big telco-operated networks have all but disappeared. They could be about to make a comeback.

Telstra at one point had over 1000 public WiFi hotspots. In mid 2005 it had 130 in the CBDs of Sydney and Melbourne alone. The Australian reported at the time that Telstra had "switched on blanket WiFi coverage across the Sydney and Melbourne CBDs."

And where are they today? According to Telstra's web site it has just 49. They are located mostly in airports and a few hotels and conference centres.

Optus' network has similarly shrunk. It announced in 2003 that it would install over 500 WiFi hotspots in CBD cafes, airports and hotels over the ensuing 18 months. I'm not sure what the number peaked at but today, according to the Optus web site there are less than 60 in a disparate collection of - mostly - coffee shops hotels and bars. And, the web site says, the service is not available to new customers.

It's not hard to see why telco-operated public WiFi is moribund: the meteoric rise of - and similarly meteoric fall in the price of - wireless broadband. Public WiFi is not even a cheap option: Both Telstra and Optus charge around $12 per hour, which is not particularly attractive in comparison to cellular broadband except for the very infrequent user. Once you've bought your dongle - pretty cheap these days - even the premium priced Telstra will give you 1GB on its mobile network anywhere in Australia for $40 on 30 day prepay. And the MVNOs are a good deal cheaper.

But perhaps it is too early to write RIP over carrier operated WiFi networks. A number of industry commentators claim that, notwithstanding the efficiency gains promised by LTE and beyond it by LTE advanced, such is the growing demand for wireless data that offload to WiFi and/or femtocells will be essential.

Just last week, analyst firm Juniper Research issued a report forecasting that even with the increased deployment and utilisation of LTE networks, global mobile network data delivery costs could surpass $US370b annually by 2016, a sevenfold increase on their 2010 level of $US53b.

CONTINUED

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Juniper argues that future operating costs could be significantly reduced by the deployment of data offload solutions such as WiFi networks and femtocells, allied to the utilisation of network optimisation techniques to facilitate flow control.

And just maybe we could see Telstra become a convert. Last week Perth-based PieNETWORKS, the developer and manufacturer of the Hotspot Webphone, a device it describes as "a payphone replacement which also provides: WiFi for smartphones, tablets and laptops; social networking; apps; banking, plus many more services," announced that Telstra had completed a four month trial of the unit in a number of airports around Australia. PieNETWORKS has now entered into negotiations to sell an unspecified number to Telstra.

According to PieNETWORKS' investor presentation the device is "Complementary to telcos' core product offerings and macro 3G networks [and] better, cheaper and faster than mobile devices on 3G."

It points out that, in the US AT&T operates a network of 26,000 WiFi hotspots and has 36 million customers with WiFi minutes included in their plans. The presentation also suggest that a telco could offer "$10 per month 'all you can eat' WiFi - feeding growth of WiFi enabled mobile devices and particularly targeting competitors' customers." If so that's a far cry from the prices Telstra and Optus are presently charging, but then again they don't seem particularly keen to promote these services.

For both operators, and particularly for Telstra, WiFi could prove attractive.
- It makes additional spectrum available at no cost (the spectrum used by WiFi is class-licensed meaning anyone can use it at no cost)
- Unlike micro cellular base stations or femtocells WiFi devices require no central co-ordination with nearby devices (interference is fact of life and can limit performance in crowded environments)
- Telstra has significant network and management resources dedicated to its current payphones, revenue from which is plummeting in world of 100 percent cellphone penetration.
- Any technology that can complement its present wireless broadband service at lower cost means that it can make a bundled 3G/WiFi mobile/portable broadband offer more cost competitive and therefore more attractive in what will become an increasingly hard fought battle for the consumer's dollar with companies providing fixed services over the NBN.

Optus has already gone down the femtocell route, ostensibly the device brings a direct benefit to customers in the form of improved in home coverage where that is inadequate, but I've read commentary from various sources suggesting that the cost benefits of offloading traffic from the main cellular network are what makes the devices really attractive. And Optus of course does not have a loss-making network of payphones that provides ready made locations for WiFi hotspots.

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