Nearpoints

Craig Mathias

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What if the Cellular Carriers Don't Do Wi-Fi?

I'm assuming that the cellular carriers will proceed with deployments of Wi-Fi capacity to augment their data offerings in densely-populated, high-demand locales. But what if they don't?

By Craig Mathias on Mon, 09/20/10 - 4:19pm.

. What's this?

I don't think anyone even mentioned the term cellular offload last year, but it would be difficult to imagine the cellular carriers surviving without access to the Wi-Fi safety valve. I've contended for some time that, even if the FCC finds another 300-500 MHz. of spectrum for the mobile operators, even that won't be enough to keep up with the demand. Remember, what the mobile user wants is what I call desktop equivalence - meaning that they want to do everything they might do while using a conventional PC (mostly evolving over time to Web/cloud services), but while mobile and compromising here only on user interface and screen context available. We've already seen what happens when enough spectrum isn't available - higher prices, caps on data volumes, and less-than-satisfied customers. I'd hate to lump the cellular carriers in with banks and the airlines with respect to the latter, but historically they've always been there in the eyes of many of their customers.

So I'd argue that the carriers must offer access to Wi-Fi just to keep up with the demand, and to keep their users happy and loyal. And there's a good deal of evidence to support my opinion. T-Mobile has been offering a good-sized Wi-Fi footprint for the past eight years (via the acquisition of public-access-Wi-Fi pioneer MobileStar). AT&T are doing the same via their acquisition of Wayport. Verizon, while being a bit late on the service side, includes W-Fi in many of their handsets today and has a decent hotspot offering. OK, Sprint doesn't do much in terms of public-access Wi-Fi, believing that WiMAX will replace Wi-Fi. We'll see about that one... In general, though, it looks to me like the carriers are setting up for the transparent addition of Wi-Fi to their mobile broadband capabilities. Eventually users won't know what technology is carrying their bits - and that's the way it should be. For now, though, I think we can agree that Wi-Fi is an adjunct service for the carriers, and not really strategic.

So, hypothetically, what if the carriers don't eventually offer full-bore Wi-Fi in high-population-density areas, where it can do the most good? I just returned from spending most of last week in Silicon Valley, doing one client project and otherwise taking a couple of extra days to meet with old friends and colleagues. And one of the latter said, no kidding, that he didn't think the carriers would ever deploy Wi-Fi because they are simply too stupid to do so, thereby leaving the opportunity to others. He did, correctly, I believe, note that the marginal cost to deploy high-density Wi-Fi is (and always has been) much lower (by 80+%) than that for equivalent cellular coverage, and that the capacity of such Wi-Fi service would be much greater than that of cellular, depending upon the impact of interference and a given installation's intelligence in dealing with it. Such is the case when spectrum is free, range is limited (thus requiring rapid frequency re-use), and equipment is cheap, relatively simple, and mature. But, I countered, we've not seen huge success so far from private-sector efforts or public/private partnerships. I argued that the political elements here - usually typified by demands for free service, even though there is no such thing as free - and rapidly changing technology (pre-802.11n) were the key trip-ups, along with the failure of business models that had never been tried before. Regardless, few would argue that metro-scale Wi-Fi makes no sense today, that the technology is inappropriate, or that consumers don't want it.

So, we can conclude that large-scale public-access Wi-Fi deployments will continue, but I think only the carriers can ultimately pull this off, and they in fact will because they are (a) in the business of providing mobile communications services, (b) live in a very competitive marketplace, (c) know that they won't be able to meet service demands or remain competitive without Wi-Fi, and (d) are in fact smart enough to realize all of this. So, IMHO, no worries - it will take longer than we'd like, but big portions of urban areas will have Wi-Fi service from one or more cellular carriers eventually. As I've said before, the future of cellular is inextricably bound to Wi-Fi. Given ever-increasing demand, this fact won't change even if more licensed spectrum becomes available.

One other possible counterargument: perhaps if that desired 300-500 MHz. of new spectrum were made available only via very small cells - microcells if not picocells or even femtocells - then we might have enough spectrum to meet the demand for desktop-equivalence applications and bandwidth hogs like video without needing Wi-Fi. But I doubt it - access to multiple spectral bands and thus the application of multiple radios make a lot more sense, while providing enhanced convenience for the consumer. Cellular and Wi-Fi? BFFs.