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January 08, 2013

Show Me the Money: Wi-Fi Service Providers Looking for Ways to Make 2013 Profitable

A recent survey of Wi-Fi service providers, conducted by Amdocs, found that service differentiation and monetization are key drivers for Wi-Fi providers in 2013.

“Service providers are now focusing on service differentiation, customer experience and monetization in Wi-Fi,” said Rebecca Prudhomme, vice president for product and solutions marketing for Amdocs. “This underscores the importance of having secure, scalable authentication and authorization solutions in place for ensuring a seamless experience as customers move in and out of the Wi-Fi network.”

Service providers have realized that Wi-Fi isn’t just about offloading traffic from busy cellular networks. They’re looking to provide added value to customers in addition to easing the crunch on user data plans. Most Wi-Fi providers are eager to find the best possible real estate for their hotspots, and some indicate that they will look to form partnerships with their competitors to make that happen.

A big part of monetization is service differentiation. The problem for service providers is that customers equate Wi-Fi with free Internet access. If customers land in a hotspot that charges, they’re likely to pack up their laptops and go somewhere else. So how can providers make profits when customers expect a free ride?

Wi-Fi roaming may be one potential avenue for cash. When a roaming, or mobile, device is connected to a Wi-Fi network, the handoff process between access points (APs) often requires re-authentication, which interrupts the browsing process for customers and causes delays and irritation. According to the Amdocs survey, eight out of 10 service providers are keen to both improve and monetize roaming.

According to AVSystemsMag, making money from extending roaming to customers will require infrastructure improvements. To eliminate as many handoffs as possible, APs will have to be improved to cover larger service areas. APs can also be virtualized so that one main controller “listens” to every device and re-authenticates it as it moves between hotspots. Virtualization, however, is an enterprise-level solution because of the significant outlay for hardware, maintenance and setup.

No provider has all of the answers, but many agree that old monetization models no longer work. “It's clear that service providers are looking to service provider Wi-Fi as a competitive differentiator, and there is strong interest in exploring new and innovative business models for Wi-Fi monetization,” says Chris Nicoll, principal analyst at Analysys Mason.

Edited by Brooke Neuman

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