In the week after Telstra launched ‘TelstraAir’ – Telstra’s venture into shared WiFi for its customers and the public – it is perhaps appropriate to look at the concept of ‘WiFi First’. Going “Wi-Fi first” was pioneered in 2012 by French mobile operator Free to fill the gaps in its cellular network. The idea has since been advanced by three American start-ups: Republic Wireless, Scratch Wireless and FreedomPop who have received increasing attention of the news media and incumbent communications companies. FreedomPop raised $30m in financing last month with plans to move into Europe and signup its first customers in Britain this month. A big part of the hype around FreedomPop has been its technology which allows it to keep continuity between WiFi networks. As the signal of one network diminishes, FreedomPop’s technology finds another network and transfer’s the call to it seamlessly. So how does WiFi first compare to Cellular first?
‘Cellular first’ vs ‘WiFi first’
A WiFi first approach relegates the cellular network to backup or cuts it out altogether. To do this successfully requires a proliferation of WiFi hotspots and the technology to switch between them. This approach has not been possible until now but as user habits move to using WiFi ‘on the move’, infrastructure is set up (like TelstraAir or Fon) and security of public networks is improved WiFi is gaining in relevance.
For the traditional mobile business model tied to cellular plans this changes the cost dynamic. Cellular infrastructure comes with ongoing maintenance cost (so will WiFi first networks) but with customers opening up their own household or business WiFi connections as hotspots there is the potential to remove fixed costs to providing coverage and access. Freedompop et. al are able to offer a single plan at a fraction of the cost of regular cellular plan in exchange for less coverage flexibility outside hotspot areas.
The drawbacks of WiFi First
There have been a number of cited drawbacks of going to WiFi first. As TelstraAir matures it will be interesting to read into customer feedback of the service in these areas:
Obviously, coverage is a drawback of WiFi first and in a country like Australia where the tyranny of distance reigns. A pure WiFi only offering is unlikely to be as popular as it is for the city dwellers of Manhattan or Sydney. How Telstra and other Air-like providers price Cellular back up services will support the use case for a combine Cellular WiFi offering.
Dropped connections and battery life
In reviewing FreedomPop feedback, some users have grumbled about dropped connections and bad customer service. In both cases subscribers need to keep their handsets’ Wi-Fi connections permanently switched on, which is a drain on the devices’ batteries. Battery-life of devices and power required to connect to WiFi signals is likely to improve in the next 2-3 years but until then this is an impediment to an experience on par with cellular first mobile.
Competing with low-cost Cellular first providers
Wi-Fi-first subscriptions appear to be tough sell particularly if you compare to services like Amaysim or Dodo in Australia. Rates are already low with generous monthly packages from around $20 that a lower cost WiFi only provider may not add much value beyond this. A more fundamental problem may be that Wi-Fi-first startups, like all MVNOs, depend on the willingness of incumbent carriers to let them use their networks as stopgaps at an acceptable price which is likely to taper off as the startups grow. Sprint (America’s third largest operator) supports both Freedompop and Republic … but for how long.
Where does WiFi first go from here?
With the possibility of 5G networks on the near horizon, the notion of WiFi first may only be a blip in the lifetime of access trends. Boasting features like very high speed, lower latency and reduced strain on battery life 5G may even eclipse the efforts of the NBN in its ability to enable trends such as Internet of Things.
Before 5G arrives, I am interested to see how WiFi first evolves. It has the capability to spawn new revenue and business models opportunities including supporting wearable technology and pioneering new ‘share-telco‘ constructs.
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