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Massive Wi-Fi on the move: End of the mobile era?

By Claus Hetting   /     Feb 01, 2015  /     Uncategorized  /  

While big US mobile carriers have been busy spending 45 billion dollars (!) on tiny slices of licensed band, others have hatched a bigger, better plan with Wi-Fi. The mobile industry in the US and the world may never be the same after this week. Get ready for a tectonic shift.

We’re a handful of folks who are rejoicing this week as Google, FreedomPop, and Cablevision all announced big plans with Wi-Fi. This is not just a change of technology. This is a tectonic shift in the mobile ecosystem. It was really only a question of time (read about more about the end of cellular here).

Cablevision’s Wi-Fi pitch for $9.95 a month is the extreme case: The Freewheel phone is not just Wi-Fi First, it’s Wi-Fi only. Cablevision is offering access to 1.1 million hotspots on their own Optimum Wi-Fi network. Presumably, this will (at least at some point) be extended by the Cable Wi-Fi Alliance’s 300,000 hotspots plus whatever open Wi-Fi hotspots consumers can access on the fly. And there are lots of those in America.

It will be interesting to see what Comcast, TWC, Cox, Bright House and the rest of the MSO giants react to this. My guess is something big quite soon.

FreedomPop’s price beats Cablevision at only $5 dollars a month and nationwide unlimited Wi-Fi at 10 million hotspots. Still no news on where that Wi-Fi network comes from but California-based Devicescape will be involved in FreedomPop’s second phase, adding another 10 or 12 million hotspots or more. “Never pay a cellular carrier bill again”, FreedomPop says.

As usual in this industry, we’re not sure exactly what Google is doing except talking to T-Mobile and Sprint about (presumably) a wholesale capacity deal. There can be no question that Wi-Fi will be a big component in Google’s service provider play. Where are they’re going to get their Wi-Fi network from? I’m not sure I want to venture a guess. But there are various options.

So what happens when Wi-Fi (as a replacement for mobile) for $5 or $10 (or even zero) dollars a month becomes the norm? If the mobile broadband (cellular) business model was unsustainable before, the bottom may just have been kicked out of it. It’s hard to see how MNOs will be able to compete and they will need to think fast. It’s not just about ARPU (revenue) erosion. This is more about ARPU destruction.

The bottom line is this: Wi-Fi-based services can carry a price of zero to 10 dollars a month, but cellular networks certainly cannot. This will have big consequences for everyone on the infrastructure side of the mobile industry. Investors also need to start worrying about debt pressures on the big MNOs.

For more about the all of this join us at the Wi-Fi Innovation Summit happening in San Francisco this April 21-22. Meet the service provider & tech leaders transforming mobile with Wi-Fi right now.

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