I’ve been evangelising about the benefits of Wi-Fi offload for a long time. Contrary to common belief more and more operators are actually starting to use it. The odd thing is that the companies (telcos and equipment providers) are doing it in stealth mode.
In other words: They’re not allowed to talk about it. Why, you ask? There’s a good reason for that, which I will explain to you now. Stay with me – this is important
In 1961 President Eisenhower coined the phrase the military-industrial complex. This is the symbiosis between the government, the military, and arms providers. Seth Godin talks about the TV industrial complex: Invent a product, build a factory, buy TV ads, and sell lots of products. Build another factory, buy some more ads, and sell more products.
Enter what I call the mobile industrial complex: The symbiotic relationship between governments, carriers, equipment vendors, and mobile consumers. The government sets out rules for buying licensed frequency bands. The carriers buy these licenses for enormous sums of money. Technology vendors, tower companies, etc. sell equipment to carriers for even bigger sums of money. Consumers finance all of this by buying mobile services. The demand for services then drive the need for more bands. And so on.
So here’s my point: The reason why people inside this system don’t talk much about Wi-Fi and offload is because Wi-Fi foreshadows the end of this massive cycle that circulates billions of dollars.
Why? Because Wi-Fi requires no license. It requires much, much smaller investments into equipment mostly from companies that are not a part of the mobile industrial complex. A lot of Wi-Fi is offered for free or monetised in ways other than by paid subscription.
It can and will be monetised by companies that are nowhere near the complex. And Wi-Fi can successfully meet rising consumer demand for connectivity totally outside of this system (but yes, we will need a lot of fine-grained fibre networks to support the traffic).
Hence follows some real disaster scenarios. What will happen to the value of licensed frequency bands if it were commonly accepted that free Wi-Fi bands could do as good a job or better? It would clearly plummet. What will happen to the network industry that supports the complex? Same story. What will happen to carriers that rely on subscription models to finance all of this? They will be under severe pressure. What will happen to the value of towers and the huge piles of mobile infrastructure deployed? Same same. It’s not a pretty picture.
I won’t go as far as to predict that this machinery is going to come crashing down in short order. I think there will be a need for ‘classic mobile services’ because they serve basic consumer needs (meaning wide area coverage) very well – just like we still have the good old TV industrial complex although it’s not nearly as powerful as it was 20 or 30 years ago.
I will predict that the money tied up in this cycle will become much less in the coming years. I’m not an economist – but I should think that there is a risk of serious knock-on effects because of the big money and expectation of value (debt) tied up in this system.
“You never change things by fighting existing reality. To change things, you build a new model that makes the old model obsolete.” – R. Buckminster Fuller. I believe that’s exactly what’s happening right now.
And if you want to know all about the innovative Wi-Fi technology and business models driving this transformation, come to the Wi-Fi Innovation Summit in Copenhagen on December 9-10. I look forward to seeing you all there