During the pre-LTE days, the importance of Wi-Fi infrastructure was on the rise and that created opportunities for aggregators such as Devicescape and iPass to offer the broadest platforms to customers – from enterprises to cellular offloaders to Wi-Fi-first mobile virtual network operators. There have been several deals to improve the footprint and ease of use of curated Wi-Fi networks. Those deals included agreements between iPass and Devicescape, Devicescape and Bandwidth X, the latter with Syniverse, etc.
Curated Wi-Fi offers both mobile network operators and multiple system operators a way to use third party hotspots, rather than invest in their own, while retaining a measure of quality control. That control has become important as providers start to promise their users ‘carrier-class’ Wi-Fi, perhaps even using that as a reason to move them to a premium tariff.
But in the age of unlimited LTE, is Wi-Fi still essential for enterprises to control their mobile workers’ connectivity cost?
In its most recent quarterly earnings, iPass showed some disappointing results. Despite the number of “hours consumed” going up, revenues are going down. One of the factors contributing to the net loss for the last quarter was explained as follows: “…the usage and resultant revenue [from]our legacy pay-per-use customers declined more rapidly than anticipated, driven by unlimited cellular data plans, the “WannaCry” virus, and other external factors. While usage from our new Unlimited and Strategic Partners rose sharply in the same period, decline in usage-based accounts resulted on lower overall revenue.”
A volume business
Wi-Fi is a volume business where iPass as an aggregator makes a margin on favorable network access cost (NAC). The more users revert to private Wi-Fi networks instead of commercial Wi-Fi, the more margin iPass makes, according to Blaz Vavpetic, the new CTO at iPass. iPass enjoys much better margins on multinational corporations, but that business is declining in favor of unlimited cellular offerings.
iPass, which has a vision of connecting 1 billion devices, claims its footprint consists of 60 million hotspots, half of which are homespots from the likes of BT, FON or Orange, while it also licenses several ofthe hotspots from Devicescape. iPass has integrated the curated virtual network (CVN) into its global Wi-Fi network. This ensures that any hotspot in the network meets certain standards of quality and security. iPass’s software carries out anonymous usage data aggregation to determine a hotspot’s location, signal strength and speed, and to rate its performance and reliability accordingly. It then uses predictive analytics to connect users automatically to the best location in range. It will also use its analytics to identify areas where it needs to add new hotspots to improve coverage or capacity.
Selling connectivity is a tough business but iPass CEO Gary Griffiths wants to remain positive about the outlook. “We’ve made material progress with iPass SmartConnect with several key partners that will be evident in the coming months,” he said. “Specifically, we are solving problems for mobile carriers. The strain put on these carriers by unlimited cellular data plans in a fixed-capacity spectrum has made the need for intelligent connection management more critical than ever. “
iPass is hopeful it can sign-up Tier 1 MNOs to facilitate their roaming deals and provide the software development kits to embed the iPass client manager SmartConnect directly into millions of devices.
Hotspot 2.0 and Next Generation Hotspot (NGH) represent the nirvana of roaming but they have seen an extremely slow adoption rate for many reasons, ranging from lack of support on the device side to lack of interest from venue owners or even service providers. Boingo is one of the few players actively deploying Hotspot 2.0 in the venues they service such as airports in the U.S. It is estimated that less than 5% of hotspots worldwide are Hotspot 2.0 compliant now.
iPass is betting long-term growth and profitability on big data and predictive analytics, for the benefit of carriers and venue owners with over-the-top quality of service monitoring. From that perspective, it is looking at other radio access technologies like LTE-U with the idea of becoming an OTT network quality-of-service enabler independent of the radio access technology.
How to keep increasing revenues, when actual access fees are under constant pressure, is a challenge faced by every player in the Wi-Fi value chain. Hence the expansion of new services which harness the hotspot maps but do not require consumer spending, such as proximity marketing platforms.
Engagement as the new frontier
Devicescape has moved beyond connectivity to make a profitable living. Engagement at a large scale is the new driver for growth. Devicescape says it is up and running, selling campaigns in the UK with Samsung, as an example, and launching in the U.S. at the end of 2017, with a global launch foreseen next year. Initial results seem promising, with click-through rates around 13%. It claims its app is on several million devices in the UK.
There are many providers of Wi-Fi and Bluetooth-based platforms that provide contextual marketing engagement, but Devicescape says it is different because it provides the ability to engage on a global scale without the consent of venue owners. “Captive portals are old school,” CEO Dave Fraser told me. “Connectivity should be automatic, seamless, and when NGHs will be in place, there will be no room for captive portals anymore.” We think he may be right, but that’s a very long-term view as we saw previously regarding the turtle progression of Hotspot 2.0.
Wi-Fi is a volume-driven business, Fraser added, and MNOs have made little effort to open their networks to Wi-Fi; most access points are deployed by venues. Devicescape reports 300 million access points but just 20 million meet their quality standards for its curated virtual network.
The proprietary quality of experience algorithms are incorporated in a smartphone app, which chooses the best available connection. These decisions can be overridden by operator policies or consumer choice, depending on how the system is configured, but Devicescape says most end users leave ‘always best connected’ as their default choice.
How will venues and merchants react to being passed by completely? Time will tell, but if clients are connected with Devicescape’s embedded app, there is not much they can do.
Ad agencies are essentially buying access to this global distribution channel comprised of curated Wi-Fi and Bluetooth access points. They specify 3 things in a campaign: type of locations (groceries, or a brand name such as Target), the ad text message and the response URL linking to a mobile mini-site.
The lines between media and connectivity are blurring, and curated Wi-Fi providers will need to continue to innovate faster than the fast-moving market.