Focus: New business models


I get this question pretty much every day: How do you make money on Wi-Fi? While there are a lot of experiments (and good ones, too) out there, there are – contrary to common belief – about five proven ways to do it. Here they are:

Retention: It is absolutely certain that Wi-Fi (usually free but occasionally not) offers big retention value for carriers at a CAPEX that hardly makes a dent in the budget. This is the number one (indirect) way to make money on Wi-Fi for MNOs or MSOs or you name it. It’s a classic: Low cost to you as a carrier, high value to the consumer. And it works. The best examples that I know of are TWC (USA), T-Mobile USA (CellSpot for indoor VoWiFi) – but there are many others.

Offload: The word is wrong but the concept works. KDDI Japan ‘offloads’ (read: delivers) 57% of their mobile traffic on Wi-Fi after they handed out a couple million free home routers. This is in-home ‘offload’. Sprint just signed an ‘offload’ deal with Boingo in the USA. So what’s the proof that ‘offload’ makes money with Wi-Fi? Well – if it didn’t, neither Sprint nor KDDI would be doing it. Right? 🙂

Wi-Fi First: Free data & voice on Wi-Fi with scratch-cards to cover the rest is a real business. Scratch, Republic, and FreemdomPop (I guess Project Fi is in this category in a way, too) are all doing this. I’ve not seen the numbers but again, I don’t think they would keep doing it if they were not making money. This is the CAPEX-less service provider / MVNO-type model.

Analytics: We’re still just scratching the surface here but here’s proof of value: Euclid Analytics struck a major location analytics (it’s all anonymized so don’t worry about your privacy) deal with BT early this year. Knowing where people are has value. I can’t tell you the dollar figure, but doing this on Wi-Fi is not costly.

International roaming: Companies like Accuris Networks & BSG Wireless are making real money on international roaming with Wi-Fi. It’s a carrier-play for the time being and it’s an important one given that data roaming fees are still high.

Here are two that I expect will materialise soon:

Ads: This one is harder because the eyeball numbers are small. But what I believe (I’ve not seen the numbers) works are up-selling and on-boarding, especially for MSOs providing ‘free’ Wi-Fi services – but it could in theory work for all carriers. In other words: Wi-Fi becomes a marketing channel for the carriers themselves. The consumer-engagement side is harder to work out commercially but we will see some good movement on this front soon, too.

Not free but included: Personally, I’m very interested in seeing what Microsoft has up its sleeve regarding its new Wi-Fi service. It’s not only possible but also highly likely that more device vendors will use public Wi-Fi networks to deliver content & services thus (where possible) circumventing the carriers.

We will be covering all of these at Wi-Fi NOW in Amsterdam.