As a Wi-Fi evangelist I’m still smiling from ear to ear after what LinkNYC pulled off last week. We knew that LinkNYC’s free Wi-Fi would likely be fast. But even I did not expect 450 Mbps in the streets of the Big Apple. That’s huge.
Yes, the cellular industry is doomed (please don’t shoot the messenger) and it won’t take me more than half a page to explain why. There is still some risk that mobile carriers will be Uberized but actually, it’s mostly a case of death by a thousand cuts. The deepest one thus far came this week in New York City.
Here’s reason no. 1: The cellular industry has no chance of competing with a price of zero to $5 ARPU a month. It probably can’t even support $10 or $15 ARPU a month. And there is no restructuring of the cellular industry that can affect a change that would allow prices like that to be sustainable.
First of all, there is pretty much zero chance that regulators will stop auctioning off licensed bands for billions of dollars. The cellular industry is structured around that very idea plus high royalties on the 4G technology that goes into networks and devices. It’s a 3 trillion dollar industry that assumes that consumers will continue to want more & more mobile data. As it happens, they may not need much more of that in the near future.
So will 5G be the next great thing in cellular? First of all, 5G is at least 5 years away right now. And secondly, it appears to be technology for the sake of technology. With 450 Mbps blasting out for free in NYC today, it’s hard see what good 5G it will do in 2020.
And so the cellular folks are betting on IoT. Unfortunately, cellular is probably the worst wireless technology to use for IoT. If you can’t support an ARPU of a few dollars a person, you can forget serving ‘things’ at a few cents a month. And how about connecting the next billion in emerging markets? Similar story: It’s a 2-dollars-a-month game. Not likely to happen with mobile.
Here’s what LinkNYC Wi-Fi is getting right:It’s secure with Passpoint (Hotspot 2.0) and it will become part of a larger seamless Wi-Fi roaming structure across the US. They’ve got fibre to the kiosks, which is a big part of the reason for the 400+ Mbps speeds. They’ve got (we think!) the revenue stream secured with ads and – probably – location analytics. If it is successful – and I’m betting on it – it could be replicated in many cities around the world. Not all cities will want 55-inch billboarded kiosks, but many just might when the see the benefits.
If I were a New Yorker, this is what I’d do: Get the smallest possible cellular subscription and make sure you download the brilliantSpeedify app that aggregates Wi-Fi and mobile data. You can even set data bucket size on it if you want to save a bit extra. With LinkNYC and many other Wi-Fi networks out there, at some point you will be on Wi-Fi 90% of the time even when you’re outside your home.
If I were an investor, I would sell short on cellular stock and keep it for about 3-4 years or so. I’d probably go for big vendors like Ericsson or perhaps (to a lesser degree) Nokia. Those companies are going to need to re-saddle in short order and I just don’t think they can do it fast enough. I would probably buy Ruckus and possibly Cisco (still hoping that Cisco will put a bit more weight behind their SP Wi-Fi push). I am also hopeful that the HP/Aruba story will work out well.
What could still hurt the Wi-Fi industry and billions of Wi-Fi hungry consumers is failure by regulators in recognising the value of Wi-Fi. We need more unlicensed spectrum because Wi-Fi works. It’s lowering the price of connectivity everywhere – in some cases (like in NYC) it’s reducing it to zero. Wi-Fi is the stuff that is enabling the Internet economy. It’s that simple.
For more on this and a full update on all things Wi-Fi don’t miss Wi-Fi NOW the conference happening in Washington DC this April! Join us by going to this link to check out the program and register. We want to see you there 🙂
/Claus
