By Stuart Taylor, Cisco Internet Business Solutions Group (IBSG)
The insatiable demand for smartphones, tablets, and other connected devices is generating staggering amounts of mobile data. As my previous editorials discussed, the use of Wi-Fi for Internet access is exploding as more mobile devices are Wi-Fi-enabled, the number of public hotspots expands, and user acceptance grows.
Service providers (SPs) now realize Wi-Fi must be an important part of their strategy to manage growing data loads on their networks and meet increased customer expectations. While operators are learning to accept the role of Wi-Fi, they still struggle with ways to turn a “cost of doing business” into profitable business models.
The Cisco Internet Business Solutions Group (IBSG) has consulted with leading SPs from around the world about new, innovative Wi-Fi business models that can provide a reasonable return on investment (ROI), as outlined in our paper, “Profiting From the Rise of Wi-Fi.”
To learn more about what consumers are doing with their mobile devices, and to test their response to the new Wi-Fi business models, Cisco IBSG recently conducted a survey of U.S. mobile users. Following are our top three findings related to monetization of Wi-Fi:
1. Bundling free Wi-Fi can be an effective way to retain existing customers.
Bundling free public Wi-Fi access with a home broadband subscription is an important factor in combating customer churn. Almost two-thirds of broadband subscribers who know that free Wi-Fi is bundled with their home broadband subscription indicate that it is a “very” or “extremely” important factor in their choice of provider.
2. Offering free public Wi-Fi can help to attract new customers.
Not only does the inclusion of free public Wi-Fi seem to be effective in retaining existing broadband customers—it may also be a means of attracting new ones from competitors. Half of all broadband customers indicate that they would be at least moderately likely to switch providers if they were offered free public Wi-Fi, with 22 percent saying that they would be “very” or “completely” likely to switch.
3. There are new ways to make money from Wi-Fi -- beyond offloading.
To date, most service providers have viewed Wi-Fi as a means to offload some mobile data traffic and help retain customers. However, we have discovered new ways to make money from Wi-Fi. Specifically, we found a significant level of customer interest in three new, innovative business models:
- Secure Wi-Fi access to content stored remotely in a digital locker: The biggest perceived benefits are: 1) lower cost/no overage; 2) flexibility of location and device; 3) data security and privacy.
- National/international Wi-Fi roaming: The biggest perceived benefits are: 1) lower cost/no overage; 2) flexibility of location; 3) no mobile roaming charges.
- Enhanced in-store shopping experience (e.g., product information, mapping, coupons): The biggest perceived benefits are: 1) efficiency while in the store; 2) free Wi-Fi access; 3) personalized and relevant deals/coupons; 4) enhanced shopping experience.
Cisco IBSG conducted its online survey of 1,079 U.S mobile users in March 2012. The study was also undertaken in Brazil, Canada, Mexico, and the United Kingdom. Full results of the survey can be downloaded here.
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