There have been a number of reports recently suggesting that the growing number of of WiFi hotspots, coupled with the proliferation of smart phones incorporating WiFi, could steal MNOs’ 3G thunder.
Data released this month by mobile analytics and billing provider Bango showed that over 20% of people visiting web sites to purchase content using their mobile phones are connecting via WiFi. Having measured connection methods and conversion rates over the last year, Bango reports that one in five connections is now via WiFi or other non-operator network. The company points out that customers connecting in this way cannot be authenticated to pay using simple operator billing, which results in an inconsistent payment experience that slashes conversion rates and kills marketing ROI. The statistics also revealed that many customers that access their operator portals via WiFi are blocked, which prevents them from accessing or purchasing operator-approved content and services.
Certainly, this a worrying trend for MNOs looking to fight falling voice and messaging ARPUs with new revenue streams created via m-commerce and the mobile Web. But suggestions that WiFi access will be seen as ‘the norm’ (and perhaps a threat to LTE) are far fetched for three key reasons.
Firstly, the majority of industry commentators discussing the WiFi connectivity trend have missed one simple but vital fact: the huge drain on battery life for the average (but not every) device. As many laptop users, let alone smart phone owners, will attest to, although WiFi often delivers a faster and smoother connection than most 2.5 and even 3G networks, if you linger for more than half an hour on a WiFi connection, you almost invariably find the battery indicator hovering dangerously in the red zone. And most coffee shops and other public WiFi hotspot providers do not offer the user an accessible power point for a timely recharge.
Secondly, WiFi coverage, by its very nature, is limited to an immediate locale. Granted, WiFi is handy if you are stationary for a period of time, or happen to be travelling on a train (or coach) equipped with access points, but the real power of the mobile Web is anytime, anywhere access on the move (to within reason and notwithstanding the quality of cellular network coverage). In addition, WiFi might be common in developed nations, but there will be a huge proportion of mobile Web users based in emerging markets where there is often not the fixed-line infrastructure (or even electricity) required to connect a WiFi access point.
Thirdly, there is the issue of trust. WiFi networks are notoriously insecure. For security-conscious users, the thought of transmitting credit card details, or indeed any form of personal data, over a radio connection provided via an un-trusted third-party, is a major (but not always insurmountable) barrier. Admittedly, this final point resonates with Bango’s original argument that mobile businesses need to ensure their mobile billing solution can secure the same high conversion rates from the growing number of WiFi-connected customers.
However, its prediction that over a third of all mobile Web connections will be via WiFi by 2010 may boil down more to interpretation than anything else. In developed markets, and if the term ‘mobile device’ is applied more broadly, this could well be the case. But in respect of typical cellular phones, then likely not, given that a large proportion of the global mobile population lives outside the reach of a local WiFi network.
