Demystifying the Wi-Fi calling phenomenon: Part 2

Demystifying the Wi-Fi calling phenomenon: Part 2

The Delta Perspective

Is Wi-Fi calling really going to disrupt the industry?

Alessandra Pelliccia and Lluís Liavina
Wi-Fi calling is rapidly maturing and could become, in the mid-term, a disruptive technology capable of enabling a real seamless experience for all kind of products and services, no matter what radio access technology the customer is using. However, the technical challenges are multiplying and operators are still to figure out the best approach to market this service.

Not a “first” for Apple this time

Following the launch of the new and Wi-Fi calling – capable iOS8 by Apple in Q4 2014, there is no doubt that the industry will see a boost in Wi-Fi calling adoption. Some operators have already been experimenting with the offering during the past years. Examples, both available in the US, include T-Mobile offering its “Nationwide Wi-Fi calling service” launched in 2007, and Republic Wireless providing tailor-made Wi-Fi calling offering launched in 2010.

T-Mobile offers Wi-Fi calling at no additional charge on nearly all T-Mobile smartphones

Source: T-Mobile, Delta Partners analysis
Republic Wireless offers mobile services via Wi-Fi with service continuity through a proprietary solution
Source: Republic Wireless, Delta Partners analysis
Sprint also offers Wi-Fi calling in its network, although it does not support seamless handover. FreedomPop and Cablevision’s Freewheel Wi-Fi service are other two interesting value propositions that can also be found in the US.

Time to overcome the challenge to deliver a great indoor experience

As device manufacturers increasingly include support for Wi-Fi calling in their devices, operators should see Wi-Fi calling not only as a way to enhance the overall value proposition offered to their customers, but also as a way to significantly improve their experience, both outdoor as well as indoor.
Wi-Fi calling might definitely become the “next solution” to mitigate, and even resolve once and for all, the industry challenge of being able to offer a decent indoor experience (in particular, in high-density, urban areas).
On the other hand, the cost of delivery of a call using Wi-Fi technology is significantly lower than that of using a cellular network (even the most advanced LTE networks). Even the deployment of Wi-Fi hotspots is much more affordable than the deployment of other indoor coverage solutions such as DAS or small cells, approximately costing up to 2-5x times less1.

How should a Wi-Fi calling value proposition be marketed?

Some years ago, when the “OTT threat” became a reality, telecom operators didn’t know in general how to react to it. Today, different points of view still exist in regards to the way the benefits of Wi-Fi calling should be marketed. 
While some players charge Wi-Fi calls and SMS as if they were going through the wireless network, others offer completely free Wi-Fi calls and SMS

Source: Operators’ websites; 1 Includes USA, Virgin Islands and Puerto Rico

Reality is that benefits and capabilities of Wi-Fi calling are multiple, just like strategy options. In one of his recent posts called ’The myth of "Telcos winning back revenue from OTT players"’, Dean Bubley says “if operators want to "regain revenue from Internet players" there is only one way to do it: innovate at a service/application level… and compete”. New services enabled by Wi-Fi calling could be indeed priced differently, and used as a way to increase overall attractiveness of the value proposition and become more competitive.

Does it mean the end of cellular voice revenues? 

Certainly not! Operators control when and how to implement Wi-Fi calling. However, as discussed above, enabling Wi-Fi calling is expected to be beneficial for both operators and customers, as it allows for a more optimal infrastructure management scheme, and improves indoor cellular network experience, one of the key problems of operators in urban areas.

In any case, one might expect Wi-Fi calling to accelerate the trend towards “buying the data package and getting the voice for free” that can already be enjoyed in multiple markets such as the US. In the case of more emerging, and prepaid-dominant markets in which this trend is less mature, and/or where the arbitrage between voice and data remains significantly high, one would expect to see it accelerating this shift and leading to uncertain value erosion in an initial phase.

On the other hand, Wi-Fi could act as a catalyst for more and more hotspots to be deployed all over the cities, thus incentivising new players to develop new value propositions to “ride on top” of these larger Wi-Fi networks, and to adopt more aggressive go-to-market strategies. Therefore, it is recommended that the right strategy to deal with these new players is defined in the operators’ agendas for Wi-Fi calling specific initiatives.

1 According to specialised analyses by Spot On Networks, a firm in managed Wi-Fi and in building wireless solution


Author's Bios:

Alessandra Pelliccia is an Associate at Delta Partners’ Management Consulting division based in Dubai. Alessandra has more than three years of telecom experience in Europe, Latin America, Africa, Southeast Asia, and the Middle East. Her focus includes financial modelling, network, LTE start-ups, LTE commercial and network PMO, corporate strategy and organisation. Prior to Delta Partners, Alessandra was a consultant within the TMT practice at The Boston Consulting Group in Milan.

Lluís Llavina is a Senior Manager at Delta Partners’ Management Consulting division based in Barcelona. He is a telecommunications engineer with cross-functional expertise on strategy and business planning, technical, and commercial areas within the telecoms and digital segments. Lluís has more than five years of experience in business consulting in the telecoms space in the Middle East, Africa, Latin America and Europe. Previous roles include being a Founder, CEO, and Board Member in two Internet/TMT start-ups.