In Business Model, Internet Access, Mobile, Spectrum

Voice over Wi-Fi represents different sources of value for various ecosystem participants. For smartphone suppliers, Wi-Fi calling is a feature that adds value to a handset.

For mobile virtual network operators, Wi-Fi calling is a way to lower operating costs, as is the case for mobile operators as well.

For cable operators (or some MVNOs), supporting voice operations on a “Wi-Fi first” basis means a chance to lower the cost of wholesale mobile network access.

Facilities-based mobile operators benefit from the ability to shift traffic off the mobile network, as well as from a chance to provide better in-home or in-building voice quality.

In a few cases, Wi-Fi calling might also be used to deal with coverage gaps caused by terrain, buildings and other obstructions, or simply mobile network unavailability.

Common to virtually all the use cases is reliance on indirect revenue sources or business case value.

Technology platforms in the access business now are becoming more asymmetrical, in terms of business advantage, often favoring new attacking providers more than incumbents. That might not instinctively make sense. After all, assuming an entity has capital resources, technology tends to be neutral–a tool any contestant may use.

But advanced technology in a number of cases is not neutral in its business model impact.

If it sometimes seems as though incumbent access providers are fighting a defensive battle, that is because they are.

It has become more common in the access business–both mobile and fixed–for new justifications when capital investment must be made. Classically, a firm makes an investment in expectation of  higher revenues, incremental new revenues or lower recurring costs.

Since the advent of optical fiber to home networks, the business case has rested significantly on reducing operating costs, while enabling new apps has been the main driver.

But some element of the business case is simply strategic: irrespective of the amount of new revenues, almost independently of operating cost advantages, fixed network operators have had to invest in high-capacity new networks simply to stay current with competitors able to offer faster Internet access speeds, for example, as such access has become the anchor service for a fixed network operator.

As one telco executive said, “you get to keep your business.” The clear implication was that, even if total revenues did not grow, and if incremental operating cost savings were not enough to drive the investment case, fiber to the home still would be necessary.

Perhaps the same logic applies in the mobile industry, even if there is far more expectation of revenue upside from deployment of next generation networks.

In an environment where much formerly-lucrative international calling now is abandoned in favor of over the top calls, significant lost revenue is often a foregone conclusion.

So why would a mobile operator want to invest capital in voice over Wi-Fi capabilities? Direct incremental revenue is not necessarily the business driver. In fact, since smartphones often natively support such calling, the issue is customer satisfaction, related to acquisition and retention, not direct revenue as such.

“Nowadays, when the users travel to another country, they are using over the top applications such as WhatsApp and Skype over Wi-Fi networks to communicate with the people back home so that they could avoid the high roaming charges,” the Wireless Broadband Association says.

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