Bloomberg News

Wi-Fi Flaws Turn Off Outdoor Users, Cost Mobile Web Traffic

February 25, 2013

Wi-Fi Flaws Turn Off Outdoor Users, Cost Mobile Web Traffic

At the Mobile World Congress this week, over 70,000 are gathering to discuss the future of wireless communications. Photographer: Simon Dawson/Bloomberg

Wi-Fi networks, having become a household fixture in the past decade, remain too annoying to use outside the home for many, hindering carriers’ ambitions to leverage the wireless Internet technology.

As hotspots pop up across cities and public transportation, multiple passwords, spotty coverage, extra charges, and phones that connect to unauthorized Wi-Fi by mistake and disable wireless data are turning some customers off. Home remains the most popular place to use Wi-Fi -- some operators see as much as 75 percent of mobile traffic carried on personal routers, while as little as 5 percent goes over outdoor hotspots, industry group Wireless Broadband Alliance found in a November survey.

“The phone connects to the network automatically: you appear to have Wi-Fi and all connection is in fact lost,” said Dave Field, a public relations consultant in London who uses Sky’s Cloud Wi-Fi service and Virgin Media Inc. (VMED:US)’s hotspots in the Underground subway. “Auto-connect is also a real pain as you often need to complete long forms and bank cards -- quite difficult on an iPhone.”

Such complaints make it more difficult for providers such as Vodafone Group Plc (VOD) and AT&T Inc. (T:US), which are increasingly counting on the technology to ease traffic on their mobile networks, and companies like BT Group Plc (BT/A) and British Sky Broadcasting Group (BSY), which want to use Wi-Fi to win user loyalty.

Wi-Fi Dreams

At the Mobile World Congress this week, over 70,000 are gathering to discuss the future of wireless communications. Companies’ ambition of streaming videos through wireless networks and marketing to consumers by location largely depend on full and frequent access to the mobile Web. To assist bloggers, analysts and media swarming the Fira Gran Via convention center, organizers have promised 50 percent more Wi- Fi hotspots than last year for 250 percent more capacity.

The WBA is working to ease access, pushing for so-called next-generation hotspots to cut the need for user names and passwords. More than 50 companies, including AT&T, BT and China Mobile Ltd. (941) agreed in December to roaming deals integrating Wi- Fi networks, billing and security as part of the initiative. It will begin deploying in the first half of this year.

The group is also testing a system using mobile-phone smartcards to identify users so they won’t have to log in. By using SIM cards, which store a user’s identity in the phone, customers won’t have to log in to the best available networks and their credentials will work across them all, said WBA program director Tiago Rodrigues.

Managing Traffic

“It’s a mechanism that is in some ways similar to the experience we have on our mobiles when we go abroad,” Rodrigues said. “Our mobiles select the network that is available automatically.”

As carriers expand their Wi-Fi hotspots in public places, they have to ensure they can handle the traffic so users aren’t driven away as soon as they try to get on. In the U.K., Wi-Fi use drops to its lowest points when customers leave home, a Nielsen survey of people with devices using Google Inc.’s Android found in September. It accounts for about 90 percent of data use between 8 p.m. and 5 a.m. and drops to a low of about 65 percent at midday, according to the study.

Most operators saw less than 20 percent of smartphone traffic offloaded onto Wi-Fi networks, the WBA survey found.

BT, with 4.5 million U.K. hotspots, has sought to boost non-home usage. It’s tripled the minutes of traffic in the last year when people are out in part by partnering with retailers and places such as train stations where people have to wait, said Andy Baker, the Wi-Fi division head.

Duty-Free Shopping

BT aims to ease frustration by adding Wi-Fi access to broadband packages and offering the service through retailers such as Starbucks Corp. (SBUX:US) and John Lewis Plc, Baker said. BT also has an application for iPhones, Windows, BlackBerrys and Android devices to point users to hotspots.

Partnerships also open new lines of business for providers that can compile data on how customers move around a store, for example, or what they buy for tailored coupons. One service BT plans would allow an airport to track how long passengers spend in duty-free shops and how often they visit, Baker said.

“You’ll see a lot of pretty cool stuff over the next 12 to 18 months,” Baker said.

FCC Vote

BT rose 0.3 percent to 278 pence at 8:54 a.m. in London. BSkyB gained 0.2 percent to 828.5 pence.

Worldwide, governments and carriers are finding ways to facilitate outdoor Wi-Fi access. The Federal Communications Commission last week voted to write rules opening more airwaves to Wi-Fi devices to help ease wireless congestion in places such as airports and conference halls.

China Mobile boosted the number of sites to 2.2 million by the end of 2011 from 300,000 that June. The world’s biggest wireless carrier then saw traffic jump 103 percent in the first half of last year, according to the WBA.

NTT DoCoMo Inc. (9437) and U.S. Wi-Fi service provider Boingo Wireless Inc. (WIFI:US) announced a roaming agreement in December that gives the Japanese carrier’s customers access to 600,000 hotspots globally. In New York, Norwegian Cruise (NCLH:US) Line has sponsored free access to clients on the subways and airports this month through a sponsorship deal with Boingo. Google also partnered with Boingo to offer free Wi-Fi in exchange for advertising to users in New York City last summer.

“Over the last two or three years, there’s been a dramatic increase in the number of places where that is free,” BT’s Baker said. “It’s a much easier world now, you’re not in the world of passwords.”

To contact the reporter on this story: Amy Thomson in Barcelona at athomson6@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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