ARE WI-FI AND 4G LTE ON A COLLISION COURSE? - PWC
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Communications Review / April 2015
Insights for telecom, cable, satellite, and Internet executives
Are Wi-Fi and 4G LTE on a
collision course?
4G
v.s. LTE
Without Wi-Fi, data services and content wouldn’t be consumed at
the levels they are today. Wi-Fi technology has moved from insecure,
point access to full-featured, ‘carrier-grade’ network capabilities
approaching those of traditional mobile operators. As interoperability
between Wi-Fi and LTE gains traction, the notion of mobility is being
redefined, and the lines between mobile operators and cable providers
are blurring. The result is a need for participants across the mobile
ecosystem to rethink business strategies and operating models.
www.pwc.com/communicationsreview
The emergence of carrier-grade Wi-Fi offers the industry
an opportunity to differentiate this Wi-Fi service.
The way Wi-Fi technology has grown grade’ Wi-Fi. What has been until both the commercial and the
over the last two decades is nothing today ‘best-effort’ Wi-Fi now has the technical areas. On the commercial
short of phenomenal. What began as attributes of cellular technology, such side, considerations include products
a simple way to wirelessly network as security, transparent registration, and services offered, pricing plans,
isolated clusters of home or business higher availability and improved the customer experience on Wi-Fi vs.
infrastructure within a limited area quality of service. The second is the cellular and strategy for supporting
has become an essential component development of interoperability. consumers across multiple networks.
of wireless communications. Cellular and Wi-Fi are now capable of On the technical side, elements
handing over call and data sessions include coordinating the building
From the days of ‘warchalking’,1 seamlessly as well as authenticating of the Wi-Fi and cellular network,
when users identified open Wi-Fi and automatically billing customers. managing and operating the
access points (a.k.a. hotspots), to networks and developing an overall
today’s active advertising of Wi- The evolution of Wi-Fi technology technology road map.
Fi availability, consumers have has implications — strategic and
grown to expect a Wi-Fi signal operational — across the industry, Spectrum strategy is another area
nearly everywhere they go. They for both mobile and cable operators. with myriad implications. Evaluating
expect not only ubiquitous but, Strategically, cable operators are the need for licensed spectrum is
frequently, also free Wi-Fi access. using Wi-Fi as a way to enter the influenced by the increasingly strong
Once, considered a threat to network mobile space. Cablevision’s January capabilities of Wi-Fi because of how
security, enterprises often shunned 2015 announcement of Freewheel,3 much spectrum an operator will
the technology. But the needs of a mobile-phone service based on buy as opposed to using techniques
workforce mobility, cloud computing Wi-Fi, is one example of a cable for offloading onto ‘free’ spectrum.
and virtual desktop applications have operator’s challenge to mobile Furthering the debate is the potential
made high-performance, secure Wi-Fi operators. Similarly, Comcast and use of unlicensed Wi-Fi spectrum for
networks indispensable. Liberty Global formed a global Wi-Fi LTE service, sometimes called LTE-U
roaming agreement 4 that’s akin to or Licence Assisted Access (LAA).6
Mobile devices have evolved in roaming agreements between mobile The debate is pitting the Wi-Fi
a similar manner. From cellular operators. standards bodies against the cellular
network, voice-only devices, standards bodies.
they have become multi-mode Such agreements likely will take a
smartphones that support high- bite out of mobile operators’ roaming Wi-Fi continues to pose one challenge
definition streaming video, Voice revenue streams. Mobile operators, to all those that deploy, manage and
over IP, Internet browsing and though, are beginning to think about rely on it: how to make money on it.
interactive gaming. The arrival of Wi-Fi as more than just a tool for Other than pay-per-use models in
Wi-Fi capability in these devices a offloading data traffic. T-Mobile captive hospitality and transportation
little over a decade ago 2 heralded USA’s Wi-Fi calling capability is settings, the willingness to pay
the age of explosive growth in data an example of Wi-Fi going beyond for best-effort Wi-Fi has been low
consumption – one where Wi- offloading data and extending because, perceiving its quality and
Fi would complement the macro farther into the full suite of mobility reliability to be low, consumers
cellular network for connectivity and services. And, Sprint offers Wi-Fi expect the service to be available
throughput. calling from overseas locations as a for free. The emergence of carrier-
way to lure customers who incur high grade Wi-Fi offers the industry an
Today, two trends in Wi-Fi technology international roaming charges.5 opportunity to differentiate this Wi-Fi
are setting a direct collision course service from its predecessor and
with cellular technologies such as Operationally, the implications of claim value for the improvements
LTE. The first is the advent of ‘carrier- Wi-Fi’s evolution include rethinking it brings.
Are Wi-Fi and 4G LTE on a collision course? Communications Review 1In many respects, the relationship between Wi-Fi and cellular
has been symbiotic.
Consuming mobile data — Figure 1: Projected moving of data traffic from cellular to Wi-Fi networks,
the cellular/Wi-Fi synergy 2014-2019
Globally, 46% of the total mobile-
Cellular traffic vs. offload traffic, exabytes/month
data traffic was offloaded onto
2014-2019
Wi-Fi networks in 2014. That
number is expected to rise to 54% for 53.5
smartphones and to 70% for tablets by
2019 7 (see Figure 1).
To date, mobile operators have 28.9
followed a ‘mobile first, Wi-Fi next’
strategy in designing their networks:
devices connect predominantly to an
operator’s network, with Wi-Fi used
to enhance capacity and coverage in
congested and indoor locations such 24.6
as stadiums and shopping malls. Even 2.67
with such a paradigm currently in 1.2
1.5
place, end users have adopted Wi-Fi as 2014 2019
a high-bandwidth, lower-cost (often
free) alternative, leading to impressive Offload traffic from mobile devices
levels of use.
Cellular traffic from mobile devices
In many respects, the relationship Note: 1 exabyte = 1000 6 bytes of 10 9 bytes
between Wi-Fi and cellular has
been symbiotic. Without Wi-Fi, the
mobile industry likely wouldn’t have
experienced such spectacular growth
in data usage. On the contrary, the
imperative that mobile operators T-Mobile USA 9 has been
industry might have been saddled
see the technology as more than demonstrating the benefits of Wi-Fi
with enormous capital expenditures
just an option for offloading data. calling by showcasing customers in the
to keep up with the demand. Without
They need to include Wi-Fi as part of basements of their homes making Wi-
cellular and in particular 4G LTE,
their network portfolio and consider Fi calls. To complement their existing
consumers wouldn’t have an industry
Wi-Fi in their continuum of service services, Verizon and AT&T plan to
ecosystem as rich as it is today with
experience. launch Wi-Fi calling in mid-2015.10
the diversity of devices, almost all
Vodafone and EE in the UK plan to
embedded with Wi-Fi capability. And Mobile operators typically face serious offer voice services over Wi-Fi as well
evidence 8 shows that where both challenges in deep indoor coverage. in the summer of 2015.11
4G and Wi-Fi access is good, traffic Their solutions reflect an increased
over networks increases. Use on one emphasis on heterogeneous networks, Another example of a strategy not
stimulates use on the other — creating including pico, femto and micro based on offloading was Sprint’s
synergy between the two and a better cells, as well as distributed antenna launch of Wi-Fi calling and messaging
overall experience for the end user. systems – all of which have a managed on two Android phones in 2013.12
deployment aspect to them. But Wi- Operators are already recognising that
With more than half of mobile
Fi technology has become a viable Wi-Fi needs to be an integral part of
data consumed over Wi-Fi, it’s
solution to this coverage challenge. their access strategy and architecture.
Are Wi-Fi and 4G LTE on a collision course? Communications Review 2Understanding consumers management capabilities (see
— and the promise of carrier- Figure 2).
grade Wi-Fi Other than seeing less demand on
Legacy Wi-Fi generally isn’t trusted, their own networks, mobile operators
is considered a best-effort access today have little insight into the
technology, and lacks sufficient traffic that has been offloaded from
methods to transport data traffic their network. They don’t know
Introducing the global securely. Its access points typically about users’ behaviour, the quality of
standards bodies were set up by end users in their service or other performance issues
homes, by Internet service providers of the offloaded traffic. As they vie
Separate standards bodies define as public hotspots, as a courtesy to have more control over what users
and shape cellular and Wi-Fi service in certain venues or by experience, carriers need to develop
technologies. With carrier Wi-Fi, enterprises for employees and a better understanding of Wi-Fi data
greater collaboration has resulted visitors. Carrier-grade Wi-Fi is a set traffic by gaining more intelligence
between the bodies. of capabilities that improve on best- about how these networks perform.
effort Wi-Fi with dramatically better The introduction of carrier-grade
3GPP (3rd Generation Partnership security, authentication, availability Wi-Fi equipment capable of being
Project): Group dedicated to defining and quality of service. integrated into mobile networks
standards and specifications for promises increased visibility into the
The Wireless Broadband Alliance, user’s experience.
cellular radio-access networks such one of Wi-Fi’s standards-setting
as GSM, UMTS and LTE. bodies, has created a set of As part of their natural technology
requirements that Wi-Fi networks life-cycle process, mobile and cable
IEEE (Institute of Electrical and need to meet in order to be branded operators alike are implementing
Electronics Engineers): Define ‘carrier-grade’. The standards require carrier-grade technology as the next
specifications related to Wi-Fi access a carrier Wi-Fi network to provide generation of Wi-Fi technology.
technologies (e.g., 802.11 standard). three core attributes: a consistent They’ll get security advantages as
user experience; a fully integrated, well as help improve their users’
WBA (Wireless Broadband end-to-end network; and network experience.
Alliance): Consortium of cable
and mobile operators as well as
infrastructure vendors created
Figure 2: Wi-Fi features compared — best effort & carrier grade 13
to deploy ubiquitous wireless
broadband services through next-
Features Carrier-grade Wi-Fi Best-effort Wi-Fi
generation Wi-Fi.
Dynamic network Ability to discover and select Limited ability; user needs to
WFA (Wi-Fi Alliance): Nonprofit discovery/ selection the network and access point be proactive in discovering and
selecting access point
organisation that certifies products
indicating they have met industry- Authentication & Strong admission control Admission control is localised
security based on authentication; can and often weak
agreed standards for interoperability, be SIM or non-SIM based
security and other application-
Service experience Service experience Limited service experience
specific protocols. configurable by device or by capability by individual/device;
user and managed by operator typically localised control
Architecture Capabilities to allow multiple Much more localised
interfaces, roaming - IPv6 architecture and less
among others distributed in nature; less
prescriptive in design
End-to-end service Subscriber provisioning and Localised roaming within
provisioning enforcement existing network
Network quality High reliability and availability; Availability and reliability not
dynamic load sharing guaranteed
Network security Strong detecting and Limited detecting of intrusion
preventing of intrusion
Network Standards-based provisioning Less management of the
manageability of devices network from a centralised
service
Are Wi-Fi and 4G LTE on a collision course? Communications Review 3Cable operators are leading the Mobile operators are noticing the
deployment of carrier-grade Wi-Fi opportunity carrier-grade Wi-Fi
access points. In the US, an example presents and are beginning to make
is the effort of the Cable Wi-Fi moves to capitalise on it. The Wireless
Alliance, a consortium of five cable Broadband Alliance announced 16
operators: Bright House, Cablevision, significant carrier-grade Wi-Fi
Comcast, Cox and Time Warner deployments, including multiple
Cable. The consortium created a operators from the US (Boingo,
Getting Wi-Fi ready for nationwide Wi-Fi roaming network Towerstream, Time Warner Cable),
carriers consisting of more than 6 million Asia (KT, NTT DOCOMO, SKT,
access points, 300,000 of which are Telkom Indonesia), Europe (Orange),
The current surge in Wi-Fi activities is deemed carrier grade.14 Around the South America (Linktel) and the
geared towards making Wi-Fi carrier world, deploying carrier Wi-Fi is Middle East (Mobily).
friendly. gaining traction (see Figures 3 and
4). And the carrier Wi-Fi equipment
Hotspot 2.0: A Wi-Fi Alliance market is projected to be worth
(WFA) initiative that has access US$3bn in revenue by 2018.15
points certified for Wi-Fi and that
aims to allow seamless and secure
authentication at hotspots. Figure 3: Growth of carrier-grade Wi-Fi hotspots, 2012-2018
NextGen Hotspot (NGH): An Depoyment of new carrier-grade Wi-Fi hotspots by mobile operators
initiative closely linked to Hotspot Million, 2012-2018
2.0, run by Wireless Broadband
10.5
Alliance (WBA) and that aims for 9.6
deeper integration with cellular 12.4%
8.3
networks, such as transporting Wi-Fi 7.9 CAGR
7.1
via mobile core. 6.5
5.2
Passpoint: Developed to allow
automatic authentication and access
to Wi-Fi networks.
ANDSF (Access Network Discovery
and Selection Function): Developed 2012 2013 2014 2015 2016 2017 2018
by 3GPP; part of the new Evolved Sources: SNL Kagan; PwC’s analysis.
Packet Core (EPC) specifications for
cellular networks; lets mobile devices
discover and connect with Wi-Fi Figure 4: Deployment of carrier-grade Wi-Fi, 2014-2018
networks and enforce policy controls.
Carrier grade Wi-Fi deployments as a % of total Wi-Fi deployments
I-WLAN: Based on 3GPP; aims to %
connect a device on Wi-Fi back into 72%
an operator’s core network via a VPN
tunnel.
EAP (Extensible Authentication
Protocol): Developed to enhance
authentication for Wi-Fi hotspots.
14%
2014 2018
Sources: Survey — Commissioned by Amdocs and conducted by Real Wireless
and Rethink Technology Research, 2014
Are Wi-Fi and 4G LTE on a collision course? Communications Review 4The overall communications value chain will be affected — everyone
from consumers to original manufacturers of infrastructure and
devices to network providers and content providers.
Mapping a Wi-Fi strategy Figure 5: Operational implications of carrier-grade Wi-Fi for cable
With Wi-Fi connectivity being and mobile operators
widely available, cable operators
have been able to venture into For cable operators For mobile operators
mobile phone services. Cablevision’s Commercial offerings • The possible need to • The ability to use the Wi-Fi
announcement of Freewheel, a low- deploy, and charge more for, network to provide additional
cost phone service based entirely Hotspot 2.0 devices and in- coverage (potentially with a
on Wi-Fi, has opened the door to a home routers degree of monetisation and
possible future of cable-led mobile • The ability to get more differentiation)
business from mobile • Commercial agreements
initiatives. Comcast has been building
operators for wireless and pricing for Hotspot 2.0
its own Wi-Fi network aggressively communications access
by also relying on a crowd-sourced
Customer experience • The ability to offer an • The ability to offer
approach that turns customers’ Wi-Fi outstanding experience a seamless mobility
routers into Xfinity® access points.17 outdoors, consistent with the experience in high-traffic
As mobile phone use moves more speeds provided indoors and indoor locations where
towards data services, a whole new speed and coverage have
set of players could be offering Wi-Fi always been a concern
only or Wi-Fi first mobile services Care operations • The need to respond to issues related to a completely different
soon.18 technology and across disparate networks
• The need for a new set of technical skills and capabilities
On the mobile operator side, the Technical operations • The need to plan and • The need to integrate
ability to initiate and pass a call manage a wireless footprint frequency planning on
or a data session back and forth and manage cellular Wi-Fi as well as cellular
between Wi-Fi and LTE is now interoperability infrastructure and,
• Regulatory implications of potentially, share spectrum
available commercially. Operators
supporting E911, call tracing through Licence Assisted
like T-Mobile USA19 have embraced Access
etc.
this technology. As mobile operators • The need to manage
finish rolling out Voice over LTE call control over multiple
(VoLTE) on their networks, and networks for prepaid
establish VoLTE interoperability services
across networks,20 they likely will Technology road map • Deploy technology that • Choose between cellular
turn their attention to making wi-fi allows handing off to cellular technologies and Wi-Fi
interoperable. • Deploy high-bandwidth Wi-Fi • Focus on technologies that
access technology, such as allow handing off seamlessly
The interoperability of carrier-grade 802.11ac to Wi-Fi
Wi-Fi and cellular Wi-Fi serves only
to further disrupt the industry status
quo with broadly ranging operational
impacts and new capabilities. The
overall communications value chain
will be affected – everyone from
consumers to original manufacturers
of infrastructure and devices to
network providers and content
providers (see Figure 5).
Are Wi-Fi and 4G LTE on a collision course? Communications Review 5Moving towards the promise unlicensed band, there’s likely to be carrier-grade Wi-Fi, an offering that
more regulatory review of how the will appeal particularly to enterprise
Mobile operators are facing a
unlicensed bands are fairly used. customers who demand a higher level
threat to their revenues as a result
Mobile operators should begin to of security and availability.
of Wi-Fi becoming ubiquitous. But
analyse the implications of such
with carrier-grade Wi-Fi, they have By wanting simplicity and flexibility
spectrum use across technologies and
an opportunity to close coverage when they consume content -
what regulatory scrutiny of that use
problems and give users a more how, when, where and what they
to expect.
managed experience. All operators consume - users are creating a clear
should establish a formal Wi-Fi Wi-Fi providers - typically the cable opportunity ahead for both mobile
strategy that explicitly incorporates operators - should recognise that and cable operators. Carrier-grade
Wi-Fi into their network road maps. cellular technology can complement Wi-Fi and the interoperability of Wi-
The strategy should consider Wi-Fi to their strategy to achieve true Fi and LTE are giving operators the
be another network in their portfolio, mobility. As the industry faces flexibility to deliver on the promise
complete with capital expenditures consumers who want mobility of of ubiquitous coverage: a seamless,
and operating expenditures managed content, the interoperability of Wi- great experience and value for
by a full-fledged, operational Wi- Fi and cellular becomes a critical money.
Fi department. Wi-Fi should play mechanism for breaking the tie to
an important role in addressing the home cable box and to competing Carrier-grade Wi-Fi already is part
coverage problems, giving users a better with the growing number of of the mobile landscape, and its
better experience and managing over-the-top video providers. impact is increasing. The strategic,
backhaul and core network expenses. operational, technical and regulatory
With carrier-grade Wi-Fi, mobile issues associated with it merit
LTE in the unlicensed bands and cable service providers have an operators’ attention. As with any
(LTE-U) considers the use of cellular opportunity to distinguish themselves disruptive technology, carrier-grade
technology in the unlicensed from the, so far, unmanaged Wi-Fi Wi-Fi holds both promise and threat.
spectrum that is today the mainstay offerings that make no commitment Have you formulated a strategy for
for Wi-Fi. As the 2.4GHz band on security, availability or purpose your company to follow in navigating
gets even more crowded, and of use. And, potentially, service a course through this changing
with the growing use of the 5GHz providers can charge a premium for environment?
Endnotes
1 Definition of warchalking — source: http://www.nytimes.com/2002/12/15/magazine/15WARC.html.
2 Wi-Fi first in cellphones — source: http://www.theregister.co.uk/2004/10/22/wifi_phones_certified/.
3 Cablevision announcement of Freewheel 26/1/2015 — source: http://cablevision.com/investor/index.jsp.
4 Source: http://corporate.comcast.com/news-information/news-feed/comcast-and-liberty-global-announce-agreement-to-connect-u-s-
and-european-wi-fi-networks.
5 Source: http://www.engadget.com/2014/08/29/sprint-free-international-wi-fi-calls/.
6 WFA’s position on LAA — source: https://www.wi-fi.org/news-events/newsroom/wi-fi-alliance-statement-on-license-assisted-access-laa.
7 Source: Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update 2014-2019.
8 Source: http://www.gsma.com/spectrum/wp-content/uploads/2014/05/Wi-Fi-Offload-Paper.pdf.
9 Source: http://www.t-mobile.com/offer/wifi-calling-wifi-extenders.html.
10 Source: http://www.fiercewireless.com/story/verizon-wireless-plans-launch-wi-fi-calling-mid-2015/2014-09-17.
11 Source: http://www.fiercewireless.com/europe/story/vodafone-ee-race-be-first-launch-wi-fi-calling-uk/2015-03-11.
12 Source: http://www.cnet.com/news/sprint-adds-wi-fi-calling-to-improve-voice-coverage/.
13 Sources: Wireless Broadband Alliance’s Carrier Wi-Fi Guidelines; PwC’s analysis.
14 Sources: Comcast, Cox, Time Warner Cable, Bright House Networks, Cablevision, Verizon, FCC.
15 Source: Infonetics Research, 2014.
16 Source: http://www.wballiance.com/2014/09/22/wireless-broadband-alliance-announces-significant-progress-in-ngh-developments-and-
deployments/.
17 Xfinity Wi-Fi — source: http://wifi.comcast.com/hotspots.php.
18 Source: http://www.fiercecable.com/story/cablevision-launches-wi-fi-only-mobile-phone-service/2015-01-26.
19 T-Mobile USA website/Wi-Fi calling — source: http://www.t-mobile.com/offer/wifi-calling-wifi-extenders.html.
20 Verizon and AT&T to make VoLTE networks interoperable in 2015 (11/3/2014) — source: http://www.verizonwireless.com/news/ar-
ticle/2014/11/verizon-and-att-move-toward-voice-over-lte-volte-interoperability.html.
Are Wi-Fi and 4G LTE on a collision course? Communications Review 6www.pwc.com/communicationsreview
About the authors
Greg Chiasson
Greg Chiasson is a Principal in PwC US’s
Communications advisory practice.
For more information, contact Greg
by phone at +1 847 343 7076 or
by email at greg.chiasson@us.pwc.com.
Dan Hays
Dan Hays is a Principal in PwC US’s
Communications advisory practice.
For more information, contact Dan
by phone at +1 202 756 1733 or
by email at dan.hays@us.pwc.com.
Harish Nalinakshan
Harish Nalinakshan is a Director in PwC US’s
Communications advisory practice.
For more information, contact Harish
by phone at +1 703 856 0470 or
by email at harish.nalinakshan@us.pwc.com.
Srinivas Ranganna
Srinivas Ranganna is a Senior Associate in PwC US’s
Communications advisory practice.
For more information, contact Srinivas
by phone at +1 214 754 4879 or
by email at srinivas.ranganna@us.pwc.com.
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