MCN Guest Blog

Hybrid WiFi-Cellular Service Is the Future

An incumbent industry watches as Comcast, Project Fi take different approaches 7/26/2016 4:45 PM

“Be afraid. Be very afraid.” That was the warning given by Geena Davis’ character in David Cronenberg’s 1986 remake of The Fly, as she beheld the horror of Jeff Goldblum’s hybrid man-insect ‘Brundlefly.’

 

It is also the advice being offered to incumbent U.S. mobile carriers by many within the analyst community as Comcast prepares to unleash a hybrid beast of its own. Word that the cable giant has appointed a lead for its newly hatched mobile division indicates it is readying the launch of a full breadth connectivity play, having last year activated its MVNO agreement with Verizon. The industry is buzzing with anticipation.

 

Related: Comcast Shakes Up Tech, Operations Ranks

 

Sci-Fi tales of hybrids are often cautionary, used to project the message that fundamental laws of nature should not be disrupted by meddling boundary pushers. Mobile carriers probably feel the same way about the laws of the industry: Mobile service should be left to the mobile specialists because it was ever thus.

 

But the hybrids in these stories almost always start out showing great promise. Before teeth, fingernails and other key appendages began dropping off Seth Brundle, the character enjoyed a host of enhancements, most notably huge boosts in strength, agility and appeal. So while there is caution in the conclusion, the prospect of success is enticing and ever-present.

 

There is certainly strength and appeal in the theory many industry observers believe will be at the heart Comcast’s proposition:; a blend of cellular and WiFi conceived to harness the complementary powers in each technology’s DNA. Cellular connectivity will serve consumers who are on the move and outdoors, and WiFi in places where they like to feast on rich content.

 

Rather than a ‘WiFi First’ play, what Comcast could well be readying is something which puts connectivity first, delivering service based on the customer’s circumstances at the point of demand, and not on a partisan attitude to either underlying bearer.

 

As always, timing is everything. Research published in July by Parks Associates suggests U.S. mobile carriers are shifting their focus from ARPU growth to churn management as new smartphone users become increasingly hard to find. And among the top priorities of smartphone users who consider themselves likely to churn within the next 12 months, according to a Parks survey, is a WiFi element to the mobile service.

 

Two thirds of likely churners ranked managed access to WiFi as "very important" to their decision, positioning WiFi (in the context of the survey) as a more compelling piece of the proposition than a loyalty rewards program, the chance of an early handset upgrade or a long contract to offset upfront costs. WiFi was ranked equally attractive as the ability to roll over unused mobile data allowance.

 

Meanwhile, data published recently by Nielsen shows the number of U.S. consumers watching video on smartphones in Q1 this year was more than 110 million, a 29% year-on-year increase. These users racked up a total of almost 11,000 years of video consumption; a 67% increase on Q1 2015. More people are watching more video on their smartphones, and the growth is far from over.

 

With this kind of demand, WiFi is crucial to any service that aims to provide comprehensive smartphone connectivity. Google’s Project Fi, another heavyweight hybrid threatening to disrupt the U.S. mobile status quo, has been conceived along very similar lines. For both Comcast and Google — unlike the mobile carriers — connectivity itself is not the product. They simply want end users to be better able to consume content, wherever they go: How consumers do that is far less important than the fact that they can.

 

The fly in the ointment for Comcast is that its WiFi network is heavily (though not exclusively) dependent on domestic locations; "homespots," which will see very little traffic beyond that generated by the residents themselves.

 

Project Fi, on the other hand, brings public WiFi into the mix, offering the same capacity benefits to data-hungry, cost-conscious consumers where they need it when they’re out and about.

 

In this way the Fi approach is closer to that taken by the world’s largest international cable company, Liberty Global. Earlier this year Liberty became the first tier - service provider to build freely shared public WiFi into its service across its entire European MVNO footprint, a powerful complement to its existing domestic WiFi and cellular connectivity proposition.

 

Shared public WiFi also offers mobile carriers an easy route to hybrid service, and it looks likely that, as LTE networks begin to encounter the congestion and performance issues that blighted 3G, those carriers’ own interest in WiFi as a strategic connectivity asset may be on the increase.

 

Consumers want high quality smartphone connectivity everywhere they go — and studies such as the one from Parks Associates mentioned above suggest that the winners in this service provider tussle will be the players that combine the best of everything available into a single, unified connectivity service.

 

Well executed hybrids are the future of the industry. Everything else will be swatted aside.

 

Dave Fraser is CEO of Devicescape, a developer of wireless networking software.