Home / Uncategorized / Wi-Fi will surpass 3G by 2007

Wi-Fi will surpass 3G by 2007

According to the new Pyramid report, in the next few years coming, Americans will utilize more mobile data communications by Wi-Fi rather than by using 2.5/3G networks. Pyramid forecasts this for paid and free Wi-Fi users compared to 2.5/3G users. We compared US forecasts for paid 2.5/3G users with forecasts for paid and free Wi-Fi users (shown below). For 2.5/3G, we included the following technologies: EDGE, 1x, EV-DO and UMTS, of which the overwhelming majority of users is represented by 1x.

This trend is not necessarily bad news for 3G. After all, a consumer may very well use both 3G and Wi-Fi. However, this trend should be a wake-up call to any carrier offering or planning to offer a cellular data service.

Bundling Wi-Fi and Cellular is Working for T-Mobile
T-Mobile has taken a great deal of criticism over the past few years for its investment in Wi-Fi deployments. However, we believe that by bundling Wi-Fi and cellular, the carrier has created a service worth more than the sum of its parts. Furthermore, a bundled Wi-Fi/cellular service is particularly attractive to business users – typically a higher-margin customer segment.

US Wi-Fi users (paid and free) vs. 2.5/3G data users (paid)

T-Mobile reports that more than 30% of its hotspot users are also cellular subscribers. While we cannot say that Wi-Fi alone resulted in added cellular subscribers, the correlation between the two services is significant. We believe that T-Mobile can justify its Wi-Fi investment purely through cellular customer acquisition and retention. A 0.2% decrease in T-Mobile’s customer churn from the enhanced utility from a bundled Wi-Fi/mobile plan would more than justify the Wi-Fi venture.

That said, there is still plenty of money to be made from commercial Wi-Fi revenues. Direct Wi-Fi access revenues in the US could exceed $1.5bn by 2008.

It is remarkable how quickly Wi-Fi has become the benchmark by which other wireless data services are measured. In March 2004, AT&T Wireless CTO Rod Nelson said the following about his carrier’s four-city UMTS upgrade: “Our UMTS service will turn these markets into giant ‘hot spots,’ providing customers with connection speeds rivaling those of some broadband services.”

People understand what a hotspot is, so AT&T is using this frame of reference for promoting UMTS. Today, it is becoming increasingly common to see wireless carriers position their services against Wi-Fi or co-opt Wi-Fi terminology in an effort to sell 3G services. Verizon Wireless often emphasizes the “Wi-Fi-like” speeds of EV-DO.

Looking ahead, Wi-Fi will be, for millions of people, their first experience with broadband wireless technology. Savvy carriers will learn how to turn these Wi-Fi users into cellular customers through creative bundling and pricing.



About Fabrizio Pilato

Check Also


Try Oculus Rift And Wii To Roam Around On The Back To The Future Hoverboard

Check out how you can fly in virtual space by using an Oculus Rift and a Wii Balance Board.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>