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Trustive, Low-cost, International WiFi Access


Recent acquisitions (e.g. The Cloud by BskyB, Skype by Microsoft (now Skype WiFi) and Motorola Mobility by Google) raise the question of what is happening to the wireless industry these days & how does it impact on traditional mobile operators?

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As perceived and described in Trustive’s last annual report, traffic patterns within the wireless industry continue to shift and evolve. The open questions now revolve around the newly emerging user profile (primarily the number and type of devices in use and the corresponding usage habits), the consequences for cellular networks and the associated business models. 

The overwhelming popularity of smartphones and tablets has had a huge impact on the mobile and wireless industries alike, in particular in terms of: 

  1. The boom in data traffic that has resulted directly from the usage of such devices and the resulting congestion and subsequent degradation of service on traditional cellular networks.
  2. The disaggregation of the overall wireless service industry thanks to the users’ ability to now adapt their devices to their own specific needs (though the installation of apps) and the management of their device’s connectivity, namely the ability to connect to independent WiFi services at will.

The inherent simplicity provided by smartphones and tablets with regards to the installation of apps and the management of connectivity preferences is resulting in the disaggregation of mobile and wireless services into separate service segments (voice, texting, data) and the definition of a new set of rules and requirements set by the users themselves.

In addition, the proliferation of low-cost, secure WiFi services, such as those offered by Trustive, also provide consumers with greater power over their mobile internet usage and its associated costs across all three of the wireless service segments.

Mobile operators are slowly losing ground to both WiFi access providers on the one hand and on the other hand to innovative app providers, who compete fiercely for business in each of the individual wireless service segments. Even if wireless operators retain an important role for some consumers by continuing to aggregate services into one convenient package, they still have to take into account pressures from new virtual operators (such as Skype WiFi, Google Voice, Facebook, Apple and many others) and the effect of service degradation resulting from the boom in data traffic that traditional cellular networks are unable to cope with.

1st segment: voice  and the rise of free phone calls

The decline of traditional GSM voice calls and the associated revenue has a number of causes, including the growth in popularity of texting (SMS and IM), social networking sites and online VoIP telephone calls thanks to innovative services like Skype, Google Voice and Facetime to name but a few.

Given the high cost of international calls, these callers were the first to discover services like that of Skype, who quickly became the largest carrier of international phone traffic; Skype continues to grow faster than all the other telephone companies in the world. However, the use of VoIP services for international calls has also shifted to domestic calls, especially with the spread of free smartphone apps that increase the network of users able to receive free calls by making it simple for users to connect to the network and contact each other. 

Microsoft's acquisition of Skype added to the sense that the even the relatively new era of wireless voice calls as a separate service category may be coming to an end. With Facebook integrating Skype into its standard service, any Facebook friend can be called via Skype with a single click and Google+ social networking services will also allow users to conduct phone calls and video conference calls at the click of a button. This is a completely different kind of competition that will seriously impact the traditional mobile operators, who don't even offer video conferencing on current voice plans!

2nd segment: texting

The story of texting seems to be following a similar trajectory to that of voice call services, with the explosion of free texting and instant messaging apps (including WhatsApp, Kik, GroupMe, textPlus; iMessage) for both smartphones and tablets replacing traditional SMS and MMS services. Of course, Facebook has capitalised on this need by offering ways to send texts to groups of people with one click and Apple and Google are also adding fuel to this debate by integrating their own texting/messaging systems into their core operating systems. It is hard to envisage how mobile operators can compete against such seamlessly integrated and often free service models.

3rd segment: data traffic

Revenue from data plans may end up being the mobile operators' only dependable revenue source in coming years. Given the explosion of data use by consumers, mobile and wireless operators will no doubt continue to see revenue growth in this sector for a number of years to come. 

In this segment, the main competitor to mobile operator data plans will be independent WiFi services, both at home and in office, whether by wired broadband operators or cable providers. Once out of this comfort zone, users make use of free or low-cost WiFi services in "WiFi zones" such as coffee shops, restaurants and hotel lobbies. Travellers are also used to relying on low-cost, secured access to premium WiFi services (like the one offered by Trustive) once they leave their domestic market.

The increased level of data traffic that is currently retained by mobile operators is putting more and more pressure on cellular networks, which are now at serious risk of congestion, and mobile operators will have no choice but to revisit and adapt their pricing models to take into account both of the aforementioned issues.  

WiFi can be a way for operators (and consumers) to offload data and review and their costs and it is also the only credible solution for mobile operators until long term LTE solutions are deployed, which will take many years and huge investments. Recent reports show that some operators are already offloading more than 40% of their data traffic onto WiFi networks; whilst users themselves are switching their data heavy tasks to WiFi to the tune of 2 GO a month. 

In summary

For video streaming, video conferencing, VoIP calls and even data connections, mobile operators cannot count on customers relying on their data plans. Competition already exists and will continue to grow in the form of independent options.  By allowing users to access a wide range of apps and to opt for WiFi access as and when they wish to connect to the Internet to execute those applications, smartphones and tablet have essentially disaggregated the overall “mobile” service into separate wireless service segments.

It is inevitable that mobile carriers will retain a role in the continued aggregation of these services into convenient packages for users, but this new competitive reality means that they will face price pressures not just from other mobile and wireless operators but also from all the other players providing innovative and often free content within the different service segments. 


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