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WiFi - 3 case studies in commercial deployment
WiFi - 3 case studies in commercial deployment
WiFi - 3 case studies in commercial deployment
WiFi - 3 case studies in commercial deployment
WiFi - 3 case studies in commercial deployment
WiFi - 3 case studies in commercial deployment
WiFi - 3 case studies in commercial deployment
WiFi - 3 case studies in commercial deployment
WiFi - 3 case studies in commercial deployment
WiFi - 3 case studies in commercial deployment
WiFi - 3 case studies in commercial deployment
WiFi - 3 case studies in commercial deployment
WiFi - 3 case studies in commercial deployment
WiFi - 3 case studies in commercial deployment
WiFi - 3 case studies in commercial deployment
WiFi - 3 case studies in commercial deployment
WiFi - 3 case studies in commercial deployment
WiFi - 3 case studies in commercial deployment
WiFi - 3 case studies in commercial deployment
WiFi - 3 case studies in commercial deployment
WiFi - 3 case studies in commercial deployment
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WiFi - 3 case studies in commercial deployment

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PPT given at USC Annenberg in 2003

PPT given at USC Annenberg in 2003

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  • 1. Three Business Models for Public Access Wireless LANs Chris Marsden Annenberg School 19 November 2003 Draft for comments to: [email_address] +44 777 926 0376
  • 2. Case Studies in Property Rights in ‘Free Spectrum’ <ul><li>Academic authors have typically concentrated on: </li></ul><ul><ul><li>Standards – Lehr & McKnight, Croxford & Marsden (2001) </li></ul></ul><ul><ul><li>Spectrum – Cave (2001) </li></ul></ul><ul><ul><li>Developing technology in peer networks and mesh networks – Shirkey, Benkler, Lessig (2001-2) Werbach, Sawhney, Sandvig (2003) </li></ul></ul><ul><li>This comparative law and economics study is of market developments </li></ul>
  • 3. LANs and WANs <ul><li>Wireless public access markets are dominated by licensed oligopolists </li></ul><ul><li>Typically voice-dominated – even Euro SMS and DoCoMo Japan have only 10-25% data revenues </li></ul><ul><li>WAP was crap, picture messaging stillborn </li></ul><ul><li>Hutchinson ‘3’ has 250,000 UK and 500,000 Italian subscribers – Vodafone launching mid-2004 </li></ul><ul><li>Verizon launched San Diego and DC October </li></ul><ul><li>Video phone and video download not killer applications - yet </li></ul>
  • 4. What’s different about LANs? <ul><li>Short range high bandwidth 11Mbs-54 Mbs </li></ul><ul><li>Mass market for base stations – very cheap </li></ul><ul><li>Backhaul on ADSL not dedicated leased lines </li></ul><ul><ul><li>dependent on country, e.g. 256Kb/s in Spain, 8Mb/s in Japan, S. Korea, urban Sweden </li></ul></ul><ul><li>Security and roaming less advanced </li></ul><ul><ul><li>Note holes in WEP but look at USC security! </li></ul></ul><ul><li>Standards: single, global, unified, American </li></ul><ul><ul><li>WiFi and WiFi5 with 802.11g interim </li></ul></ul><ul><ul><li>European standards dormant both HIPERLAN and HIPERLAN2 </li></ul></ul><ul><li>Spectrum – messy but workable, and FREE </li></ul>
  • 5. Economic Case for WLANs <ul><li>No spectrum cost </li></ul><ul><li>Minimal backhaul cost – varies with business case </li></ul><ul><li>Minimal base station cost – $400-700 </li></ul><ul><li>Seamless networking unnecessary </li></ul><ul><li>Data not voice – IP and hotspot use </li></ul><ul><li>Network security, roaming and interface IP-based – intelligent device </li></ul><ul><li>Device simply add-on to laptop/PDA – corporate user installed base </li></ul>
  • 6. Case Against WLANs <ul><li>Extreme short range – in-building effectively </li></ul><ul><li>Sharing only 5Mb/s bandwidth in WiFi devices – 20 users maximum </li></ul><ul><li>5Mb/s dependent on premises having multimegabit backhaul – leased line in US, EU </li></ul><ul><li>Security still poor for most users </li></ul><ul><li>Start-ups have no subscribers or billing </li></ul><ul><li>No real alternative to 3G or wire broadband – supplement model </li></ul>
  • 7. 3 Models:WiFi as 3G Complement <ul><li>Parameters: </li></ul><ul><li>Partnership model </li></ul><ul><ul><li>With host locations and 3G networks </li></ul></ul><ul><li>Billing and subscriber management </li></ul><ul><ul><li>SIM-GSM interoperability </li></ul></ul><ul><li>Software integration </li></ul><ul><ul><li>User interface </li></ul></ul><ul><li>Hardware integration </li></ul><ul><ul><li>Security and QoS – VoIP or video capable? </li></ul></ul><ul><ul><li>Backhaul costing and integration </li></ul></ul>
  • 8. Boingo; Classic Aggregator <ul><li>Earthlink philosophical foundation </li></ul><ul><li>Santa Monica: 1601 Cloverfield Boulevard </li></ul><ul><li>Start-up with strong VC support & Mitsui, Sprint, Infonet </li></ul><ul><li>T-Mobile has 3314 locations in US – 50 in UK! </li></ul><ul><li>Claims 5100 hotspots (1900 ‘live’): </li></ul><ul><ul><li>1700 US, 2500 UK, 500 other Europe </li></ul></ul><ul><ul><ul><li>but UK agreement is not roaming, just location-finding </li></ul></ul></ul><ul><ul><li>468 California, 75 New York State </li></ul></ul><ul><ul><li>53 NYC, 25 cafes, 19 hotels </li></ul></ul><ul><ul><li>118 UK, 12 Ontario </li></ul></ul><ul><ul><li>47 hotspot partners including Telecom Italia </li></ul></ul><ul><ul><li>Earthlink and Fiberlink ISP partners </li></ul></ul><ul><ul><li>3 months free for Centrino laptop purchasers </li></ul></ul>
  • 9. Boingo – Unique Characteristics <ul><li>Earthlink model and financing secured </li></ul><ul><li>Very California-centric culture </li></ul><ul><ul><li>Using network of WiFi enthusiasts for value proposition </li></ul></ul><ul><ul><li>Is Silicon Valley duplicable in Santa Monica? </li></ul></ul><ul><li>Caffeine addiction and Starbucks focus </li></ul><ul><li>Invented here! </li></ul><ul><li>Intel and T-Mobile support </li></ul><ul><li>Aggregator has roaming but no genuine national let alone international network </li></ul>
  • 10. Boingo – Transferable Knowledge <ul><li>Aggregation creates critical mass </li></ul><ul><ul><li>First mover advantage </li></ul></ul><ul><li>Very solid financial backing </li></ul><ul><li>Simplicity focus on end user </li></ul><ul><ul><li>Software and systems integrator </li></ul></ul><ul><ul><li>Branding of network and hotspots </li></ul></ul><ul><ul><li>Boingo in a Box </li></ul></ul><ul><li>Additional activities solely to pump-prime market </li></ul><ul><li>Verizon and T-Mobile using WiFi to stop DSL churn – so why pay $22 a month for Boingo? </li></ul>
  • 11. The Cloud – Unique Characteristics <ul><li>Inspired Broadcast Networks uses gambling ‘fruit’ machine installed base from Leisure Link </li></ul><ul><ul><li>90,000 in 30,000 locations, 12,000 payphones </li></ul></ul><ul><li>3000 hotspots end-2003; 21,000 further orders by end-2006 </li></ul><ul><li>Pubs – are European cafes so different? </li></ul><ul><ul><li>Critical mass of users creates scale economies </li></ul></ul><ul><li>Wholesale unbranded network </li></ul><ul><ul><li>Backhaul solution belongs to parent </li></ul></ul><ul><li>Expansion into Europe (probably France) </li></ul><ul><ul><li>Based on local network and presence </li></ul></ul>
  • 12. The Cloud – Lessons for Others <ul><li>Backhaul costs critical </li></ul><ul><li>Symbiotic relationship with telco – each is the other’s largest customer </li></ul><ul><ul><li>Openzone is biggest retail customer </li></ul></ul><ul><ul><li>MyCloud orders 20,000 DSL lines for franchisees </li></ul></ul><ul><li>Franchisees see WiFi as ‘add-on’ to basic xDSL need – updating pub quiz games </li></ul><ul><li>No branding – black box product </li></ul><ul><li>High QoS </li></ul><ul><ul><li>Including VoIP to cannibalize 3G revenues </li></ul></ul><ul><ul><li>Arguably only BTOpenzone would allow this </li></ul></ul>
  • 13. KTNespot – Unique Characteristics <ul><li>World’s most advanced broadband users </li></ul><ul><ul><li>Broadband must-have with universal appeal </li></ul></ul><ul><li>Triple play with 3G mobile and xDSL </li></ul><ul><ul><li>Note regulatory constraints in retail </li></ul></ul><ul><ul><li>Backhaul on incumbent parent network </li></ul></ul><ul><ul><li>VDSL at 8Mb/s available to consumer </li></ul></ul><ul><li>National coverage declared at outset </li></ul><ul><li>First mover demolishes competition </li></ul>
  • 14. KTNespot – Lessons for Others <ul><li>Leveraging dominance: </li></ul><ul><ul><li>Triple play replicable for e.g. Orange, KPN, T-Mobile, DoCoMo in French, German, Dutch and Japanese markets </li></ul></ul><ul><ul><li>First mover already used by Swisscom Mobile and Austria Telekom </li></ul></ul><ul><li>Focus on low consumer price point requires massive subscription </li></ul><ul><li>Difficulty of using terminal equipment holding back subscription </li></ul>
  • 15. 1. Partnership model -franchisees <ul><li>Boingo – aggregator = 5100 locations </li></ul><ul><li>The Cloud – wholesale network = 20,000 projected </li></ul><ul><li>Korea Telecom – integrator = 25,000 </li></ul><ul><li>Backhaul – franchisee pays B + C, KT uses parent network </li></ul><ul><li>Role of fixed networks – BT as sponsor through BT wifi initiatives </li></ul>
  • 16. 1. Partnership model - backhaul <ul><li>Backhaul is highest cost </li></ul><ul><li>Base stations ideally require dedicated 11 Mb/s </li></ul><ul><li>That in UK costs $50,000 per annum </li></ul><ul><li>In South Korea $50 per month </li></ul><ul><li>Typically 512Kb/s ADSL – dedicated business lines at $50-100 per month </li></ul><ul><li>Franchisee pays… </li></ul>
  • 17. 1. Partnership model - wireless <ul><li>Boingo and Telecom Italia </li></ul><ul><li>The Cloud and BT, NWP Spectrum </li></ul><ul><li>Korea Telecom and regulators – SKMobile </li></ul><ul><li>Verizon-Vodafone and Orange – fence sitters </li></ul><ul><li>What’s the price point for mobile data? </li></ul>
  • 18. 2. Billing and subscriber management <ul><li>Weroam – GSM-SIM authentication from Togewanet ‘clearing house’ </li></ul><ul><li>TeliaSonera-Swisscom deal – includes Megabeam UK, WLAN AG, Service Factory, Homerun. </li></ul><ul><li>Note – Nespot charges $9 a month above $27 DSL charge – 250,000subs </li></ul>
  • 19. 3. Software integration <ul><li>Boingo interface – 24 hour promise </li></ul><ul><ul><li>Systems integrator as primary business focus </li></ul></ul><ul><li>The Cloud – using: </li></ul><ul><ul><li>Service Factory (TeliaSonera interest) </li></ul></ul><ul><ul><li>Sun Microsystems – virtual WISP </li></ul></ul><ul><li>Nespot – private network only </li></ul>
  • 20. 4. Hardware integration <ul><li>Centrino co-operation with all 3 </li></ul><ul><li>‘ Boingo in a box’ </li></ul><ul><li>The Cloud – ‘My Cloud’ </li></ul>
  • 21. 2004 – Market Developments <ul><li>National networks in UK and Korea </li></ul><ul><li>Centrino chipsets industry standard with critical corporate user mass </li></ul><ul><li>802.11g usable in East Asia and Canada </li></ul><ul><ul><li>Requires 50Mb/s xDSL for optimal use </li></ul></ul><ul><li>WiFi moving into PDAs </li></ul><ul><li>3G roll-out – will they use hotspots? </li></ul><ul><li>Having built the ballpark, will they come? </li></ul>

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