2013 08-20 wifi-mw_en

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2013 08-20 wifi-mw_en

  1. 1. Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving credit to the source of information – J’son & Partners Consulting. ™ J’son & Partners [registered trade mark]. 1 Rapid growth in penetration rate of smartphones, tablets and other devices supporting Wi-Fi in Russia and in the world as a whole, popularity of social networks and a huge number of various web services – it leads to the real need of high-speed mobile Internet access from the part of subscribers anywhere and anytime. This creates favorable conditions for the development of market of services based on Wi-Fi in transport. J'son & Partners Consulting company presents a summary of the research ‘Use of Wi-Fi in transport: Russian and international experience, perspectives of development’. Wi-Fi in transport Main conditions of development of demand on Wi-Fi-access in transport related to the following factors:  vehicle typically has a limited number of potential customers and small business area coverage, which eliminates inherent disadvantages of 802.11 family technology;  there is a clear need for online access service during long-time journeys from the part of passengers for both solve of business issues, obtaining of information and entertainment. By providing access via Wi-Fi, operator increases penetration of services and brand loyalty, and transport company increases attractiveness of its services and competitiveness in the market. Main areas of Wi-Fi use in transport are the following:  Ground public transportation (trolley, bus, tram)  Railroad transport and subway  Air transport  Sea transport  Private transportation  Telematics and M2M  ‘Smart city’ In general, monetization of Wi-Fi services is one of the key challenges for providers who are planning to develop such networks in public transport. Therefore, in order to make right choice of a particular business model, operator must carefully examine its passengers, demographic composition, degree of penetration of smartphones, most frequently used online services, consumer expectations, etc. If considering all of the above strategy will be chosen incorrectly, a transport company may receive a
  2. 2. Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving credit to the source of information – J’son & Partners Consulting. ™ J’son & Partners [registered trade mark]. 2 negative experience when faced with negative reactions and criticism from the part of users on poor service. Architectural features Wi-Fi networks in transport are established either in order to provide passengers with Internet access services, or as part of a larger infrastructure projects. In the first case vehicle is usually equipped with modem with router functions. It is connected with basic network via 3G/LTE/WiMAX network or using satellite channel. In the second case so-called mesh-network (from English, ‘loop, network cell’) is used. This network is based on a decentralized organizational scheme, where access points do not only provide user access services, but also act as routers/repeater for other network points. Mesh topology has several advantages over classical architecture ‘cellular network /router Wi-Fi’, as it was created specifically for the establishment of high-speed stable symmetric radio channels. Mesh-networks provide higher transmission capacity (up to several tens of Mbit/sec) for mobile object, moving at speeds of up to 250 km/h. Services provided As a rule, limited transmission capacity of the external access channel (usually it equals 2-4 Mbit/sec) cannot offer passengers more than simple web surfing, social networks and emails. In general, this is enough for short trips around the city. For example, the majority of subscribers (over 80%) of Spanish operator GOWEX use Wi-Fi to access social networks: Fig. 1. Most popular applications among users of Wi-Fi operator GEWEX in transport Source: GOWEX, 2012 At the same time, multi-purpose entertainment system with local storage of HD-content can be deployed in the vehicle, especially with long haul. This content can be provided on demand (and for a fee) through internal closed Wi-Fi network.
  3. 3. Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving credit to the source of information – J’son & Partners Consulting. ™ J’son & Partners [registered trade mark]. 3 Market segmentation In general, world market of Wi-Fi services in transport can be divided into two main segments:  provision of services in public municipal transport (tramway, trolley, bus, taxi, subway);  provision of services to the long haul passengers of different types of transport (railroads, intercity buses, airliners, sea crafts). Wi-Fi projects in public municipal transport are characterized by a well-developed 3G/4G networks infrastructure. It minimizes its capital cost to an installment of simple and affordable subscriber access points (except for subway), as well as to the costs of traffic transmission. Therefore, as a rule, these projects are quickly spreading due to minimal cost and high advertising effectiveness. In general, they can be attributed to image or sponsorship projects; it is not likely that they will bring any commercial profitability. Development of Wi-Fi networks in the segment of long-haul passenger transport is characterized by limited development of ground network infrastructure. It requires either massive investments in its development, or expensive satellite equipment and high rent cost for channels. Peculiar feature of this segment is lack of possibility of use of common low-cost equipment - it must be protected and certified in a specific manner, which significantly increases the final cost. On the other hand, due to the relatively small coverage of 3G/4G networks, need for on-line access through Wi-Fi is increasing significantly, and intensifies in the face of long duration of such journeys. As a result, online access services via Wi-Fi can be a key competitive advantage of a transport company, and real means of passenger traffic flow increase as well as improvement of user experience. Business-models There are three main business-models of implementation of Wi-Fi projects in transport:  sponsorship;  reimbursable;  hybrid. Sponsorship business model with free Wi-Fi access is the most common model in municipal passenger transport projects. Cost of equipment and operator’s cost for traffic transmission may be compensated, on the one hand, by providing advertising space on the transport or advertising illuminations to operators, and on the other hand – directly by municipality or under the additional agreements between operator and transport company. Reimbursable model starts to dominate in the segment of long haul transportation with high cost on network deployment and traffic aggregation. Hybrid business model implies, on the one hand, free Wi-Fi access, however it is provided only to part of passengers (business-class, as part of loyalty program, etc.). On the other hand, granting of Wi-Fi access to everybody, however, with certain limitations, as a rule, time limits. Usually it is 15 – 60 minutes of free access a day, afterwards access is provided for a fee. Another variant of this model is access unlimited by time but limited by speed. Speed can be increased for a fee (Freemium). It is worth mentioning that business model with free Wi-Fi access to the end user becomes dominating today in the developed competitive markets. According to experts’ estimates for each EUR, earned by a company on paid Wi-Fi access there are minimum 5 EUR tickets sales growth due to provision of a free Wi-Fi to passengers on board.
  4. 4. Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving credit to the source of information – J’son & Partners Consulting. ™ J’son & Partners [registered trade mark]. 4 In general, business cases of Wi-Fi implementation in transport are almost never paid back just by provision of Internet access to the end users. Its business effectiveness and even profitability should be considered solely in terms of additional value for customers, which is created in respect to the basic services (passenger transportation services), and, as a result, increase consumption. Depending on the chosen business model, level of penetration of Wi-Fi services in transport will also differ. As a rule number of free Wi-Fi users exceeds significantly number of users of chargeable services. Comparative data on penetration of chargeable/free Wi-Fi services in trains in some European and US companies, 2011. Railway company/country % of users of paid Wi-Fi % of users of free Wi-Fi National Express (Great Britain) n/a 12% of total passengers, 85% laptop owners Thalys (Belgium) 1% of total passengers 25-30% business class passengers SJ Trains (Sweden) 1% of total passengers 20% business class passengers UTA (USA) n/a 10% of total passengers Sources: EURAILmag, J’son & Partners Consulting Main projects in the world When talking about development of Wi-Fi projects in transport one can reach a conclusion that there is some sort of region ‘specialization’. In European Union in the face of high popularity of high-speed railway transport the majority of Wi-Fi projects are connected with it. The cost of Wi-Fi access on the railway is shown in the table below: Sources: companies’ data, J’son & Partners Consulting, May 2013 In USA due to traditional domination of automobile transport the biggest Wi-Fi projects in transport are connected with bus companies. Moreover, mobility of USA population, its solvency and development of air travel market inside country in general led to large scale Wi-Fi projects on the board of airplanes. As far as South-East Asia countries is concerned, Wi-Fi projects are mainly concentrated in Japan and China, and the main accent, as in Europe, is done on provision of access on high-speed railway transport. In other developing countries such problems as construction and modernization of transport infrastructure, increase of population solvency and development of national economies in general are more crucial compared to competition for the increase in passenger traffic by few percents and increase in level of service by transport companies in developed countries. Comparative price for Wi-Fi access on the railways in the world RZD/ «MegaFon» Thalys Belgium SJ2000 Sweden SNCF TGV, France Shinkansen, Japan Amtrak, USA CRH, PRC USD 3,19/hour USD 8,36/hour; USD16,76/whole trip USD 5,90/30 minutes; USD15/whole trip USD 6,50/1 hour USD10/whole trip USD 1,5/3 hours plus USD 3,8 for the access Free Free
  5. 5. Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving credit to the source of information – J’son & Partners Consulting. ™ J’son & Partners [registered trade mark]. 5 Full version of report contains examples of Wi-Fi use in ground public transport, in taxi, subway, airplanes, sea and railroad transport, as well as in telematics, M2M and in relation to ‘smart city’. Examples of Wi-Fi use in transport in the world are presented below: Fig. 1 The most well-known international developer of solutions based on satellite links used for connection with network core of operator is Swiss company OnAir. Its on-board equipment, as a rule, is used not only for deployment of Wi-Fi network, but also to provide voice and data-services of mobile connection on board. OnAir is cooperating with 14 airlines, including Russian JSC ‘Aeroflot’. Apart from classical topology of deployment of Wi-Fi network on board of the aircraft ‘router – board server – satellite – ground infrastructure’, there is another one, where specially created mobile network ‘transmits’ in the sky. So far such network covers only United States. In 2008 the company Aircell (brand Gogo) launched in commercial use ‘air – earth’ network (Air-To- Ground, ATG) using CDMA EV-DO technology with a 3 MHz band. Fig. 2 Fig. 3 This year state-owned Indian telecom operator BSNL introduced Wi-Fi modules for private transport (USD 92-110) with an external antenna. The access speed of these routers reaches 3.1 Mbit/sec., they work based on the deployed nationwide CDMA EV-DO network. It is planned that routers will be installed in vehicles of top management of operator, in taxi, buses, trains and other vehicles. It is planned that starting from October 2013 domestic roaming charges across India will be canceled. It will give a new impulse to the penetration of such devices to the market, especially in the field of transport between states. Largest bus operator in USA Greyhound, that serves 25 million passengers on 13 directions annually, equipped 800 long-haul buses in USA and 100 more in Canada with Wi-Fi devices (wireless gateways Icomera Moovbox). It became part of a more large scale program of the company aimed at attraction of new customers – passengers compartments are also equipped with power outlets, LED-illumination, etc. Fig. 4 Main projects in Russia Russian ‘big three’ mobile operators develop Wi-Fi projects in various vehicles and in various federal districts. At the same time a certain specialization of operators has developed. For example, ‘MegaFon’ bets on the deployment of Wi-Fi networks in railway transport with a focus on paid online access and commercial success, simultaneously developing concomitant infrastructure and dealing with the
  6. 6. Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving credit to the source of information – J’son & Partners Consulting. ™ J’son & Partners [registered trade mark]. 6 elimination of ‘white spots’ in its 3G network. ‘VimpelCom’ is actively developing projects in municipal public transport with free access (trams, trolleybuses, buses and taxis), using both advertising model, and model of counter payments with transport companies. ‘VimpelCom’ has also implemented a pilot project on provision of Wi-Fi at Sokolnicheskaya line of Moscow subway. MTS develops Wi-Fi both on railway and public transport, realizing both commercial and advertising models. If service is provided on a commercial basis, MTS, as opposite to the scheme used by ‘Megafon’, charges transportation company instead of passenger – end user of services. A large-scale MTS pilot project on equipment of 180 wagons of circle line of Moscow subway with Wi-Fi access points should be mentioned separately. In the end of 2012 – beginning of 2013 Moscow subway with assistance of Moscow Department of Transportation announced several tenders to build cellular network with possibility of connection to Wi-Fi, however largest operators considered the project to be economically unsound and ignored tenders. As a result, at the end of July 2013 tender for construction and operation of Wi-Fi network received ‘Maximus Telecom’. The company plans to recover the project by advertisement. Drivers and constraints Main drivers of Wi-Fi in transport market increase:  Rapid increase of penetration and cost reduction of smartphones, tablets and other devices supporting Wi-Fi.  Relatively rapid increase in welfare of BRIC and SEA countries population, as well as implementation of large scale infrastructure projects in China.  Advantages of 802,11 family technology (low price, mass character and flexibility)  Massive cooperation and roaming agreements between owners of largest Wi-Fi networks.  Increasing role of Wi-Fi in traffic unload of 3G/LTE networks. As for constraints of Wi-Fi networks in transport, limited market should be mentioned on the first place. Wi-Fi access service in transport is either premium (business class in trains, airliners and sea cruises) with potentially limited audience, or massively available, but directly competing with existing 3G/LTE networks as, for example, in municipal public transport. Among other constraint of market development the following can be mentioned:  difficulties in recovery and lack of universal business-model  competition of Wi-Fi in transport with 3G/LTE networks  unwillingness of some municipals and transport companies to cooperate with operators  high costs on organization of transport channels irrespective of type of vehicle  necessity of increase in network infrastructure capacity  necessity to use expensive protected and certified equipment Forecasts and perspectives of market development According to Informa Telecom & Media forecasts, in the coming year hot spots in transport will result in 15.8% of traffic unload of 3G networks, the same as for hotspots in cafes and restaurants. In general, trend of further increase of unload of mobile traffic through Wi-Fi networks will only grow, and will reach 46% by 2017. This will have a positive impact on the growth of Wi-Fi market, including transport sector.
  7. 7. Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving credit to the source of information – J’son & Partners Consulting. ™ J’son & Partners [registered trade mark]. 7 Fig. 2. Impact of various types of Wi-Fi hot-spots in traffic increase within the next 12 months Source: Informa Telecom & Media, 2012 In general, commercial perspectives of development of Russian market of Wi-Fi services in transport are mainly connected with railway passenger transport, while joint projects with municipals carried out in municipal public transport are still on the ‘run-in test’ stage and still have image character. Other; 3,10% Retail outlets; 9,70% Hotels; 6,60% Cafes, restaurants; 15,80% Transport (trains,airplanes, cars); 15,80% Airports; 3,90% Local open areas; 25,90% Public open territories; 19,30%
  8. 8. Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving credit to the source of information – J’son & Partners Consulting. ™ J’son & Partners [registered trade mark]. 8 Detailed results of the research are presented in the full version (82 pages) of report ‘Use of Wi-Fi in transport: Russian and international experience, perspectives of development’ Content of report Summary Introduction 1. Wi-Fi in transport: spheres of use, architecture and possibilities 1.1. Spheres of use of Wi-Fi in transport 1.2. Architectural features 1.3. Key possibilities and significance for improvement of users experience 2. Main producers equipment for construction of Wi-Fi networks in transport 3. Market of Wi-Fi in transport: current conditions, tendencies and forecasts 3.1. In the world 3.1.1. Main projects in South America 3.1.2. Main projects in Europe 3.1.3. Main projects in SEA countries 3.1.4. In other countries 3.2. Typical areas of use of Wi-Fi in transport 3.2.1. Ground public transport 3.2.2. Taxi and private car transport 3.2.3. Subway 3.2.4. Air transport 3.2.5. Sea transport 3.2.6. Railway transport 3.2.7. Telematics and М2М (Machine-To-Мachine) 3.2.8. ‘Smart city’ and public needs 3.3. Business-models of Wi-Fi in transport use 3.3.1. Business to Government (B2G) 3.3.2. Business to Business (B2B) 3.3.3. Business to Clients (B2C) 3.3.3.1. Free 3.3.3.2. Reimbursable 3.3.3.3. Hybrid (Freemium) 3.4. Services provided while use of Wi-Fi in transport 3.5. Drivers and constraints of market development 3.6.1. Main projects in ground and underground transport 3.6.2. Main projects in private transport 3.6.3. Main projects in air, sea and railway transport 4. Regulatory issues of deployment of Wi-Fi networks in transport 4.1. Wi-Fi networks access and private data security 4.2. Electromagnetic compatibility and security in transport 5. Forecasts and perspectives of the market Conclusions and recommendations The report is intended for telecommunication operators, transport companies, developers and provides of innovative solutions based on Wi-Fi, federal and regional state bodies.
  9. 9. Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving credit to the source of information – J’son & Partners Consulting. ™ J’son & Partners [registered trade mark]. 9 List of tables Table 1. Main suppliers of Wi-Fi solutions for construction of networks in transport Table 2. Comparison of tariffs on Wi-Fi access on international flights of various airline companies Table 3. Comparison of tariffs on Wi-Fi access on domestic flights of American Airlines Table 4. Comparison of tariffs on Wi-Fi access on Wi-Fi access in domestic and international flights of American Airlines Table 5. Comparison of tariffs on Wi-Fi access on leading cruise companies in the world Table 6. Comparative data on penetration of chargeable/free Wi-Fi services in trains of a couple of companies in Europe, 2011 Table 7. Comparative price for Wi-Fi access on the railways in the world Table8. Comparative characteristics of free and chargeable service of Spanish operator GOWEX Table 9. Allocation of described in research Wi-Fi projects by world regions and types of transport Table 10. Main Wi-Fi projects on city public transport of Russian mobile operators (trolleybuses, trams, buses) Table 11. Main Wi-Fi projects on private transport of Russian mobile operators Table 12. Main Wi-Fi projects on railway transport and subway of Russian mobile operators List of Figures Fig. 1. Network organization scheme based on Mesh topology. Real project Winncom Technologies for Ukrainian railways Fig. 2. Disadvantages of wireless technologies while realization of projects in transport Fig. 3. Average time spent by GOWEX users in different types of Wi-Fi networks Fig. 4. Correlation of new clients and those, who use Wi-Fi on regular basis by types of hotspots locations of GOWEX company Fig. 5. Organization scheme of advertising and entertainment system based on Moha equipment for passengers of Helsinki subway Fig. 6. Principal organization scheme of Wi-Fi network on air transport Fig. 7. Principal organization scheme of Wi-Fi network on ship based on the example of ‘MegaFon’ Fig. 8. Architecture of communication network based on Moha equipment with the use of Wi-Fi access points and Mesh-network along the railway bed Fig. 9. Correlation of paid and free Wi-Fi network access of GOWEX company Fig. 10. Results of survey of passengers of American buses on necessity of Wi-Fi in transport availability Fig. 11. Most popular applications among users of Wi-Fi GOWEX network in transport Fig. 12. Most significant Wi-Fi projects on railway transport, 2010 Fig. 13. Places of upload of mobile networks with the use of Wi-Fi in operators strategies Fig. 14. Impact of various types of Wi-Fi hot-spots in traffic increase within the next 12 months Fig. 15. Dynamics of upload of traffic volume of mobile networks by means of Wi-Fi List of companies mentioned in the report JSC ‘Aeroflot – Russian airlines’ JSC ‘Megafon’ JSC ‘MTS’ JSC ‘Vimpelcom’ JSC RZD FSUE ‘Morsviazsputnik’ ABB AeroMobile Aircell Airspan Allen-Bradley Alvarion AXIS Bluesocket Boingo Wireless Broadcom BSNL BWCS Cambium China Mobile Cisco Devicescape Software D-link Ericsson Ericsson BelAir FireTide GOWEX Honeywell Huawei Icomera Intel INTRACOM KDDI KT LGU + Motorola Solutions MOXA Inc. Nokia Siemens Networks Nomad Digital NTT DoCoMo O2 OnAir Orange Proxim Wireless Qualcomm Atheros Radwin Rapira Romawireless SEATEL Siemens SinglePoint Communication SoftBank Strix Systems Telecom Italia T-Mobile Ubiquiti Networks Vee Time Corp Verizon Wireless Virgin Media Vodafone Wavion Winncom Technologies Yokogawa
  10. 10. Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving credit to the source of information – J’son & Partners Consulting. ™ J’son & Partners [registered trade mark]. 10 The newsletter was prepared by the J'son & Partners Consulting Company. We exert every effort to provide actual and forecasting data representing the situation in full and available at the time of the publication of the material. J'son & Partners Consulting reserves the right of revising the data after publication of some new official information by individual players. For additional information please contact: Pavel Ermolich Commercial Director Pavel.Ermolich@json.ru www.json.ru

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