In the past several weeks, there have been several news articles and blog posts about the possibility of Wi-Fi being a solution to congested mobile networks. There was a piece in Total Telecom, one by Maggie Reardon, and one by Stephen Rayment for the FT.
The argument is that the widespread adoption of smart phones and mobile Internet has congested mobile wireless networks to the breaking point. In order to alleviate congestion on their 3G or 4G network, carriers could offload traffic onto Wi-Fi networks (including those of other operators). This would free up the carriers’ limited spectrum resources which they obtained at auction through the licensing process. And, it could be done more cheaply than upgrading existing cell sites. (Dana Blankenhorn at ZDNet correctly points out the inconsistency of giving more spectrum to wireless carriers if unlicensed operation is the solution. It was not so long ago that wireless carriers were crying foul that all Wi-Fi networks such as the now defunct Cometa presented unfair competition because they had not spent billions to acquire their licenses at auction.)
Insight: Integrating mobile networks with Wi-Fi is a good idea. It is, however, not a new one. At a conference nearly eight years ago at Columbia University and in the ensuing paper, I suggested that wireless carriers consider incorporating Wi-Fi into their networks. My reasoning was not so much about load balancing as it was about market segmentation. Complementing existing 3G networks with Wi-Fi would enable carriers to offer tiered services – a best efforts service and a better than best efforts service – charging different prices for both and increasing profitability. I also suggested it would be possible to use spectrum not licensed to the carrier such as the spectrum which has been allocated to CB Radio, GMRS, or FRS. A 2003 FCC rule change would allow handsets cable of operating both on mobile networks and in these bands. In this way, carriers could offer services like push-to-talk or walkie-talkies without encumbering their already burdened spectrum and networks. Users would be able to speak directly to others in their area, even users on other carriers’ networks. Alas, there was not much economic incentive for carriers to sell such handsets because it would reduce the mobile termination revenues which carriers charge one another (and eventually their subscribers) for completing calls over their networks. However, with the balance of market power tipping away from networks and in favor of handset providers recently, it might be possible that we would see such enabled handsets in the next few years.
