The rise of the semi-connected consumer
The nearly ubiquitous Wi-Fi availability increase in the western world has had a huge impact on the success of OTT service providers, many of whom have been instrumental in shaping the digital needs and expectations of customers. Wi-Fi calling and messaging services have now become a feasible alternative to the lengthy and often expensive data-heavy contracts that are available from traditional mobile operators. This has given rise to the ‘semi connected consumer’ - consumers who often either opt out of data plans, or use data sparingly in return for subsidies on the price of their smartphone or very cheap contracts.
While budget friendly, the semi connected movement is not without its downsides. Being limited to Wi-Fi only areas of coverage means jumping between hotspots is often a cumbersome process at best, leading to frequent call disconnections; this is especially true in many developing countries such as Africa, where the level of connectivity is particularly limited.
Nevertheless, the repercussions of this growing consumer trend will have a significant impact on the CSPs’ current business model – as with the already steady decline in traditional voice and text packages, operators have looked to data packages to secure additional revenues. However, with Wi-Fi becoming more and more prevalent, securing revenues from data packages looks set to present a challenge for CSPs too now. Operators will need to find creative ways to encourage mobile data usage and find alternative sources of revenue from the OTT ecosystem.
Craig Moffett of telecommunications expert firm, MoffettNathanson, recently wrote in the Wall Street Journal, that one day Wi-Fi will be the primary network and cellular data will serve as the fall-back when Wi-Fi is not around. There’s evidence from our customer base to suggest that in many markets, this is already the case.
For example, WhatsApp, the popular cross-platform mobile messaging app, has recently introduced a new Wi-Fi only calling feature, and Google’s recently launched MVNO “Project Fi” which will use both Wi-Fi and cellular networks in order to provide stable connections and a stronger service is set to further reduce reliance on traditional operators. Not only this, but in the US, Google has managed to negotiate MVNO arrangements with multiple operators, allowing the client to automatically cherry pick the best connectivity across a wide range of options for any given situation.
At the moment, it is unclear how such arrangements would work outside the US regulatory environment, Project Fi is certain to act as a wake up call to many mobile operators, signalling the beginning of an era where traditional metrics for customer loyalty will no longer make sense.
In response to these growing trends and to reclaim some of their lost market share, operators such as EE, Virgin and Sprint are introducing Wi-Fi plans and Wi-Fi only call packages, however, usage will count against a customer's monthly allocation of minutes and text messages. In Africa and Latin America, many CSPs already utilise Wi-Fi offload to balance network capacity and offer additional coverage, but mostly in a mobile-centric setup. It does not, however, take a huge leap of imagination to reverse the setting and start offering a Wi-Fi first offering in the style of Google.
Time is therefore of the essence for operators that wish to capture new revenue opportunities and meet the needs of their customers; with the rise of OTT ecosystems such as Google, Viber, WhatsApp, Facebook messenger and Skype, creating platforms for consumers to maximise Wi-Fi usage, it is critical that operators look to use their existing assets to provide additional value and differentiation, not only in delivering exciting services but also in basic connectivity. While some CSPs will undoubtedly turn to regulators for help in blocking these new entrants from their markets, we are perhaps facing a ‘back-to-basics’ moment in many ways for the industry as a whole.
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