What is Wi-Fi Offloading and Will it Hurt My Lease?

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Wi-Fi offloading is the use of Wi-Fi technology to deliver data that was originally sourced by cellular networks. Wireless Service Providers can intentionally offload cellular 3/4G and LTE traffic to Wi-Fi, which basically means that the end user will be accessing unlicensed spectrum in the public domain via a Wi-Fi hotspot.  Why are the wireless carriers interested in offloading subscribers from their networks where they get paid by the megabyte?  Two words- Data Tsunami.

Industry analysts have estimated that Internet traffic will exceed an annual growth rate of 50%.  From 2012-2013, smartphone use rose by 40% to more than 1.2 gigabits per month per user, and tablet use increased by over 50%, largely due to video streaming.  In fact, in March of this year, Smartphone use (in minutes) surpassed TV use for the first time ever: 151 to 147 minutes per day respectively (with laptop and tablet using treading at 103 and 43 minutes).   Global data traffic is expected to increase 18-fold between 2011 and 2016.  These numbers have the wireless industry spinning and scrambling to keep up with demand.  Available spectrum and bandwidth are not the only concern – the ability for wireless infrastructure to handle the squeeze and alleviate network congestion is more critical than ever before.

Wireless carriers want to avoid churn (the industry term for subscribers changing service providers). They’d rather “offload” subscribers to public (or privately) owned Wi-Fi networks, rather than seeing their competitors benefit.

Deployment Strategies and Player Competition

Why use WIFI at all?  Because consumers expect consistent and fast access: 2/3 of Smartphone users expect a web page to load in four seconds or less – and are demanding that providers not only offer seamless Internet experiences, but competitive pricing on data packages, as well as a best-case user experience.  Wireless carriers are waking up to this and integrating heterogeneous models that span across technologies.

We have seen operators that have built offload networks in areas with dense data traffic, like universities, stadiums and hotels. AT&T has publicly discussed a number of Wi-Fi (and small cell) offload systems.  For instance, in January 2014, it installed 4G antennas at Sun Life Stadium to strengthen its cellular signal for voice calls. Each antenna is paired with a Wi-Fi router to provide AT&T customers better data access.

Does this mean that cellular towers will become obsolete because of WIFI offloading? Read on (but the answer is no).

Since Wi-Fi uses unlicensed public spectrum, it is free to use by anyone, which means that you don’t have to be a wireless carrier to provide WIFI offloading.  Some technology companies that don’t own wireless spectrum like Google and Comcast, have arrived on the scene with enough money to build out robust WIFI networks where they have fiber or cable already in the ground or in the air.  Both companies don’t want to depend upon the wireless carriers to provide mobile access to their services (search engine advertising in the case of Google, and pay TV in the case of Comcast).

So what does this mean to property owners, municipalities and anyone involved in a cellular lease?

Wi-Fi offloading will be an essential part of the wireless carriers strategy that will help them cope with the onslaught of the Data Tsunami, no doubt about it, but we don’t expect this to result in cellular networks or towers disappearing any time soon (if at all).  There are some fundamental technological issues with WI-FI that will inhibit the widespread adoption of WI-FI as a ubiquitous replacement for your cell phone service.

1. Interference

First, since WI-FI is provided over unlicensed spectrum, anyone anywhere can use it.  Typical WI-FI routers are built to broadcast relatively short distances.  That is why when you travel to large cities and look for available WI-FI, there can be tens or even a hundred access points within a close proximity.  A convenient outlay of wireless hotspots is great for easy access to coverage, but interference is a factor to contend with. When a dense network of access points is deployed on a number of wireless devices (from MP3 players to watches and shoes), it’s necessary to reduce the signal power of some of them, while favoring others to avoid what is called co-channel interference.  But at the end of the day (or perhaps even in the long-run), a densely deployed network of hotspots doesn’t necessarily provide better end-user experience because capacity and reliability may become problematic.  In other words, some end-users ultimately prefer to pay for access to cellular data networks, which the carriers own via specific licensed frequencies,  meaning that others can’t interfere with their network operation.

2. Seamless Connectivity

Currently, most WI-FI networks require an affirmative act to connect to each network, meaning that the user has to sign on at least once to each network.  While this isn’t an issue if you are at your home or office, if you are walking or moving in a car, doing so is inefficient, if not impossible.  However, Industry bodies like the Wi-Fi Alliance and the Wireless Broadband Alliance are pushing for standard specifications like Hotspot 2.0 (aka Passpoint), which would make Wi-Fi connectivity more seamless and easy to use by automatically connecting users to supported Wi-Fi networks.  The shift to ubiquitous Wi-Fi offload is likely waiting for these standards to even out. We believe that it will be at least another few years before significant and focused roll-out occurs and the technological devices exist on a wide spread basis to systematically access these networks.  Even then, someone still needs to build out these supported networks.  (Who better than the wireless carriers who already have tens of thousands of cell sites?)

3. Volume of Calls

The average number of voice calls that can be handled on a Wi-Fi access point is only 15. When interference is introduced, the number of calls that can be handled drops from there. Additionally, small amounts of interference seriously impact voice-over-Wi-Fi voice quality. The question is: will users be okay with this, or will they prefer to rely upon the cellular connections they’ve become used to?

4.  Security

Security concerns are no joke.  When small cells are brought into public areas (or even private residences) they are by definition less secure than when they are in managed in central offices tied to macro cell sites.  Because Wi-Fi hot spots are using unlicensed spectrum, they are easier to hack.

5. Number of Hotspots Needed

Wireless hotspots boast an average coverage area of about 65 feet. Consider that the coverage for the smallest small cells (femtocells) reaches about a 40-foot radius, and can support up to six users going full speed ahead. Slightly bigger microcells have a one-mile radius and can support about 200 users.  DAS installations have a three-mile radius and can support almost 2000 users. While macro (cell) sites provide coverage for up to ten miles, the quality of the service depends entirely on the number of people accessing the network at any given time, eg: the capacity.

Wireless carriers invested over $25 billion in 2013 to improve their wireless networks, and 2014 is likely to be no different. This capital is going primarily to new cell site development and to fund LTE modifications on existing cell sites, and only secondarily to wireless offloading efforts.

In rural areas, there simply isn’t any way to deploy enough hotspots to provide seamless, consistent coverage.  There are alternatives like Super WI-FI that hope to deliver much wider area coverage using TV white space, but these networks haven’t been deployed in any significant manner.

So How Will Wi-Fi Offload Affect Your Cellular Lease?

Small cells and accessible coverage is great to have, but capacity is perhaps the most valuable function for wireless carriers to consider in determining successful network deployment strategies. Macro solutions, like cell sites, are going to remain necessary to handle both the capacity and coverage needs of subscribers. The industry will see a tremendous amount of restructuring in the coming years.  DAS, small cells, hotspots and carrier collocation will aid in coverage requirements, but will not be sufficient to replace cell towers and rooftop sites.  With the current demand for data, the number of cell sites is going to continue to grow, and the number of requests to modify existing sites will skyrocket as carriers augment and expand their networks.

This should bring peace of mind to anyone involved with, or considering becoming party to, a cellular lease tied to a tower or rooftop.

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