To offload or not to offload? The existential dilemma of mobile operators
February 2011
Public WiFi networks are popping up like mushrooms in crowded spots where always connected geeks seek shelter for a frappuccino and a facebook update. This should be good news for mobile operators desperate from capacity shortfalls: they can now offload part of their data traffic to less expensive wholesale WiFi bit pipes – or they can even catch a free ride. So should mobile operators embrace the symbiosis and integrate externally cultivated WiFi hotpots in their business models?

Biological parasites can often be useful for their host’s bodies. Likewise, clusters of public WiFi access points provide the obvious offload benefit. But hungry parasites having the urge to multiply can also have dare consequences on their hosts’ valuable organs. Will operators be shooting themselves in the foot if they allow WiFi to become the default radio access point in the most lucrative urban hotspots? Besides the obvious spectrum and infrastructure asset devaluation that this will entail, one can’t resist wondering: will they be willing to hand over customer relationship to WiFi players for saving a few bucks on the cost side? The offload business case rests on the assumption that it is significantly cheaper to provide hot-spot coverage and capacity by buying wholesale access from WiFi clouds than by investing into the self owned cellular infrastructure. But what if a new breed of home grown bacteria challenges this premise?

While it has got relatively little industry attention, cellular network platforms in the last few years have undergone a major evolutional jump. The new generations of previously refrigerator sized base stations now fit in the size of a DVD player. And even more importantly, in conjunction with their shrinking physical dimensions, the hardware cost of modern mobile network equipment has been in free fall during the recent years. Imagine if in the near future the hardware price of a high capacity, GSM – HSPA – LTE combo base station would fall below 10K Euro and small scale “micro” base stations would cost on the order of hundreds of Euros! Of course, that’s only the hardware, and gear makers need to maintain their top line revenues to pay the salaries of their R&D staff. So they keep on charging fortunes for the software licenses required to unlock the otherwise large hardware capacities.Software can now command more than 90% of the CAPEX price tag of a fully configured modern base station.

But luckily for operators, their hungriest suppliers are showing signs of succumbing to market realities and are adopting “gigabyte friendly” software pricing approaches. In such novel gear pricing models the licenses are linked not to the traffic but instead to the number of active customers, in essence squaring off the famous cost-revenue decoupling crisis.

What do you think? Will low cost hardware and “gigabyte friendly” software licensing models, combined with the inherent benefits of protected spectrum and controlled user experience, give an ultimate evolutionary advantage to “home grown” cellular gears over unsanded offload workarounds?
2011
wifi
Back
List of all research reports and external articles


Featured research reports
Competitiveness of Czech mobile data prices – April versus September 2019
2019
dfmonitor
pricing
Czechia
Vodafone
DeutscheTelekom
PPF
spectrum
unlimited

October 2019
The Czech government commissioned Rewheel to review the state of competitiveness of Czech smartphone mobile data tariffs, ahead of the upcoming 5G-centric spectrum auction where a frequency package is to be reserved for a new, 4th entrant mobile operator.

2018 capacity utilization and 5G capacity potential of mobile operator existing macro cell site grids
2018
spectrum
mobile-first
massiveMIMO
UK
Canada
Hutchison
Finland
Elisa
5G
networkeconomics
Verizon
UnitedStates
Play
Poland

October 2019
When will EU28 & OECD operators run out of 4G capacity and how many more gigabytes per subscriber per month can they carry with 5G? A Rewheel research PRO-study of 143 European, US, Canadian, Japanese, Korean and Australian operators

Root cause of weak competition in the Canadian wireless market
2019
Canada
Telus
Bell
Rogers
Shaw
spectrum
pricing

September 2019
The Canadian wireless market is ruled by provincial mobile network duopolies and monopolies. While in some provinces regional operators increasingly challenge the incumbents, at the national level, Canada is a de-facto network duopoly.

4G era – Who got the most out of it?
2019
Elisa
DNA
Play
Iliad
Tele2
DeutscheTelekom
Vodafone
Telefonica
Drillisch
Swisscom
Sunrise
Germany
UK
Netherlands
Ireland
Austria
France
Italy
Finland
Sweden
Denmark

May 2019
5-year mobile service revenue trends for 143 operators present in EU28 & OECD markets. Finnish operators that executed ‘unlimited everything’ strategies were the undisputed champions of the 4G era.

Site density is key to LTE network performance – and critical for 5G
2019
spectrum
networkeconomics
Finland
Switzerland
Germany
Elisa
Play
Telenor
Vodafone
5G

February 2019
Rewheel-Tutela research study. Analysis of 99 mobile networks across EU28, Norway and Switzerland, key network performance drivers and implications on 5G infrastructure and spectrum investment strategies.


Iliad’s 4th MNO venture into Italy – Will it pay off?
2019
Iliad
Hutchison
WindTre
Italy
spectrum
5G
networkeconomics
pricing

January 2019
Can Iliad make money by charging only €7.99 per subscriber?

First impressions from the world’s first commercial 5G network
2018
spectrum
massiveMIMO
Finland
Elisa
5G

August 2018
In June 2018 Elisa became the first operator in the world to launch commercial service over its 5G (3.5 GHz) network in Tampere Finland and Tallinn Estonia. Elisa invited Rewheel to try its 5G network.

The massive MIMO effect: has the 3.4-3.8 GHz TDD spectrum become more valuable than 800 MHz (and 700 MHz) FDD?
2018
spectrum
massiveMIMO
United Kingdom
Vodafone
Telefonica
Hutchison
BritishTelecom

April 2018
Paradigm change in mobile technology leads to paradigm change in spectrum valuations (observations after the UK auction)

The market is changing. Mobile data pricing and network economics metrics and research reports for industry professionals
PRO >


Contact us:

Tel: +358442032339
E-mail: research@rewheel.fi
Twitter: @RewheelResearch

Copyright © 2009-2019 Rewheel Oy. All rights reserved.