While the call drop versus the spectrum crunch debate goes on, we want to direct the attention to a simpler, more productive solution for improving connectivity—especially for mobile broadband.
The prevailing view amongst policy-makers is that the vast majority of economic value is derived from licensed spectrum. Unlicensed spectrum, for instance spectrum in the 2.4 GHz and 5 GHz bands being used for Wi-Fi, has always been undervalued. There are many studies that have illustrated the economic value of unlicensed spectrum using data from the US under different scenarios, including cellular-Wi-Fi offloading, Wi-Fi internet service provisioning, Wi-Fi in communication intensive locations such as hospitals and malls, community Wi-Fi in public places, and finally residential Wi-Fi. As per the recent work of Katz (2014), the sum of consumer and producer surplus of the technologies operating in unlicensed spectrum bands in the US amounts to a total annual economic value of $222 billion in 2013, and contributed $6.7 billion to the nation’s GDP. It is also estimated that, by 2017, at least, $547.22 billion in economic value and $49.78 billion in contribution to GDP will be contributed by unlicensed spectrum and associated technologies. According to iPass.com, the worldwide Wi-Fi hotspot count has grown by almost 270% in the last two years. France leads the pack with 13 million hotspots, followed by the US.
Realising the above economic value of unlicensed spectrum, the US Federal Communications Commission last year made available another 100 MHz of spectrum in the 5.150 to 5.250 GHz band more usable for unlicensed technologies, doubling the amount available in the 5 GHz band and enabling Gigabit speeds through the 802.11ac Wi-Fi standard.
India does not figure in the top 10 countries in terms Wi-Fi hotspot deployment even though we have the second largest mobile subscriber base in the world, next only to China. The penetration of Wi-Fi hotspots in India is poor at about one-fourth that of the US, and about half that of China. Mobile operators have been hesitant to use Wi-Fi to complement their macro cellular networks, both for coverage and capacity, for reasons best known to them.
We postulate that in countries such as India, wherein the average licensed spectrum assigned to operators is a low of about 2X13 MHz per service area, at a very high price of $1-2/MHz/population (in metros and category A service areas), Wi-Fi and associated technologies operating in unlicensed band will generate more economic value than in other markets in certain scenarios.
Wi-Fi in residences: Of the about 90 million worldwide hotspots as measured by iPass, 80 million are residential ones. However, residential Wi-Fi is poor in India due to pathetic landline broadband penetration at six per 100 households which is required to back-haul Wi-Fi hotspots at home. Despite poor penetration, a study by the authors indicates that users switch their data access to residential Wi-Fi as best as they can, due to (1) lower landline broadband tariff and (2) improved quality of experience. While most of the landline broadband providers offer bundled Wi-Fi access points, they are not actively promoting it as a better alternative to mobile broadband possibly due to avoid cannibalisation of their mobile data revenue. The ability of ISPs and private telcos to access optic fibre to home through the unbundling of the local loop, currently in the possession of the government operator, will unlock value in this market.
Wi-Fi in offices: Most of the organisations that the authors have studied are actively deploying Wi-Fi infrastructure mainly to (1) provide mobility to workforce, (2) enhance flexibility at work and (3) provide better quality of experience. However, not even one of the organisations has indicated that a telco as approached them with a solution to deploy and manage Wi-Fi infrastructure in their campuses. It has always been system integrators or Wi-Fi equipment providers who have been engaged by the firms for their Wi-Fi needs. It is time the telcos stop protecting their networks running on licensed spectrum, and aim at using the complementarity of Wi-Fi and licensed spectrum, including for off-loading 3G traffic.
Deployment of venue Wi-Fi hotspots by restaurants, hotels, airports and hospitals: No one has used Wi-Fi more than Starbucks for improving brand loyalty and retention. There are about 8 million of these hotspots installed globally in venues as mentioned above and in trains and flights. In the recent visit of the Prime Minister to the US, Google mentioned its willingness to connect Indian trains using Wi-Fi. This could have been done by RailTel long time ago as they have the required optic fibre backbone infrastructure and exclusive Right of Way across railway tracks covering almost 70% of the country’s population. As Infrastructure Provider I licensee, bandwidth can always be leased from RailTel by the mobile operators to provide Wi-Fi in trains and railway stations.
Community Wi-Fi: This is normally deployed by the city municipalities for providing public access to the internet. Starting with San Francisco, many cities started providing community Wi-Fi. Though there has been talk about community Wi-Fi being provided in our cities including Delhi and Bangalore for quite some time, nothing much has happened on the ground.
On the technology front, seamless Wi-Fi connectivity from cellular macro networks through SIM-based authentication has been in vogue as most of the US and European operators have adopted it for their international roaming programmes. Firms such as Qualcomm have been promoting the 4G Long Term Evolution (LTE)-Unlicensed that operates in the 5 GHz unlicensed band for seamless connectivity between macro and micro networks.
It is time India jumps on to the Wi-Fi bandwagon and overcome the seemingly endless debate over spectrum bottlenecks. The government, on its part, should release more unlicensed spectrum especially in 5 GHz (5.15-5.35 GHz) as noted by Trai in its recommendation on broadband earlier this year. Telcos, on the other hand, shall use Wi-Fi as an opportunity and business proposition to enhance coverage and capacity of their cellular network to derive value not only for themselves but also for their subscribers who are tired of waiting for internet to be provided on their mobiles.
V Sridhar is professor, International Institute of Information Technology, Bangalore. Rohit Prasad is professor, MDI Gurgaon