Research published by Parks Associates this month offers a fascinating insight into the U.S. mobile market and its end users. With fresh smartphone customers getting harder to find, a Parks blog post explains, intensifying competition has forced U.S. carriers to shift their focus from ARPU growth to churn management. In this operational mode the carrier must augment its proposition to keep its own customers from leaving and compel its competitors’ customers to switch sides.
Helpfully, Parks Associates asked consumers what would sway them, and this is what they learned: Two thirds of consumers who are likely to switch carriers in the next year felt access to Wi-Fi as part of their mobile service would be “very important” to their decision.
Within the survey that ranks Wi-Fi connectivity as a more compelling piece of the proposition than a loyalty rewards program, the chance of an early handset upgrade, or a long contract to offset upfront costs — and equally attractive as the ability to roll over unused data.
It is worth placing Parks’ findings into the wider context of the U.S. mobile market, because the prospect of increasing churn is hardly the carriers’ only concern. An LTE capacity crunch is imminent as 4G falls victim to its own success like 3G before it. Meanwhile the competitive pitch is being raised yet further by challengers including Google’s Project Fi and, expected later this year, the debut wireless offering from Comcast.
Google’s positioning of Fi as a ‘Project’ is ambiguous. Projects can be side-line experiments or undertakings on the grandest scale. Pitching Fi as a project allows Google to show a little deference to the carrier partners it is effectively pushing down the value chain, while also hinting at a far wider plan to force fundamental evolution in smartphone connectivity provision.
Perhaps Google’s tongue is wedged firmly in its cheek, but Fi is no mere foray; it’s already changing the game. It cannot be coincidence that the service elements consumers identified as decision-makers — data rollover and a connectivity model which blends Wi-Fi and cellular into a single continuous service — are mainstays of the Fi proposition. Google commands the highest profile for its activities, even in their earliest incarnations, and the progressive clarity of the Fi offering has clearly struck a chord.
It’s not hard to see why; just compare the Fi homepage with carriers’ consumer websites. The Project Fi homepage is a visual rendering of the simplicity and understanding it brings to a market defined for so long by complexity.
While U.S. carriers have introduced varying degrees of data rollover with varying degrees of reluctance, no doubt influenced in some cases by Project Fi, their plans for Wi-Fi are less clear.
The relationship between cellular carriers and Wi-Fi is complicated. In one sense they’re more than happy for consumers to use Wi-Fi, particularly when it has enabled them to charge (as part of the monthly bucket price) for cellular capacity which doesn’t get used. And when that capacity is constrained, as was the case with 3G and soon will be with 4G, the option to offload is an appealing one.
And yet they have largely resisted integration of Wi-Fi at scale into the service, in a strategic sense, naturally prioritizing RoI on their multibillion-dollar network and spectrum investments. Even where carriers have their own Wi-Fi deployments, they are not prominently positioned. In short, customers using Wi-Fi isn’t a problem — but it’s the customer’s business, not the carriers’.
But the Parks Associates survey contradicts the notion that consumers are perfectly happy to manage their own Wi-Fi connectivity. They don’t want to have to find hotspots, join different providers’ programs, or submit reams of personal data during arcane captive portal rituals just to get a simple connection to the internet.
Google knows this, which is why it’s doing it for them.
So we have a situation where mobile carriers are fighting to retain customers who clearly want Wi-Fi as part of their mobile service. That fight is playing out against a backdrop of intensifying competition, thanks in part to the world’s most valuable company, which is offering Wi-Fi as part of its mobile service. To top it off, LTE networks are hitting worrying levels of congestion and the mobile industry’s official response — 5G — is years away.
The carriers have never needed Wi-Fi more.