Unlimited Mobile Data Means Wi-Fi Is More Important Than Ever

Posted on March 23, 2017

Unlimited data is back in a big way in the U.S. All of the leading mobile operators now offer plans that — despite an all-you-can-eat buffet of caveats — are positioned as offering endless mobile data. 

It’s a powerful message from a consumer perspective and thus a difficult shift for operators to resist once it begins. At least one analyst firm is predicting that every mobile operator in the world will offer unlimited data before the end of this year.

Amid billowing press coverage of the return of unlimited a handful of reports have speculated that, free to gorge themselves on supersized cellular plans, smartphone users will no longer need Wi-Fi. Perhaps, one analyst suggested, coffee shops will even stop offering it as a customer benefit.

A Bloomberg headline ran the idea through to its natural conclusion, invoking the real possibility of “A World Without Wi-Fi”.

Wi-Fi, the writer proclaimed, is “starting to fade from the limelight”. Unlimited data plans represent a “critical change that threatens to render Wi-Fi obsolete.”

All of which offers a solid lesson in hooking a reader in the age of digital news, but misses an important point about the economics of unlimited data plans.

If subscribers view unlimited as insurance against a possible need, operators offering unlimited data must view Wi-Fi as their insurance against soaring demand.

With tiered data allowances, data consumption meant operator profit. If the subscriber exhausted their allowance on this kind of tariff they incurred hefty overage fees, or were bumped into a more expensive tier. The operator wanted its customers to use more data.

In the unlimited model, operator profit comes from the data you don’t use. Once you’ve paid for your 20GB, the less of it you consume the more the operator profits. Unlimited offerings, whether mobile data, pizza, or gym membership, perform reliably based on the absence of consumption and consumers themselves are happy to pay out for the ability to meet a need which may not in fact materialize.

The worst case outcome for any unlimited offer is that consumption never stops, the resource runs dry, and the customer experience suffers.

This means that, in a new age of unlimited data plans, Wi-Fi becomes more important, not less. Without Wi-Fi delivering vast volumes of smartphone data, the cellular network experience would work for nobody. Cisco estimates that the volume of smartphone data consumed worldwide over Wi-Fi (and femtocell) networks will rise from 60 per cent in 2016 to 63 per cent in 2020. Demand for mobile data is only going one way, and meeting that demand requires every resource available.

If subscribers view unlimited as insurance against a possible need, operators offering unlimited data must view Wi-Fi as their insurance against soaring demand.

Perhaps the most intelligent approach for operators is to position Wi-Fi explicitly as part of the service. One operator which appears to be doing just this is Germany’s Deutsche Telekom. Amid the whirlwind of Mobile World Congress in February, where much attention was understandably focused on 5G, Deutsche Telekom (DT) published a blog post detailing field tests of its new Seamless Connectivity app.

The app automates customers’ connectivity to Wi-Fi — both DT-owned and shared public — and manages the movement of devices between all available networks to ensure customers get what DT calls “always the best connection”. According to the blog post the app is being trialed by a number of DT subsidiaries and will launch commercially this year.

DT is one of the world’s largest and most influential mobile operators and this is a significant move — a strategic approach to the entire smartphone connectivity experience.

Pricing, on the other hand, is tactical and data tariffs come in and out of fashion like everything else. Wi-Fi, which is truly unlimited, remains crucial to the smartphone experience whatever tariffs are in vogue.

‘Unlimited’ mobile data is an appealing consumer proposition, even when so many limitations are actually applied. Whether qualified by throttling, video quality, restrictions on tethering, and volume of data itself, unlimited sends a reassuring message about service availability. (What it doesn’t offer is service availability at those times and in those places where the mobile network simply doesn’t deliver; particularly certain indoor locations. Fortunately, of course, there’s Wi-Fi for that.)

So, a “world without Wi-Fi?” That’s beyond the limits of reason, never mind mobile data.