SP Wi-Fi Monetization Thought Leadership
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Transcript of SP Wi-Fi Monetization Thought Leadership
© 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 1Cisco Confidential 1© 2013 Cisco and/or its affiliates. All rights reserved.
SP Wi-Fi Monetization Thought LeadershipJared Headley
Senior Director, Service Provider Mobility
October 2013
Cisco Public
© 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 2
Service Providers Go Up The Value Chain: Wi-Fi as a Service Platform
Wireless Services
Mobile Offload
Wi-Fi Hotspots
6 BillionMachine-to-Machine Connections in 2017
50%Mobile Data Offload in
2013
94% Users who Turn on
and Find LBS Useful
Cisco Public
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Mobile Offload Adoption Accelerating
Growth in mobile data
Lack of Spectrum
Market Drivers
Offload economies
Wi-Fi is ubiquitous
Shift to indoor consumption
46% 71% By 2017, 71% of tablets traffic will be offloaded
By 2017, 46% of smartphones traffic will be offloaded
Source: Cisco Visual Networking Index, 2013
50% of mobile data traffic will be offloaded to Wi-Fi and Small Cells in 2013, equivalent to 10 billion movie downloads or 9000 petabytes per year
( Source: Juniper Research)
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Business Models & Value Creation
Retention & Loyalty
Reduce churn by 50% with
free Wi-Fi
Save Money Make Money
Mobile Data Offload
Offload of 7% of data
traffic results in billions of dollars saved
Managed Services and Wholesale
Create new revenue streams of up to
$5M per venue with B2B
managed wireless services
Location AnalyticsOffer analytic reports for
$50K/moLocation-Based AdvertisingMobile advertising revenue grows
10x with LBS
Cisco Public
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SP Wi-Fi Business Models and Value Creation
Retention & Loyalty
Save Money Make Money
Mobile Data Offload
Managed Services and Wholesale
Location Analytics
Location-Based Advertising
Cisco Public
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Churn Reduction at North American MSOs
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 180
0.1
0.2
0.3
0.4
0.5
0.6
0.7
Month of Deployment
Re
du
cti
on
in C
hu
rn R
ate
fo
r D
ata
Su
bs
wit
h
Wi-
Fi S
erv
ice
Impact on Broadband Data Churn Following Introduction of Wi-Fi Offer Among Subscribers Who Used Both
28–35% Reduction
12–17% Reduction
53–66% Reduction
MSO #1
MSO #2
MSO #3
Trendline is an immediate benefit, normalizing to ~15% reduction in churn
Source: Cisco and RCBG, August 2012
Retention & Loyalty
Cisco Public
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Making The Business Case: North American Cable Operator
$14.0MRetention Savings
OR$10.1MTotal Wi-Fi costs
$6.0MForegone Revenue (net loss)
OPTION A – Differentiate with Wi-Fi
$3.9MNetGain
OPTION B – Match competitive pricing
for Triple-Play package offered by competitor$49 High subscriber
acquisition cost: $495$115 avg. monthly revenue per subscriber
Service Provider ended up ahead by $9.9M by differentiating with Wi-Fi
Retention & Loyalty
© 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 8
SP Wi-Fi Business Models and Value Creation
Retention & Loyalty
Save Money Make Money
Mobile Data Offload
Managed Services and Wholesale
Location Analytics
Location-Based Advertising
Cisco Public
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Mobile Offload: Optimization that Complements the Macro Network
Wi-Fi works in tandem with our global network to keep people connected wherever they are. Wi-Fi is a clear factor in mobile use, driving purchase decisions to enriched hospitality, fan & travel experiences
Josh Goodell, AVPAT&T Wi-Fi Services
“
”_
Public Wi-Fi hotspots
32,000
2011
2012
x3
+10% +200%Wi-Fi connections2012
Venues 2012
Mobile Offload
Public Wi-Fi hotspots
3.8 million 50%Smartphone offload
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Offload Value Increases When Based on Owned Network
MNOs offloading via to someone else’s Wi-Fi network are significantly less productive than those moving traffic to their own Wi-Fi network
20%0% 40% 60% 80% 100%
MNO1
MNO2
MNO3
MNO4
MNO5
MNO6
MNO7
% of Mobile Data Traffic Offloaded to Secondary Network
Source: Cisco; as reported by sample of Tier 1 MNOs in US, Asia and Europe (Jul-Sep 2012)
Offload via owned Wi-Fi
Offload via 3rd party Wi-Fi
Mobile Offload
Percentage of Mobile Data Traffic Offloaded to Secondary Network
© 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 11
Representing
savings
Case Study: Middle East Tier-1 Mobile Operator
Service provider subscription and traffic forecast through 2016:
of mobile data traffic to be offloaded by 2020
7%
$3.6Bn
Mobile subscription to grow x53.5 M
17.5 M
2011
2016
Mobile broadband data usage to grow x3550 MB/Mo
1.6 GB/Mo
2011
2016
1.6%
7%• Cost savings based on less data
served over the cellular network
• Intelligent traffic routing and network optimization
• Service improvements in buildings and dense urban topographies
• Coverage extension where service provider has no spectrum2013 2014 2015 2016 2017 2018 2019 2020
$1.1Bn
$830M
$615M
$425M
$290M$185M
Cost Savings (US$) Traffic Offloaded (%)
Mobile Offload
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Case Study: MSO Wi-Fi Used for Mobile Data Offload
Cisco outdoor AP 1552C
3 SSIDs
Mobile SSID is a closed (secured) network with EAP-SIM Authentication
MSO broadband clients eligible for free public Wi-Fi
Passpoint (Hotspot 2.0) secure and automated selection
Mobile Offload
Cisco Public
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SP Wi-Fi Business Models and Value Creation
Retention & Loyalty
Save Money Make Money
Mobile Data Offload
Managed Services and Wholesale
Location Analytics
Location-Based Advertising
Cisco Public
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Managed Connectivity Services Could be a Natural First Step
Managed Private Networkfor secure business operations
Managed Public Networkfor guest Internet access
Venue and retail owners start using Wi-Fi as a way to improve business
Generate more customer traffic attracting more customers
Increase customer dwell time more time spent = more money
Creates an opportunity for service providers offering managed Wi-Fi
Managed Services
Example:
* Source: AT&T, Hilton McDonald’s and Sam’s Club’s websites
Partners with:
© 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 15
Key Vertical Managed Services Business Models
Transportation Centers• Connecting frequent and occasional travelers• Business models:
• 30 second video every 30-40 minutes of access• Subscription model for higher speeds starting at
$4.95/hour
Hospitality• Connecting hotel guests and visitors• Business models:
• Subscription models: free access for value-hotels and up to $5-30/day for luxury hotels
• Tiered pricing model and customized applications available for VIP customers, such as conference attendees
Stadiums• Connecting fans to social media, check scores and
watch highlights• Business Models:
• Paid subscription to users, as low as $7.95 24 hours
• Paid apps to access in-venue premium content• Ad-supported connectivity
• Opportunity for SPs: $3-5 mill per stadium deployment
Education• Connecting students and faculty to high-bandwidth
information (videos, streaming information)• Opportunity: 15% of school systems expected to
upgrade in 2014 for $300M in opportunity*
*Source: Cisco Systems
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Wholesale Wi-Fi to Other SPs
• Wholesale using installed fiber bundled with VLAN and Wi-Fi SSID
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SP Wi-Fi Business Models and Value Creation
Retention & Loyalty
Save Money Make Money
Mobile Data Offload
Managed Services and Wholesale
Location Analytics
Location-Based Advertising
Cisco Public
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Location AnalyticsLocation Analytics and Big Data
Location analytics provide insights into device’s journey inside a venue
Where people go? What are the common paths? Most visited places?
How long people stay in each place? Where is the first place they stop?
Analyze patterns of repeat vs. visitorsTrend analysis & history comparison
Quantify & justify rental pricing
Measure signage impact
Perform predictive analytics
Analyze changes impact
Analytics Benefits to Venues:
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Social & Wi-Fi – Joint Analytics and Single Sign-on
• Cisco and Facebook provide an integrated WiFi sign-on platform
• Allows customers to use their Facebook page as the splash page during WiFi login
• Delivers better user experience, encourages users to ‘check-in’ and ‘like’ Page
• Increase traffic on Facebook Page, share offers and announcements
• Facebook provides Page Insights for aggregate demographic data from check-ins
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Analytics Align with Carriers’‘Big Data’ Strategy• Internal optimization and performance benefits• External monetization
Frequency
Customers
Data Volume
Analytic Intensity
Value
Manual Reports Automatic Reports
One-Time Subscription Custom Single Feed Multi-Feed QueryableStatic report on network usage
Recurring report with analyzed data
Project-based analysis, output
API from database / network
API from database / network
Exposed database & network
Retail, SMB
Goodwill
Retail, SMBLarge Retail, Franchises
Larger B2B Larger B2B Multiple B2Bs
Location Analytics
Cisco Public
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Service Providers Launching Analytics Business Units
Dynamic Insights by Telefonica
Precision Marketing by Verizon
Pinsight by Sprint
GeoVision by SK Telecom
Location Analytics
Cisco Public
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SP Wi-Fi Business Models and Value Creation
Retention & Loyalty
Save Money Make Money
Mobile Data Offload
Managed Services and Wholesale
Location Analytics
Location-Based Advertising
Cisco Public
© 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 23
Mobile Advertising is Broken
$20$0 $40 $60 $80
Cable (highly targeted)
Hulu (popular content)
Cable (local)
Broadcast TV primetime
Online video ad (prem.)
Broadcast TV
Want that
Average CPM $ by Advertising Type
Source:
RCBG analysis of advertisement market
Mobile
Online Banner
Cable Network
Online video ad - UGC
Getting this
Mobile CPMs are below expectations, closer to desktop than television
Location-based Advertising
© 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 24
Cracking the Nut: Moving to Targeted Mobile Advertising
% of Wi-Fi venues enabled for advertising
Source: Cisco & RCBG SP Wi-Fi Monetization Research (2013)
20% 0%40%60%80%100%
Volume-Based Impressions
Venues
LBS
100%No
eCPM $2-$5
Targeting-Based Mobile Ads
Venues
LBS
10%Yes
eCPM $24
ARPU uplift by year 5
$5.82
Volume-Based Impressions Hyper-Targeted
Location-based Advertising
More mobile advertising revenues in 5 years
x2.5
Cisco Public
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Highly Targeted Ads Drive CPM Revenues
4 Year Cumulative Revenues from Retail
Source: Cisco and RCBG Wi-Fi Monetization Research (2013)
Mall in Dubai
eCPM
4Y Rev.
$350$430M
Public venues in Western Europe
eCPM
4Y Rev.
$85$125M
Malls in Singapore
eCPM
4Y Rev.
$40$52M
Malls in Canada
eCPM
4Y Rev.
$24$40M$24$2 $40 $85 $350
Location-based Advertising
Cisco Public
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Go-To-Market and Value Creation Sources
Service Provider
Business Models Services
Other Service
Providers
Business
Consumers
B2B
B2C
B2SP
Managed Service
Mobile Advertising Analytics
Service Bundling Subscription
Mobile Advertising
Wholesale Services Roaming
Cisco Public