Companies such as Wigo in Peru are developing quite an interesting business model entirely based on giving free access to wifi in public places. Telcos cannot ignore for long both the growing call for Free Wifi and the fact that the competition is likely to be redefined according to this need.
Growing demand for Free Wifi
A few estimations help understand this phenomenon. First, the mobile data tsunami has completely changed people’s expectations regarding their data consumption. A smartphone generates 49 times the traffic of a basic-feature phone. A tablet, 127 times.
People wants faster connections, and consume contents requiring heavy data processing capacity. The share of smart device connection is expected to increase from 21% in 2013 to 54% in 2018. And 4G is said to surpass 3G the very same year, representing 51% of all wireless data communications, against 46% for the 3G.
The number of broadband connections will get stronger. Considering that, the demand for Wifi won’t get any weaker, on the contrary.
The demand for broadband connections, and Wifi, gets bigger
Telcos must embrace Free Wifi if they want to stay in the game
Telco operators need to be relevant in a all-wifi world. They have to think out of the box, both considering carrier Wifi, venue Wifi and roaming, even if it implies looking for new kind of partnerships.
Until now, Telco operators have proven to have a conservative approach of their commercial strategy as they mainly focus on their core business, neglecting the (only) few millions they could generate by looking for innovative sources of income, and have been able to operate this way for years.
But nowadays there’s a high risk to lose customers, whose requirements are each time stronger regarding the quality of the services they buy, and who want a provider that follows them everywhere they go without having to subscribe to multiple complementary offers.
Aptilo, a carrier Wifi solution provider, is convinced there’s a Free Wifi revolution going on. And Telcos should consider it.
To Paul Milkessen, there’s an increasing demand for simplified solutions, covering all the connections a user make in a day.
Given that, there are acording to him two possible scenarios for 2018. If an operator invest in Free Wifi to install it in all venues and public places, for all kind of devices, it is likely to capture 60% of the traffic and the churn should be kept around 7%. But if it doesn’t do the necessary investments, the wifi will be everywhere but the operator will be out of the game, loosing most of its clients.
As a conclusion, Free Wifi is not about a few millions USD profit that an operator could make by being the first to this market, nor it is to acquire venue site space. It is about keeping customers by considering their growing and homogeneous demand for Free Wifi.
Monetizing Free Wifi: The Wigo Case Study
Wigo is a peruvian startup whose model is entirely based on delivering Free Wifi in Lima’s public venues. Although the customer will not spend a penny, they’ve successfully managed to monetize their activity!
Wigo monetizes Free Wifi through facebook logs and regular adds
The user experience is excessively simple: after opening a navigator, people only have to log on Facebook and see a few adds, which will be displayed every 15 to 30 minutes. And this is actually a completely relevant Business Model. Wigo monetization process follows the following chain:
- Location: first, the startup is only only looking for key locations, such as shopping malls and touristic places. The reason is they need to be sure that they are answering an actual need of the mobile user population.
- Customer Acquisition: second, Wigo collects data through the Facebook logs. Which give them valuable information on the users such as their age, gender and interests.
- Customer Insights: this recollection allows the company to produce insights. They will be able to determine the behavior of the costumers within commercial or touristic venues.
- Monetization: last, knowing the Who-How-When-Where-Why is what the company can sell. Monetization is done through targeting customers with local adds, according to their moves and tastes.
By Louis Leclerc, Fixer for Innovation is Everywhere in Latin America, is attending the continent’s top tech event, FutureCom, in Sao Paulo, Brazil. More posts from this part of the world to come soon!