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Why quality of experience is important with Wi-Fi? Business cases and drivers for service providers
White Paper / Aug 2015 / Wi-Fi, LTE, ANDSF

Public Wi-Fi is increasingly important for the business models of communications service providers and for consumers, but it will not fulfil its full potential unless it is seamlessly integrated with other networks, particularly cellular ones. ReThink Technology Research conducted a survey in March 2015 for InterDigital to investigate service providers' plans, over the next 3-4 years, to implement strategies based on seamless cellular/Wi-Fi access, and policy driven management. Discover the study results and more here.

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?Thought Leaders in Quadruple Play and Emerging Wireless Technologies Rethink Technology Research Ltd? 19 The Hundred? Romsey ? Hampshire ? SO51 8GD Telephone: +44 (0)1794 521411? info@rethinkresearch.biz w w w . r e t h i n k r e s e a r c h . b i z Rethink Technology Research White Paper SPONSORED BY Lead Author: Caroline Gabriel, Research Director, Rethink Technology Research May 2015 Why quality of experience is important with Wi-Fi? Business cases and drivers for service providers Seamless Access Management ? Rethink Technology Research Ltd 2015 2 Executive Summary: Public Wi-Fi is increasingly important for the business models of communications service providers (CSPs) and for consumers, but it will not fulfil its full potential unless it is seamlessly integrated with other networks, particularly cellular ones. A pool of wireless capacity, in which users can move seamlessly between different wireless connections and spectrum bands, is the goal of the heterogeneous network (HetNet). Seamless Wi-Fi/cellular access and authentication can expand the pool of capacity for mobile network operators (MNOs) at low cost; can enable wireline carriers and internet service providers to add wireless elements to their offerings and move towards a quad play; and can support new applications and business models which rely on access everywhere. Public Wi-Fi technologies have evolved in recent years to support carrier-grade functionality which can enable a far wider range of business cases, including those which require high quality of service (QoS). These developments are spurring a wave of investment in carrier-class hotspots, creating a huge base which will be used by a wide variety of service providers. With a high degree of hotspot sharing and roaming, as well as integration with cellular, it is important that users have a smooth customer experience as they move between networks. Seamless access and unified authentication are fundamental to carrier Wi-Fi and the HetNet, and there has been significant work done in the standards arena, notably in the Wi-Fi Alliance?s Hotspot 2.0/Passpoint program, and the 3GPP?s ANDSF specification. There are ongoing efforts in 3GPP Release 12 to align ANDSF with the HotSpot 2.0 capabilities. Interest in seamless access capabilities is very high among service providers ? in a survey conducted for InterDigital by Rethink Technology Research in March 2015 (see appendix for details), it emerged that two-thirds of operators see Wi-Fi/cellular convergence as important for their business models going forward. Interest is particularly high among MSOs, over 75% of which think seamless access is important as they look to harness Wi-Fi, plus cellular MVNO deals, to offer mobile services and a quad play. The main drivers to invest in seamless access are: ? Churn reduction (a top three driver for 59% of respondents), enabled by an improved customer experience in terms of capacity, availability and hand-off ? Higher ARPU, enabled by high capacity and QoS for premium services ? New revenue streams which relay on seamless access such as TV everywhere Seamless Access Management ? Rethink Technology Research Ltd 2015 3 However, adoption of standards is progressing more slowly than the operators? need to be able to harness converged networks. And the standards do not always address all the requirements that operators have to ensure a high quality seamless experience. One of the factors which is delaying some providers in rolling out policy-driven seamless access strategies is that they want to see a critical mass of devices supporting key standards (mainly Hotspot 2.0 and ANDSF). By the end of 2017, there will have been considerable growth in support for Passpoint, NGH and ANDSF, but even then, over 90% of providers expect specialized client software still to be playing an active role to add extra functionality to the standards. This opens up a significant opportunity for third party intelligent connectivity solutions, which can accelerate the move to ?always best connected? policies and add functionality over and above that of standards. Table of Contents The research study 4 Introduction and context 5 1. The importance of seamless Wi-Fi/cellular to providers 6 ? Wi-Fi or LTE? 7 ? Patterns of deployment 8 2. The importance of seamless access to the business case 10 3. Level of support for seamless Wi-Fi/cellular access 14 ? Standards 15 ? Challenges for standards 16 4. Penetration of standards in the device base 20 5. Device OEM support for Passpoint and ANDSF 22 Conclusion 25 Seamless Access Management ? Rethink Technology Research Ltd 2015 4 The Rethink study: Rethink Technology Research was commissioned by InterDigital to investigate service providers? plans, over the coming 3-4 years, to implement strategies based on seamless cellular/Wi-Fi access, and policy-driven connection management. Also included were surveys of plans by service providers and mobile device makers to support the Passpoint/Hotspot 2.0 and ANDSF standards. The researchers interviewed 58 tier one national or multinational service providers and 25 tier one and two mobile device manufacturers, with supporting conversations with the broader ecosystem (chip suppliers, software houses, access point providers). The core response base consisted of: Mobile network operators 22 Multi-service operators/telcos 18 Wi-Fi network operators 18 Mobile device manufacturers 25 Figure 1. Geographical distribution of survey respondents 12 17 6 6 17 3 4 18 0 5 10 15 20 NAM EU MEA CALA APAC N o o f re sp o n d e n ts Providers OEMs Seamless Access Management ? Rethink Technology Research Ltd 2015 5 Introduction and context: Public Wi-Fi is increasingly important for the business models of communications service providers (CSPs) and for consumers, but it will not fulfil its full potential unless it is seamless integrated with other networks, particularly cellular ones. A pool of wireless capacity, in which users can move seamlessly between different wireless connections and spectrum bands, is the goal of the heterogeneous network (HetNet). The HetNet holds out the hope of supporting: ? Truly seamless hand-off and access/authentication, which will improve customer experience and therefore loyalty and usage ? Improved cost base for mobile operators, as they can increase capacity and coverage by using license-exempt spectrum to supplement 3G/LTE ? New revenue streams driven by the move to carrier-class Wi-Fi. Although license-exempt spectrum will always have some disadvantages in terms of security and guaranteed quality of service (QoS), Carrier Wi-Fi addresses many of the performance issues of earlier technologies. That allows mobile operators to move beyond simple Wi-Fi offload to develop high quality services ? for instance for enterprises ? which rely on fully integrated Wi-Fi and cellular ? For MSOs and telcos, carrier-grade Wi-Fi allows them to create far broader wireless services to increase their customer satisfaction, and while they are currently bundling free hotspot access with their broadband and TV services, they will move towards a full quad play offering. That will still require integration with a cellular network (via an MVNO deal or other partnership) to provide full mobility and coverage, so seamless access will be important to their business cases too ? Carrier-class Wi-Fi combined with seamless cellular integration also benefits pure-play Wi-Fi providers by providing more opportunities to monetize their sites through deals with the MNOs and MSOs. These trends indicate how important seamless access and unified authentication will be to achieving the promises of carrier Wi-Fi and HetNet. For this reason, there has been considerable work by standards and industry bodies in this area, most notably the 3GPP standard, ANDSF, and Hotspot 2.0. The latter has evolved over recent years but can be summarized as a combination of the Wi-Fi Alliance?s Passpoint technology on the device side, with the Wireless Broadband Alliance?s Next Generation Hotspot (NGH) on the Wi-Fi access point. Seamless Access Management ? Rethink Technology Research Ltd 2015 6 ANDSF allows users to register seamlessly to the network that offers the best connectivity (based on a series of parameters such as quality, jitter, or latency) at any time. This enables policy-driven intelligent network selection and traffic steering by communicating with an ANDSF server located in the carrier?s core network. There are ongoing efforts in 3GPP Release 12 to align ANDSF with the HotSpot 2.0 capabilities. Despite all this work, standards always have their limitations, because of their slow pace and their need to address a broad range of platforms and interests (with the risk of a lowest common denominator outcome). The operators and consumers are eager to see seamless access implemented as soon as possible, but adoption of Hotspot 2.0 and the latest release of ANDSF integrated into devices has so far lagged behind that demand. That has seen third party intelligent connectivity solutions, such as InterDigital?s Smart Access Manager (SAM), emerging to fill the gap. These are client software solutions tied into operators? policy engines, and so can be deployed at a faster pace than a technology which needs to be integrated into the device and then undergo the certification process. They often support standards such as ANDSF as those emerge, but they can also add functionality over and above that provided by the base standards. 1. The importance of seamless Wi-Fi/cellular to providers Investment in carrier-class Wi-Fi - whether directly through hotspot build-out and upgrade, or indirectly through partnerships with hotspot owners ? will be an important aspect of carrier strategy in the coming few years, as the following graphs indicate. In order to derive the full benefit and ROI (return on investment) from that strategy, it is essential that devices can access both Wi-Fi and cellular networks seamlessly and interchangeably, so that customers can get the full advantages. The key patterns in carrier Wi-Fi in 2015-2019 are huge growth in coverage and capacity; accelerating increase in speed; and a rising emphasis on quality of service as well as data rates. The increase in build-out seen in 2015 (Figure 2) is largely driven by pent-up demand to support carrier-class standards such as Passpoint/NGH on the infrastructure side, as those technologies become mature and available in hotspots. Although Hotspot 2.0 deployments started in late 2013, they will only drive a wide-scale round of network upgrade from 2015. Seamless Access Management ? Rethink Technology Research Ltd 2015 7 Another peak will be seen in 2017, largely because truly integrated architectures such as MNO HetNets will be more achievable by then, and because of an expected major uptick in India and other growth markets in Asia. Figure 2. New and upgraded public Wi-Fi access points deployed by region (excludes homespots) Source Rethink Research study December 2014 a) Wi-Fi or LTE? There has been speculation that the role of Wi-Fi will decrease as MNOs build out LTE, because this will increase capacity ? for their own services and those of MVNOs ? and so reduce the need for offload. However, Rethink believes that this effect will be only temporary and will only affect a subset of MNOs even then, and that it will be offset by the rise in Wi-Fi deployments by MSOs, vertical market providers, wholesale hotspot providers and others. There are two main reasons for this, and these help account for the growth patterns seen in Figures 2 and 3. ? The MNOs will continue to need additional Wi-Fi capacity because of the cost and limited availability of licensed spectrum. As data consumption continues to rise, they will aim to reduce the cost of supporting that by expanding both LTE and Wi-Fi capacity; often preserving the former for premium applications; and increasingly supporting dynamic and intelligent hand-off between the two networks as they move towards a full HetNet. 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 2013 2014 2015 2016 2017 2018 2019 ,0 0 0 u n it s Africa APAC CALA CIS Europe Middle East/Turkey North America South Asia Seamless Access Management ? Rethink Technology Research Ltd 2015 8 ? The non-mobile service providers, especially the MSOs, want to reduce their expenditure on MVNO agreements, but they need to provide wireless services, from on-the-move content and broadband access for subscribers, to full quad play. A few, like BT, will buy their own mobile networks, but many more, like several US cable operators, will reduce the amount they use MVNO-based mobile links and push as much traffic as possible over Wi-Fi networks which they can control. Build-out of carrier-grade hotspots, and upgrades to Hotspot 2.0, will be divided among MNOs, cable and broadband providers, and pure-play Wi-Fi operators and aggregators such as Boingo. b) Patterns of deployment The patterns of deployment will vary in different regions ? for instance, MSOs are a driving force in the US, and MNOs in China. Figure 3 indicates the carrier-class hotspots which will be deployed by MNOs annually to 2019. Figure 3. Deployments and upgrades of carrier-class Wi-Fi hotspots (excluding multimode small cells.) Rethink Research/Maravedis/WBA study December 2014 These build-outs and upgrades will result in a base of almost 12 million hotspots accessible to MNOs and MSOs and their customers by the end of 2018. It is worth noting that the total will be greatly increased by broadband providers? deployment of ?homespots? (home Wi-Fi access points with a second SSID left open for public access), and these will also figure in seamless access strategies from 2015 onwards. Figure 4 shows how ownership will break down between the different operator types, with a significant shift towards direct deployment by MSOs and, to a lesser extent, MNOs, though both categories will still also rely heavily on wholesale and roaming 0 200 400 600 800 1,000 1,200 1,400 1,600 2013 2014 2015 2016 2017 2018 2019 Africa APAC CALA CIS Europe Middle East/Turkey North America South Asia Seamless Access Management ? Rethink Technology Research Ltd 2015 9 deals with one another and with pure-play operators, to extend coverage outside their core territories. Figure 4. Deployment and upgrade of public Wi-Fi hotspots by operator type Rethink/Maravedis/WBA study December 2014 In all cases, there will be considerable sharing of hotspots between different types of provider, whether by roaming, network sharing, capacity leasing, wholesale multi- operator systems or ? in future ? dynamic access management by a third party. Carrier-grade Wi-Fi will evolve into a huge base of hotspots which are open to customers of many different service providers. That will make seamless access and authentication ? and other functions like security and policy enforcement ? critical in order to: ? Deliver a smooth customer experience, shielding the customer from the complexities of hotspot ownership and sharing, and of cellular integration ? Allow the service provider to track their customers, regardless of the ownership of the hotspot, enforce policies and monetize them ? Allow operators of all kinds to build services around ?access everywhere?, whether Wi-Fi or cellular, and whether based on their own infrastructure or that of partners. However, the customer experience benefits ? and therefore the commercial benefits to the operator ? will not be delivered until a critical mass of devices, particularly smartphones (the most commonly used cellular/Wi-Fi product), can tap into this new infrastructure. 0 20 40 60 80 100 120 2012 2013 2014 2015 2016 2017 2018 % o f ac ce ss p o in ts o w n e d WiSP/wholesaler MNO MSO Other Seamless Access Management ? Rethink Technology Research Ltd 2015 10 2. The importance to the business case of seamless Wi-Fi/cellular: The targeted survey asked service provider respondents about their plans to deploy seamless Wi-Fi/cellular access, whether they owned both network elements or just one (or neither in an MVNO case). As Figure 5 shows, there is very high interest among MSOs, which are trying to secure the primary relationship with a fixed/mobile customer and own the wireless user experience. That is likely to involve an MVNO deal on the cellular side but the MSO may invest in its own Wi-Fi hotspots and homespots. In North America, all the MNOS and MSOs said seamless access was important to their business case, while on a global basis, two-thirds of providers, across all categories, planned to deploy cellular/Wi-Fi. Wi-Fi pure-play network operators are less likely to own the primary relationship and manage the customer?s access though some major players like Google and Boingo are moving this way. Figure 5. Providers which see seamless Wi-Fi/cellular as central to their business plans Source: Rethink survey, 58 service providers Regionally, the greatest activity is in the developed economies where Wi-Fi/cellular convergence and HetNets are being deployed to differentiate in very competitive markets and to address capacity crunches and rising expectations of QoE. As Figure 6 shows, the deployment of full support for seamless access is staggered across the next three years and there are still significant numbers of service providers with no firm plans (one-third globally). In that group, most of the ?undecided? MNOs and MSOs are either in developing markets where the need for new levels of network 0 20 40 60 80 100 120 NAM EU APAC Other Global % o f re sp o n d e n ts MNO MSO/telco WiFi Total Seamless Access Management ? Rethink Technology Research Ltd 2015 11 efficiency and customer experience are not yet urgent; or they are waiting to see how the standards develop, in the hope of cheaper or simpler deployments. Some of the Wi-Fi pure-play providers have no current plans as they primarily support simple Wi- Fi-only access, or provide hotspot capacity to larger providers which control the customer experience. Figure 6. Timescales to support seamless cellular/Wi-Fi access and policy-driven network selection Source: Rethink survey, 58 operators Of those companies which do plan to deploy seamless access and policy-driven network selection, North America?s timescales are the most weighted towards 2015, while the more diverse European and APAC regions see a range of timeframes. As with the undecided operators, the main reasons to defer support until 2016 or 2017 are the lack of an urgent business requirement right now; or a decision to wait until standards have been more broadly supported, since that may affect the economics or the simplicity of the process. For those which do plan to support seamless access, there is a wide range of motivations, whichever elements (if any) of the infrastructure they own. Seamless access greatly enhances the broader business case for carrier Wi-Fi by allowing it to function as an integrated whole with the cellular MNO/MVNO network. However, in a world where they do not control all the access points and devices which tap into their services, providers are heavily reliant on their network partners and their device suppliers supporting seamless access technologies. In the targeted survey, the respondents were asked to name all the drivers to support seamless Wi-Fi/cellular access. From all the responses, the top eight were selected 0 10 20 30 40 50 60 NAM EU APAC Other CALA Global % o f re sp o n d e n ts End 2015 End 2016 End 2017 Don't know/no plans Seamless Access Management ? Rethink Technology Research Ltd 2015 12 and the respondents were then asked to select the top three of most significance to their business case, in order. The results are seen in Figure 7. Figure 7. Most important drivers to support seamless Wi-Fi/cellular access, and those placed in the top three in terms of significance to the business case Source: Rethink survey of 58 service providers This indicates that the most important drivers are to reduce churn, by offering customers access everywhere, improved quality of service and more flexible pricing ? and without cumbersome sign-in methods. In total, 24% of respondents said reducing churn was the single most important driver, while 59% placed it in the top three. It is also clear that seamless access drivers new revenues ? it is not just a defensive move to retain customers or reduce costs. The driver which was second most commonly cited as the most important was to increase ARPU by improving QoS (the most common to appear in the top three, where it was placed by 64%). The third was to support new revenue streams from services that required seamless access (eg streaming video, TV everywhere), which was in the top three for almost half (48%). The importance of a seamless and high quality customer experience is quantifiable because it reduces churn, which in turn improves the economics of the provider. A separate Rethink study in 2014 found that mobile operators in developed economies, on average, believe that seamless QoS across multiple networks can shave 2.2 percentage points off annual churn (given that many large mobile operators? annual churn is 17% to 20%, this is significant). 24 17 16 14 12 7 7 3 59 64 48 31 21 33 31 14 0 10 20 30 40 50 60 70 Churn reduction Quality of service to drive ARPU New revenue streams WiFi-first More efficient capacity usage Offload revenues Support VoWiFi Security % o f re sp o n d e n ts Primary Top 3 Seamless Access Management ? Rethink Technology Research Ltd 2015 13 Decreasing churn by two percentage points, for an operator with monthly ARPU of about $40, could result in an additional $40m in revenue and $22m in profit over three years, according to some calculations. 12 Figure 8 indicates what operators regard as being critical reasons for churn (conversely, if they can address these issues, they will not only reduce churn but attract new customers). In the Rethink survey, the 58 operators were asked to define the main reasons for churn. Of the six factors which were named by a significant proportion, they were then asked to rate the top three by importance, in order. Figure 8. Top three reasons for customer churn Source: Rethink study, 58 operators The results show that the two dominant reasons for customers to defect are the cost of their tariffs (or better offers elsewhere), and poor quality of experience on the network. In both cases, 19% of operators see them as the single most important factors behind churn, while 60% place cost in their top three, and 55% do the same for QoE. Both of these can be partly addressed using seamless Wi-Fi, which can reduce the cost to the provider and consumer, by routing the data over the most cost-effective link, and can deliver a more ubiquitous experience, with the system selecting the fastest, most reliable or cheapest connection available. Including free Wi-Fi hotspot access in a bundle has been an important tool for churn reduction/new customer attraction, especially for wireline providers, in recent years. 1 WDS, ?Understanding Wireless Churn?, 2013 19 19 16 16 14 12 5 60 55 52 45 34 40 14 0 10 20 30 40 50 60 70 Cost Poor network QoE Device choice Coverage gaps Lack of free WiFi Lack of particular service Other % o f re sp o n d e n ts Primary Top 3 Seamless Access Management ? Rethink Technology Research Ltd 2015 14 While the lack of it is still a significant reason to churn, this is less important than the overall quality of experience a customer has. More broadly, seamless access can help support carriers? most important challenge, to improve customer experience on an ongoing basis, even though users? expectations of that experience are also constantly rising. A seamless pool of capacity, across Wi- Fi and cellular, can deliver fundamental aspects of QoE, from high data rates to low latency to lack of call drops. Passing a call between two connections helps avoid breaks in video or voice traffic and move the user to the best available connection. 3. Level of support for seamless Wi-Fi/cellular Given that quality of network experience is an important element in customer satisfaction and retention, the operators were asked to rate certain tools for improving QoE in a Wi-Fi/cellular environment. As Figure 9 shows, there was a wide range of tools which were seen as important. These fell into two broad categories: ? Selection of the most appropriate connection to deliver the best QoE at the best cost (e.g. policy-based or fully dynamic network selection; support for different layers of QoS with different levels of cost and service level agreement) ? Optimization of traffic when passing across the network (e.g. RAN optimization, specific video optimization tools, management of applications traffic, congestion control). Both are seen as critical. Among tools for assigning or controlling traffic across multiple connection types, dynamic network selection emerged as the most important, and the single most important tool for one-fifth of the respondents. It was seen as a more powerful tool for QoE than more static network selection methods based on pre-assumed criteria (e.g. always default to Wi-Fi if within a certain range), rather than the current conditions of the network. Seamless Access Management ? Rethink Technology Research Ltd 2015 15 Figure 9. Key tools to improve network QoE in cellular/Wi-Fi and therefore improve customer satisfaction/retention Source: Rethink survey, 58 operator respondents a) Standards: Of course, standards like Passpoint/Hotspot 2.0 and ANDSF are designed to address some of the issues raised above, and to improve overall network QoE by ensuring seamless access, unified authentication and, increasingly, automatic selection of the best available connection, according to criteria set by the operator. However, both are in the early stages of deployment and have yet to achieve all the capabilities which operators may gain from specialized client software or even proprietary approaches. Passpoint is the certification program for the Wi-Fi Alliance?s Hotspot 2.0 specifications and was introduced in 2012. Several hundred devices have been certified, though these tend to be concentrated in a small group of vendors (see later section). A few major hotspot operators have started to roll out or upgrade their infrastructure to support the system, especially in North America. There will be the usual ?chicken and egg? situation in which customers will not use, or see the benefits of, Passpoint capabilities in their devices until they can readily find a supporting hotspot ? but operators will be deterred from upgrading equipment until there is a critical mass of devices and users. The WBA?s Next Generation Hotspot is a related effort on the Wi-Fi infrastructure side which handles authentication and connections to carrier systems for roaming and 21 19 14 14 12 9 9 3 59 34 48 48 34 28 21 10 0 10 20 30 40 50 60 70 % o f re sp o n d e n ts Primary Top 3 Seamless Access Management ? Rethink Technology Research Ltd 2015 16 other back office activities. It is generally being implemented in infrastructure alongside Hotspot 2.0. Meanwhile, ANDSF has been part of the 3GPP standards since Release 8 but was initially a static technology and has really come into its own in terms of seamless access in Release 11. More capabilities will be added in Release 12, but that will not be widely supported in LTE devices and infrastructure until late 2015. The later releases of ANDSF have seen limited native support on devices, though there are third party client software solutions (like InterDigital?s solution) which comply with the specifications and add further functionality. b) The challenges for standards There are two key questions about Hotspot 2.0 and ANDSF: ? When will the large majority of the installed base of devices support them natively? ? Will they ever be sufficient, by themselves, to address the key QoE issues outlined above, or will they always need to be supplemented with additional capabilities? As seen above, one of the factors which is delaying some providers in rolling out seamless access driven strategies driven by policy is that they want to see a critical mass of devices supporting key standards (mainly Hotspot 2.0 and ANDSF). That accounts for some of the delays in deployment. However, other operators are moving ahead of broad standards-based availability by deploying available solutions, and some believe these will always be necessary to supplement the core functionality of the standards. Others are delaying the implementation of network-driven, policy-defined access management but are still seeing customers moving between connections increasingly smoothly using their own device-side applications. However, those ?do it yourself? approaches are difficult for the operator to monetize, even if they may get some of the benefit of a more satisfied user. Figure 10 shows that, up to the end of 2015, device applications remain the most common approach to seamless access, with policy driven clients in second place. By the end of 2017, there will have been considerable growth in support for Passpoint, NGH and ANDSF, with 86% of this response base expecting them to be an active part of their seamless access strategies (it is worth noting that these standards will, by then, be included by default in most new devices and infrastructure, but may not be actively harnessed by the operator in its seamless access services). However, even at that stage, nearly all the providers expect also to be seeing device applications and the specialized client software still playing an active role in seamless Seamless Access Management ? Rethink Technology Research Ltd 2015 17 access services ? the former to support customer choice; the latter to add extra functionality to the standards. So 36 out of the response base of 38 will be using policy-driven clients on top of the facilities supported by Passpoint and ANDSF on their own. Figure 10. Approaches to seamless access in active use (multiple responses allowed, since many providers have several systems in place). Source: Rethink survey, 38 respondents (subset of the total response base ie those with active deployments or firm plans). The whole base of 58 respondents was then asked to comment in more detail on the readiness of the available technologies to support their seamless access and HetNet strategies, in three important areas ? device support, network support and user acceptance of the associated experience. Figure 11 indicates the operators? view of the readiness of each technology by device availability and support. In 2015, less than 10% believe Passpoint and ANDSF support to be sufficiently broad and functional to support their models (only 2% in the latter case), while two-thirds are positive about client software solutions and 78% believe device applications are broadly available and useful, if not carrier-controlled and therefore of limited impact on the business case. By 2018, 80% or more think that all four key approaches will be well supported by a broad device base. Of course, most devices at this stage will include Passpoint and ANDSF, but the carriers are judging whether these will be deployed in a suitable manner to be harnessed for their business case. For example, older versions of the standards may be present in the devices, but not delivering the functionality required by 2018, just as legacy ANDSF versions in 2015 2 10 9 24 14 5 15 14 35 3133 33 32 37 36 0 5 10 15 20 25 30 35 40 ANDSF Passpoint NGH Device app Policy driven client N o o f re sp o n d e n ts 2015 2016 2017 Seamless Access Management ? Rethink Technology Research Ltd 2015 18 are not considered adequate for dynamic HetNet environments, at least without additional functionality provided by third party software. Figure 11. Service provider views of the market readiness of different seamless access technologies, in terms of device support Source: Rethink survey, 58 respondents Similar patterns are seen in terms of infrastructure support (Figure 12). ANDSF will be upgraded on the network side as Release 12 is deployed, and so gets a higher rating than it does in devices ? and higher, in 2015, than Passpoint and NGH, since Wi-Fi hotspot upgrade cycles are less predictable than those of cellular, and not all equipment will support the new standards by default at this early stage. In 2015, the solution which is best supported by carrier networks is the policy-driven client, tied into PCRF engines and other infrastructure. By 2018, the standards are nearly ubiquitous except in very legacy sites, but the carriers still see client solutions as being well supported and a strong presence in the market. 2 10 52 80 8 22 67 86 78 80 80 82 67 72 75 80 0 10 20 30 40 50 60 70 80 90 100 2015 2016 2017 2018 % o f o p e ra to rs ANDSF Passpoint Device app Policy driven client Seamless Access Management ? Rethink Technology Research Ltd 2015 19 Figure 12. Service provider views of the market readiness of different seamless access technologies, in terms of network support Source: Rethink survey, 58 respondents As for user acceptance, the ease of use for the customer, and the improvements to the resulting experience, are already clearly established both for device apps and policy- driven clients, with over three-quarters of respondents saying these are already capable of supporting the business cases. Figure 13. Service provider views of the market readiness of different seamless access technologies, in terms of user acceptance Source: Rethink survey, 58 respondents 16 36 72 96 5 28 72 92 3 24 68 86 26 48 76 84 0 20 40 60 80 100 120 2015 2016 2017 2018 % o f re sp o n d e n ts ANDSF Passpoint NGH Policy driven client 10 16 10 84 76 24 28 24 86 80 67 67 62 90 9090 92 88 96 96 0 20 40 60 80 100 120 ANDSF Passpoint NGH Device app Policy driven client % o f re sp o n d e n ts 2015 2016 2017 2018 Seamless Access Management ? Rethink Technology Research Ltd 2015 20 The standards, supported natively rather than as part of optimized apps, will steadily gain user acceptance and awareness, but that will take a couple of more years, until they are common on a large number of devices, and implemented in a way that is appealing to consumers. 4. Penetration of standards in the device base The previous figures indicate the importance, to operator and customer acceptance, of broad device support, in order to drive seamless access strategies based on native Passpoint/NGH and ANDSF rather than specialized software solutions (which may support those standards but add other functionality). This section looks at the likely timescales for mass penetration of the device (mainly smartphone) base by these standards, from an operator and device manufacturer perspective. Figure 13. Service provider estimates of the percentage of their smartphone base with native Passpoint support, by region and year Source: Rethink survey 58 respondents, average of responses Figure 13 shows the service providers? estimates of how native Passpoint support (certified) will develop within their smartphone installed base. Factors in the growth ? from 18% in 2015 to 82% in 2018, based on an average of operators? estimates ? include: ? The upgrade cycle, which is quicker in some regions than others and so affects the installed base of the latest handset models 20 16 12 10 16 18 36 28 24 20 32 32 64 56 44 42 68 66 84 80 72 76 92 82 0 50 100 150 200 250 NAM EU MEA CALA APAC Overall A ve ra ge o f o p e ra to r e st im at e s o n % p e n e tr at io n 2015 2016 2017 2018 Seamless Access Management ? Rethink Technology Research Ltd 2015 21 ? The pressure from consumers to support the standard (which most see as being limited until awareness is far higher, as also indicated in Figure 13) ? The pressure from operators to support the standard, which is gathering steam for the reasons outlined in the preceding sections APAC providers, especially in countries like South Korea and China, where significant OEMs are based and ties to handset suppliers are tight, are more optimistic about the rate of change in their installed base than those in Europe or emerging markets. In the same question about ANDSF, the optimism is somewhat lower ? as pointed out above, although this feature will be a default for smartphones in future because it is part of LTE standards, operators are assessing penetration by the latest releases, which will support dynamic access, not by legacy versions, and that is reflected in Figure 14. Figure 14. Service provider estimates of the percentage of their smartphone base with native ANDSF support, by region and year Source: Rethink survey 58 respondents, average of responses In the case of both Passpoint and ANDSF, 2017 is widely seen as the year when these standards penetrate a critical mass of the installed base of devices (over 50%), in a manner that is useful to service providers (full support, not legacy or pre-standard versions). While Figure 13 reflects operators? assessments of the speed at which Passpoint will achieve significant penetration of their device installed bases, Figure 15 indicates how quickly they expect the majority of their major handset suppliers to support the technology in new models. In North America this will reach 100% by 2018, in a market where Wi-Fi integration will be critical and operators have the power to dictate a checklist of elements for their devices. Overall, on average, providers expect 6 4 2 4 6 5 24 20 16 12 18 20 60 56 48 52 56 56 80 76 72 76 90 80 0 20 40 60 80 100 120 140 160 180 NAM EU MEA CALA APAC Overall A ve ra ge o f o p e ra to r e st im at e s o f % p e n e tr at io n 2015 2016 2017 2018 Seamless Access Management ? Rethink Technology Research Ltd 2015 22 92% of their device providers to support Passpoint by 2018, up from 40% by the end of 2015. Figure 15. Service provider estimates of the percentage of their handset suppliers which will support certified Passpoint in the years to 2018. Source: Rethink survey 58 respondents, average of responses 5. Device OEM support for Passpoint and ANDSF The first Passpoint handsets appeared in mid-2013 and there has been a steady stream of certifications since then. By contrast, support for ANDSF remains low in early 2015 though developments such as Wi-Fi Calling and Wi-Fi-first services ? which are critical to some carriers? business plans, and are heavily reliant on ANDSF ? should start to jumpstart adoption. Passpoint received a strong boost when it was supported in Apple?s iOS 7, though the iPhones have yet to be officially certified. Overall, as of January 2015, there were 595 individual smartphones which were certified under the Passpoint scheme by the WFA, plus 77 tablets. However, that is a small number of models compared to the overall total of Wi-Fi-certified devices (4,755 handsets and 1,043 tablets). Among the 595 Passpoint smartphones, 314 are from Samsung and 215 from LG, indicating that active support for this standard is still the preserve of a few vendors. Some significant OEMs, including many of the Chinese majors (eg Huawei, Lenovo/Motorola, Xiaomi), have no Passpoint models certified as yet, while others have just a few models (e.g. Fujitsu has one). HTC and Sony are implementing Passpoint in the majority of new smartphones and have 23 and 14, respectively, certified so far. 50 52 46 38 36 40 64 68 60 48 44 52 84 78 74 64 68 68 100 96 86 84 86 92 0 50 100 150 200 250 300 350 NAM EU MEA CALA APAC Total A ve ra ge o f o p e ra to r re sp o n se s 2015 2016 2017 2018 Seamless Access Management ? Rethink Technology Research Ltd 2015 23 There are other barriers to a fully standardized user experience. For instance, Android phone makers have not fully agree on a common method to deliver and store the Passpoint configuration profile, so actual user experience may vary depending on the combination of access point and device. On the smartphone manufacturer side, a survey of 25 tier one and two OEMs conducted by Rethink reveals a similar pattern to that outlined by operators ? relative caution in 2015-16, with support becoming widespread in new models from 2017. Figure 16. Device manufacturers expecting to support native Passpoint, and latest release of ANDSF, in years to 2018 Source, Rethink survey, 25 OEMs Figure 16 shows that there is still some uncertainty about timescales to support the standards (8% are unsure about Passpoint timelines, and 16% about ANDSF.) But by 2018, 92% of manufacturers will support Passpoint and 84% ANDSF in the majority of models. Those which do not are mainly those heavily focused on the low end of the market, or emerging economies, where seamless access may not be of mainstream importance until the next decade. Figures 17 and 18 indicate the penetration which OEMs expect to see across their new devices, for the two standards. Those vendors with plans to deploy in each year were asked to estimate the percentage of their range which would be equipped withthe standards. For Passpoint, in 2015, 55% of OEMs think they will deploy the standard in less than 10% of new models. By 2018, 48% expect to deploy Passpoint in between 50% and 75% of new models, and 30% expect the specifications to be native in almost all their products. 44 72 84 92 8 16 36 76 84 16 0 10 20 30 40 50 60 70 80 90 100 2015 2016 2017 2018 Don't know % o f d e vi ce O EM s Passpoint (certified) ANDSF Seamless Access Management ? Rethink Technology Research Ltd 2015 24 Figure 17. Percentage of OEMs? new devices which will feature native Passpoint support (certified). Those OEMs with plans to support Passpoint per year were asked to estimate what % of their models would include the capability. Source: Rethink survey 25 OEMs. Figure 18 shows the same results for ANDSF, which is seeing even slower initial adoption. Even among those planning to support it in 2015, 50% will deploy it in less than 10% of devices, but by 2018, over 90% expect to deploy it in over half their range. Figure 18. Percentage of OEMs? new devices which will feature native ANDSF support (certified). Those OEMs with plans to support ANDSF per year were asked to estimate what % of their models would include the capability. Source: Rethink survey 25 OEMs. 0 10 20 30 40 50 60 <10% 10-33% 33%-50% 50-75% Most % o f ve n d o rs w it h p la n s 2015 2016 2017 2018 0 10 20 30 40 50 60 <10% 10-33% 33%-50% 50-75% Most % o f ve n d o rs w it h p la n s 2015 2016 2017 2018 Seamless Access Management ? Rethink Technology Research Ltd 2015 25 Conclusion: Seamless access across Wi-Fi and cellular networks is becoming a critical element of service provider strategies to improve customer experience, reduce churn, support new revenue streams and reduce costs. Success will rely on a smooth user experience with seamless hand-off and authentication, which can be tied by the operator into policies and tariffs. That is the promise of various standards efforts, most notably Passpoint/NGH/Hotspot 2.0 on the Wi-Fi side and ANDSF from the 3GPP. These should address many of the capabilities operators need in order to fully deploy their seamless access strategies, especially when used together. However, they will see relatively slow adoption in the device base until a major uptick from 2017, and even then they may lack some of the capabilities which providers and consumers receive from specialized software solutions such as InterDigital?s Smart Access Manager (SAM) solution. There is an opportunity for these solutions to fill the gap until the standards have critical mass in smartphones, since they are more mature and functional than the standards at this stage, and offer better carrier control than device-side apps managed by the consumer. They will retain an important role even after 2017 because they will evolve to support greater functionality, especially in terms of fully dynamic capabilities, than the standards provide when used in their native form. Seamless Access Management ? Rethink Technology Research Ltd 2015 26 About Rethink Technology Research: Rethink Technology Research is a specialized research and consulting firm with 12 years? experience in surveying wireless, broadband, over-the-top and quad play operators. This has resulted in a broad research base of over 140 service providers (MNOs, telcos, cable and satellite operators, over-the-top providers) worldwide. These organizations are surveyed on a regular basis about their network infrastructure and business plans, and have a relationship of trust with Rethink. Together with that unique research base among CSPs, Rethink has deep relationships with the telecoms ecosystem (tier one device OEMs, vendors, technology developers, integrators, regulators, etc.), and is perceived as a thought leader in many areas of the telecoms and media sectors. Key areas of expertise and research experience include HetNet migration, small cells and carrier Wi-Fi; transformation strategies for the access networks and the BSS/OSS; convergence of IT and network skills and platforms; mobile device and chipset roadmaps; spectrum strategy. The mobile practice is headed by Caroline Gabriel and the wireline/media practice by Peter White. Both are well recognized influencers in these areas. About InterDigital InterDigital, Inc. designs and develops advanced technologies that enable and enhance mobile communications and capabilities. Since our founding in 1972, our engineers have designed and developed a wide range of innovations that are used in digital cellular and wireless products and networks, including 2G, 3G, 4G and IEEE 802-related products and networks. For over four decades, InterDigital has been a pioneer in mobile technology and a key contributor to global wireless standards. Our team of more than 170 engineers ? approximately 80 percent of whom hold advanced degrees, ? has unparalleled expertise in major mobile connectivity and content delivery technologies. Since 2000, InterDigital has spent close to $1 billion on technology research and development. The company?s activities are organized around the concept of the Living Network: a future where intelligent networks self-optimize to deliver service that is tailored to the content, context and connectivity of the user, device or need. InterDigital?s Smart Access Manager (SAM) product is an intelligent connectivity and traffic management application that enables smartphones, tablets, and other mobile devices to make intelligent network selection and traffic management decisions. Seamless Access Management ? Rethink Technology Research Ltd 2015 27 SAM is designed to improve users? QoE, and application traffic management across cellular and Wi-Fi. Because most operators have limited or no visibility into the real- time traffic load and resource availability of the Wi-Fi infrastructure, SAM works from the mobile device end to select the network that provides the best connectivity seamlessly. It bases the selection on multiple factors, such as traffic load of the network, link quality and capacity, battery level, location, and time of day. Network selection can be tied to a policy server (based on ANDSF) to implement the operator?s policy and enable revenue-generating services. Additional benefits include cost savings and new revenue generating opportunities for operators and service providers, which are available through Wi-Fi offload and on-load, venue services, and roaming capabilities. Contact Rethink Contact InterDigital Caroline Gabriel Renuka Racha Research Director Senior Director, Business Development caroline@rethinkresearch.biz Renuka.Racha@interdigital.com Tel: +44 (0)207 450 1230 Tel: +1 631.622.4277