Wi-Fi Takes Center Stage

With Wi-Fi, wireless carriers have an opportunity to capitalize on their existing wireless experience, while wireline carriers, cable service operators and ISPs have an opportunity to tap into new revenue streams for WLAN access. Success, however, will depend on resolving complex roaming and multi-partner management and settlement.

Wi-Fi could be the technology that catapults telecom to its next metamorphosis, because it gives carriers the potential to open up entirely new revenue streams from non-traditional services and products.

If carriers think out of the box when partnering with high-traffic Wi-Fi venues and their products, it is foreseeable that Wi-Fi could be considered as much a necessity for day-to-day living as cell phones are today.

For business travelers who spend more time in airports than in their homes or offices, Wi-Fi is becoming a key productivity enhancer, as it enables users to access corporate LANs and download large files via high-speed connections that are 50 times faster than dial-up. In some cities, consumers are becoming addicted to the ability to access email from virtually anywhere. With Wi-Fi, the sky’s the limit—literally—as even Boeing and Lufthansa are offering Wi-Fi on their jets.

“What the industry should avoid is having Wi-Fi to move into a price competition model,” says Ted Hunting director of marketing at Narus, referring to the current trend of all-you-can-eat flat-rate models. “It would become a lose-lose situation, where carriers wouldn’t make a profit and consumers would not experience the most robust applications possible,” he adds, referring to the fact that carriers currently measure and charge for volumes of data, while others charge simply according to length of time users are on the wireless network. None have really gone to packet analysis for identifiers that recognize the service and the content as well as the user because of issues around roaming, settlement and AAA. For the time being, the business models allow for flat-rate charging based on time or volume.

If planned correctly, carriers, LECs and cable service operators with backhaul capabilities will figure out how to leverage existing billing and OSSs for WLAN access, which can become a complement to their 3G network buildouts by offering a standardized method for access to all networks in situations where cellular cannot deliver consistent quality and speed.

Different Business Models

For the time being, most of the North American carriers are testing the waters through partnerships with established aggregators or going it alone. For example, Verizon Wireless is using a different business model by entering the market via a partnership with Wi-Fi aggregator Wayport. Verizon Wireless is offering voice and data customers access through 700 hot spots for a $34.99 monthly charge or $6.99 for a day pass. The charges go directly to subscribers’ phone bills. The company also has launched broadband access via wide area wireless data networks in Washington D.C. and San Diego, offering customers in those cities peak speeds of 2.4 Mbps.

Sprint PCS has also entered the Wi-Fi space via a partnership with Wayport. Wayport also has roaming partnerships with AT&T Wireless and SBC. Nomadix and GRIC are also part of the partnership with Sprint PCS. They enable end users to sign up for WLAN roaming services on any hot spot network whose WISP or hot spot provider agrees to authenticate and integrate back with Sprint’s network. What’s different about Sprint’s business model is that it gives a slice of the revenue to the hot spot operator.

Wireline carriers are also starting to get their feet wet. Verizon Communications recently launched free hot spot access for its DSL customers in Manhattan. Now, anyone within 300 feet of a Verizon payphone, which is virtually every street corner, bar and restaurant, will be able to browse the Internet through Wi-Fi-enabled devices. By simply mounting base stations on its existing real estate, Verizon is giving its DSL customers the perception of added value, which will possibly lower churn.

Another avenue carriers might consider is hiring trusted brokerages and clearinghouses, such as EDS, Danet and VeriSign, to act as intermediaries that handle billing and settlement with other carriers. Because it is the wireless carriers that generally have the infrastructure and experience of forming relationships with other carriers and roaming, small independent non-traditional network access and hot spot providers entering this market have been virtually ignored.

Don’t Forget the ISPs

Service providers with 3G networks on the wireless side will have IP billing capabilities embedded in their networks. As a result, an aggregation model has emerged to help them embrace Wi-Fi.

For wireline carriers wanting to enter the Wi-Fi market, it’s not so straightforward. Traditional clearinghouses help operators with roaming and aggregation of data on existing networks, but wireline carriers and ISPs eyeing the market don’t have the capability to necessarily convert records and handle roaming, accounting and settlement issues with their existing infrastructure. While ISPs have the advantage of experience with fragmented markets, they have never before had to deal with carriers in trading settlements or clearing, nor the non-traditional players such as automotive shops, coffee houses, record stores and others who can own hot spots and control access. They do not have the systems for billing and OSS to handle the many-to-many relationships inherent in Wi-Fi. While larger ISPs and hot spot franchises will establish direct agreements, others will need a trusted third-party to mediate usage and settle charges incurred when a customer accesses their network at hot spot locations.

One company, Billing Concepts, is not ignoring that fact and is investing a lot of time and energy into targeting this market with its eZ-Wi product, the first independent clearing and settlement service connecting the customers of ISPs with Wi-Fi venue operators. It allows customers to connect at hot spots anywhere and have charges for those connections reflected on their home or office Internet bill. As a neutral third party, eZ-Wi is also distinct because it does not encroach on the branding efforts of ISPs or venue operators. “We see an opportunity to become a clearing facility for this very fragmented market,” says Paul Buehler, director of corporate development at Billing Concepts. He believes consumers should have a single Internet access provider relationship if ISPs are to mitigate churn rates. The organization will target the ISP market, as it can serve as a liaison between the ISPs and carriers and partners inherently involved in Wi-Fi services. “The customers owned by the ISPs will become a natural bridge between non-traditional service providers and the big backbone service providers,” says Buehler, who believes ISPs represent a “huge underserved segment.”

Don Philbin, COO of Billing Concepts, further explains that his company will handle the conversion of RADIUS-based records coming off IP networks for ISPs that are used to traditional switching records coming out of PSTN networks. “The biggest thing is there is no creation of CDRs with Wi-Fi usage, so carriers have to convert IP records into records they can use in existing billing systems.”

Rather than gathering IP records and converting back to cellular carriers’ bills, Billing Concepts will directly mediate RADIUS records to create usage data for rated or unrated records,” says Buehler.

By acting as a clearinghouse, Billing Concepts would provide a mechanism for subscribers to log on to participating hot spots, ostensibly allowing roaming on any open network. Then, ISP services will be mediated, rated and charged to the customer’s phone bill or part of an ISP package. “We are not bypassing existing billing methods, but offering an alternative,” says Buehler. He notes that Billing Concepts has also been very active with IPDR.org’s efforts to establish an accounting and settlement standard for roaming in Wi-Fi (see “Standards Groups Focus on WLAN Roaming,” p. 40).

Partner Management and Settlement

For companies that eventually decide to do it on their own, partner management and settlement on 2.5G networks are expected to be the Achilles’ heel to Wi-Fi becoming truly ubiquitous.

In the late 1980s, cellular took a gigantic leap after home location register and automatic roaming were enabled. “That need for roaming is even more pressing in Wi-Fi, because people have become so accustomed to roaming with their devices in the cellular world. Users don’t want to be restricted by who the carrier is,” says Tom Hefele, director of technology planning for Convergys, which recently demonstrated a live implementation of Wi-Fi settlement and partnership management at the ITU show in Geneva.

Since cellular carriers already bill for mobile data, the expectation is that the same billing systems could evolve to handle wireless LAN services; however, there will be so many service portfolios and exponential increases in the number of agreements to manage, conventional mobile infrastructures and existing mediation, OSS and billing capabilities for 2.5G and 3G networks may not be sufficient to handle Wi-Fi.

For instance, partner management ultimately will involve billing and settlement with public-access hot spot operators (which enable user access to the Wi-Fi network), roaming intermediaries that facilitate AAA and financial settlement among hot spot operators, WISPs, service providers and other carriers that help provide access, and the content providers with which carriers can strike up new bundles and incentive programs.

Gartner recommends that carriers explore ways to create “pools” of sessions with WISPs, aggregators or wireless service providers (WSPs).

“For the first time, service providers are faced with the prospect of having partners reselling their services; and they have to worry about delivering the same functionality to partners for settlement as they do with retail settlement,” says Anthony Behan, vice president of market development at Am-Beo.

With Wi-Fi, the billing infrastructure will have to reward those partners who aggressively work to deliver incremental revenue through advertising—whether decals on doors or product bundles that draw customers to their venues or content. Once certain thresholds of Wi-Fi usage are surpassed, a bonus should be evoked in the settlement process. Currently, Wi-Fi users often have to search for locations because many coffee shops, restaurants, bookstores, etc., fail to advertise that they offer Wi-Fi access.

Aggregators such as GRIC, Boingo Wireless, iPass, Wayport and Fatport are looking at business models that create incentives for content providers and high-traffic Wi-Fi venues to aggressively target market Wi-Fi services to their customer bases. Boingo, for instance, has set up incentives to locations that aggressively target new users by offering a bigger slice of the revenue stream. And Wayport has now started to add free digital content, such as magazine subscriptions, to attract users.

“Carriers should look to empower their partners to maximize potential business by delivering reports on a regular basis and offering access for partner self-care, troubleshooting and so on,” says Neil Philpott, marketing director for Amdocs and president of the Global Billing Association. “Wi-Fi goes beyond traditional communications, as it is dependent on whether people go to hot spot locations.” He envisions a future where carriers could possibly get a slice of revenue garnered by hot spot operators who increase sales of their products because of hot spot services.

In partnership management, carriers must also be sure to maintain control of the customer. Carriers, who already have established billing relationships, should try to bolster their branding and the billing relationship through Wi-Fi services. “When users in our network put in an identification code, we do RADIUS authentication and match the customer to their service provider brand, whether Verizon, SBC, Sprint PCS or other. Our logo comes up only to say ‘powered by Wayport,’” says Dan Lowden, vice president of marketing for Wayport.

Customer loyalty will depend on how carriers brand their hot spot services. “We think the Wi-Fi market will depend on single-bill roaming,” says Joel Short, CTO and senior vice president of Nomadix, which helps hot spot providers deploy access networks. He also serves as chairman of the Wi-Fi Alliance’s Public Access Task Group, which helps to set minimum standard requirements for public access hot spots. “While some aggregators and carriers are big enough to have proprietary solutions right now, we think the percentages of the past will speak loudly to the fact that roaming support will be necessary for Wi-Fi to reach its full potential,” says Short. “Larger incumbents want to slow down standardization with proprietary solutions. We don’t believe maintaining that gap in the market is beneficial to the industry as a whole.”

It comes down to what business models succeed. “If carriers provide Wi-Fi to their cellular subscribers, then they are in a position to offer a unified bill, which is what customers ultimately want,” says Kevin Dorton, mobile industry manager at CSG Systems. He warns that cellular operators entering the Wi-Fi market through a Wi-Fi aggregator can possibly set the stage for segmentation of the service and the bill, which could lead to customer frustration and churn down the road as Wi-Fi services evolve. “If you provide Wi-Fi to cellular subscribers, you are in a position to offer a unified bill, but if you force subscribers to another provider for Wi-Fi, then you create segmentation for the user of the service,” he says. In other words, billing, troubleshooting and branding should all be easily tied to one name so that customers know who to associate with their Wi-Fi services.

Even though most Tier 1s want to roll out a unified platform and support their own hot spot networks, most feel they have no choice but to offer access through partnerships with companies that have established brands and infrastructure. “Ultimately, I wouldn’t be surprised if the carriers wanting to dominate Wi-Fi ultimately acquire those companies with proven records and customer bases, such as Boingo, Wayport or Fatport,” says Dorton.

Who Are the Users?

Not only will access be controlled by non-traditional players who own hot spot venues, but the nature of the users will also change with Wi-Fi. “Currently, Wi-Fi is most popular among business travelers, which immediately creates a telecom industry anomaly, as having corporate users as the main customer in a prepay service environment is not the norm,” says Am-Beo’s Behan. Because Wi-Fi is not yet subscription based, rather predominantly based on prepay vouchers, the anonymity factor of Wi-Fi could become a major pain point in mitigating churn and in trying to establish roaming if carriers aren’t careful.

“Identifying the user is a mediation function that must happen before provisioning a service, therefore, the process of getting information about charging from the network to the billing system to the customer is difficult, as identifying the customer in Wi-Fi services still eludes carriers and service providers,” says Amdocs’ Philpott.

He is referring to the fact that whenever a network is accessed from a public access point, an IP address—rather than a customer name or profile—serves as a transitory identifier. After all, it would be impractical to have customers fill out profile pages every time they logged onto a Wi-Fi service. You need a prepay piece with real-time monitoring integrated into the corporate billing system with a prepay platform for session management and control, says Philpott.

Vouchers are a headache not only to the consumer for that reason, but to the service provider and its partners as well. Even if rating prepay access to WLANs is not a significant challenge to existing systems, the consequent management of partner relationships becomes a headache as customers roam from one hot spot to another.

Consider a scenario where a customer purchases a $10 prepay card with a service provider and goes to a location with a 30 percent revenue share agreement with the service provider. If the customer uses $6 on the card at that location, and then later in the day uses $3 at a different location with the same service provider, but at a 40-percent revenue share, and the final dollar expires because it’s not used within the allotted time period set forth by the service provider, there has to be a process of resolving two different revenue settlement agreements. This can be very problematic, mainly because users gain access to hot spot networks by associating with the wireless networks and then by being authenticated locally within the hot spot itself or remotely by their retail providers, or by roaming intermediaries. Usually, authentication of users is established via standard RADIUS and Enhanced RADIUS AAA mechanisms. “The problem that arises from the inability to identify customers is that customer aren’t recognized when they start a new session at a different hot spot location, even if its controlled by the same service provider,” says Convergys’ Hefele. “If customers can’t use their voucher from one hot spot to the next because the authorization and authentication process no longer recognizes them when they move from one venue to the next, there is a valid cause for frustration.”

Standards for resolving those issues are being hashed out by IPDR.org, the Wi-Fi Alliance, the GSM Association and Cibernet.

Currently, service providers bill based on number of connections, location of connections, bytes sent and received, connect time, and so on. Potentially, the customer database will exist in a central RADIUS server, along with associated attributes for each user, such as bandwidth upstream, bandwidth downstream and IP address type.

When a roaming user connects to the wireless hot spot network, RADIUS servers will apply attributes associated to customer profile and log the details of their network activity.

In Europe, subscriber identity modules, analogous to those in GSM phones, ostensibly offer AAA access control.

The convergence of pre- and postpaid as well as rules-based rating will be important as such futuristic applications come to fruition. If a subscriber roams from a foreign location, the carrier will want rules in place that dictate that user gets less bandwidth or a smaller time slice versus a native subscriber on the same network, thus creating tiered services.

Active Mediation

To open up options for users every time they request content, providers will need to look at active mediation, says Joe Hogan, CTO of Openet Telecom. He notes that passive mediation platforms will not suffice in the prepay environment of Wi-Fi. “Operators will have to think of themselves as banks, as they will have to enable people to pay however they choose, regardless of where they are or what they access,” he says.

Because it is up to mediation to identify the user, mediation platforms will serve as an aggregation point for multiple access points. They provide the logic that sits in a processing layer above the premediation boxes from companies like ProQuent, Netspire and Megisto, which sit in the network traffic to help with real-time applications.

These companies will become more important for providing intelligent networking to support Wi-Fi, especially when interception of traffic is necessary based on rules set by carriers.

Carriers will need intelligence in mediation so that advice-of-charge and blocks on access, say to a 14-year-old trying to see adult sites, will be possible.

“It is imperative that a unified platform be introduced to consolidate the creation, management and deployment of Wi-Fi services,” says Tom Hamilton, president and CEO of ProQuent Systems. He believes that right now, the market is overrun with products of varying levels of functionality. “A consistent service model can be garnered only if a mediation platform serves as an aggregation point for multiple access points.”

Extensibility is a key requirement for wireless data networks since the service offerings are likely to evolve rapidly in Wi-Fi. “Therefore, operators need to be in a position to quickly react to new opportunities as well as be able to experiment with new offerings,” says Hamilton, noting that typical IP infrastructure network elements perform a limited set of functions that are built into the product, be it a router, load balancer or firewall. Consequently, each function requires a new dedicated piece of equipment.

Carrier-grade OSS

Wireless LANs are being marketed in the context of a broader array of service offerings because of the difficulty in managing capacity for value-add services over WLAN (voice over WLAN, and even video over WLAN). Those types of services will require an extremely nimble OSS environment.

“You want to avoid having to add a new layer of management or complex integration when looking at provisioning and billing OSSs,” says Andrew Hamlin, head of product management for mobile solutions at MetaSolv.

He notes that accommodating new types of records will be the biggest challenge. “You have to be able to assess records and pieces of data about usage and relate it back to the customer in ways that differ from 3G,” he says. “With 3G, you can bill by message, but in Wi-Fi, you may have to charge by minute, or by Web page accessed.”

If carriers have a solid inventory management system and OSS platform, Wi-Fi can be deployed as just another service. As Wi-Fi merges with 3G wireless networks, there needs to be a level of abstraction so the business can focus on billing issues, says Peter Briscoe, worldwide product manager for Cramer Systems. “The key in the U.S., as in Europe or anywhere, will be utilization of capacity in local cells and how to manage that.”

According to Hamlin, operations is the costly part of managing WLANs because of the capacity planning issues unique to the IP world and packet technology. “How much capacity to allocate to each location and applying overbooking and understanding the best utilization of your connections becomes difficult,” says Briscoe. “Even within an airport, some locations may become hot for Wi-Fi usage, say in cafés or bars, and carriers have to be able to quickly manage the LAN and accommodate bandwidth demands should it take off.”

With IP technologies, carriers will burn off operational costs if they have to change OSSs and billing down the road. “Carriers should build up OSS capabilities now so they don’t get stuck with a difficult migration path down the road,” says Briscoe, noting that existing “stovepipe” solutions are not viable for that level of extraction. “Unfortunately, as with many emerging technologies, carriers aren’t think about managing their networks.”

“Volume-based data and the flexibility to price and accept payments in different ways and to enact business policy back on the network—all without losing data—can bring an OSS to its knees,” says Narus’ Hunting.

These data elements are essential to providing business intelligence that enables carriers to figure out what Wi-Fi services will appeal to what customer profiles.