By Richard McBride, Director of Strategic Futures, Intec Telecom Systems


June 13, 2003/Wi-Fi Technology News/- The telecoms industry has not openly discussed a clear business strategy for making money with Wi-Fi services - despite the creation of thousands of hotspots around the world. From pricing and bundling of services to sharing revenues with roaming and reseller partners, Wi-Fi providers will need the right billing systems in place if they expect to achieve a solid return on investment.

Wi-Fi hotspots are springing up everywhere. From Starbucks coffee shops to hotels and pubs, wireless Internet access is now readily available in most major cities. The next big challenge is finding a way to make money out of this convenience. So far, uptake for the service has been slow, since operators are stilly only targeting businessmen that have the necessary Wi-Fi enabled laptop and PDA to use hotspots.

Unfortunately many of these potential users are discouraged because most venues require an account with a specific phone company to connect. Furthermore, those users who are accessing the service are not leveraging the network to its full potential. For example, BT?s Wi-Fi venture Openzone reaches over 90,000 minutes of access per week. This only works out at around two hours per day per hot spot, for a network that supports 200 UK sites including Gatwick Airport and the Hilton chain of hotels.

Roaming agreements

Part of the access problem is the dearth of roaming agreements preventing seamless Wi-Fi connectivity. Customers want to access Wi-Fi anywhere in the world and not worry about authentication or payments up front. They also want the choice to access Wi-Fi with their mobile phones, instead of having to lug around a computer or purchase a costly PDA. Coverage beyond the Wi-Fi can be achieved from roaming agreements with mobile-phone operators, allowing data sessions to be transferred from hotspots to GPRS or later 3G networks when users stray out of 802.11b Wi-Fi range.

But handover between these networks is still not available. Until that happens Wi-Fi will continue to lose money as users avoid the service or limit the amount of time they spend accessing the network.


According to a study published by BWCS and venture capital firm BrainHeart, service providers are losing up to 30 percent of potential revenue due to the lack of roaming agreements. The report WISP Roaming - Single Subscription, Global Reach reveals that only 12 out of the 26 largest hotspot operators worldwide have any sort of roaming agreement in place- and none of those that exist can be classified as true commercial roaming.

Global operators and service providers are starting to address the roaming issue. The biggest activity is currently taking place in Asia-Pacific. Five operators in the region have agreed to invest in the Wireless Broadband Alliance, using their combined force to compete against Asian giant SingTel, another competitive player in the Asian Wi-Fi market. The alliance comprises of Maxis Malaysia, Telstra Australia, Starhub Singapore, China Netcom, and Korea Telecom. The companies claim this is the world?s first Wi-Fi operator collaboration of its kind. There will be many customer advantages gained as a result of the partnership, especially to business users who could utilise the alliance's roaming capabilities.

Commercial business models

But there are major hurdles to overcome before seamless roaming is achieved, particularly in the areas of billing and settlement. This is a crucial problem since the alliance plans to launch services next month without a solid billing strategy in place. In a recent article in Total Telecom, a spokesperson for Starhub talked more about the outlines of the agreements than the pricing of services: "We want to keep costs down, so we think this will remain bilateral. We don't want to create a central brokerage scenario because that will mean cost settlements. We are progressing on roaming agreements, but cannot announce anything yet."

This vague response highlights the biggest problem faced by the Wi-Fi industry: no one knows for sure which business model will be successful.

Fortunately the technology is currently available to support any type of Wi-Fi billing model. Of crucial importance is the right mediation or interconnect systems. For some operators it is simply a case of configuring their existing systems at little or no extra cost to bill hotspot users. For others it may require the purchase of new equipment. The good news is that now is the best time to buy. The overall slowdown of the global telecoms market has meant that OSS vendors have had to reduce their prices to win customers.

According to the industry association Telemanagement Forum, today?s prices have fallen so much that OSS suppliers are even losing money just to win business. Ten years ago carriers were spending anything up to $20 million on massive systems, but now prices around $1 million, and even below that, are common.


Billing and Settlement Solutions
Before investing in system, operators need to understand their Wi-Fi billing requirements. Flexibility and scalability are on the top of the list, particularly when it comes to rating different types of calls. Service providers also need to possess authentication and authorisation systems to support the user?s Wi-Fi requirements. This includes instant access to external systems to validate credit cards, pre-paid accounts and debit cards as well as control over user sessions. A real-time convergent mediation can achieve these requirements. This is a back office platform that acts as an interface system between the network and billing applications, allowing operators to collect, process and deliver information on the traffic passing through its network. Real-time mediation offers support for the multiple organisations that are involved in the delivery chain between the provider and consumer.

For instance, if a Wi-Fi user wants to buy a pair of football tickets with a credit card, the network provider must have the ability to ensure that consumers are properly authenticated to receive services, that payment is available and that the revenue generated is correctly distributed. A flexible convergent mediation system makes sure that the information is collected and delivered so that content services can be set up between partners, brought into service, recognised on the network, and then accurately and securely billed. Real-time mediation functionality can also ensure that consumer details are accurately authenticated in real-time for payment and that content or transactions can be priced, delivered and charged using different business models, with each partner receiving the correct revenue share.

Intercarrier billing

Mediations systems also support interconnect billing platforms, which are crucial to managing roaming agreements. This is achieved by feeding the billing solution with the necessary network data to produce an invoice. Interconnect systems enable service providers or operators to charge others for using their network and services. This form of billing payment is usually the first or second source of income for most operators, accounting for at least 20 per of annual revenue. With interconnect, Wi-Fi settlements can be made between roaming partners (i.e. hotspot operator Costa Coffee might need to settle payment with Vodafone) or Wi-Fi hotspots and the carriers that provide network connectivity (i.e. Costa Coffee would need to pay BT for supporting Wi-Fi across its network).

Wi-Fi providers should possess an interconnect platform that supports their specific business needs including the management of various interconnect business models and the support of increasing subscriber numbers. Furthermore, the interconnect system must also be flexible enough to support different types of content - such as video clips and picture messaging - and to bill according to specific criteria, such as size and bandwidth of content data.

Security

In addition to support billing applications, real-time mediation systems can support other network platforms such as fraud systems. It is widely accepted by the industry that Wi-Fi offer great potential for fraud, since the 802.11 and Bluetooth standards are well known to criminals and can be easily manipulated depending on how Wi-Fi is used. With convergent mediation operators can keep track of daily activities on the network to help identify unauthorised access.



Future requirements
Wi-Fi providers have to respond to their billing requirements as soon as possible, especially is it wants to support new business opportunities. Wi-Fi hotspots may be hogging headlines, but there are new ways of making money. This includes the rising market of in-home users buying Wi-Fi equipment to connect PCs and of companies installing wire-free networks. In the US alone this new Wi-Fi market generated over 20 percent of overall business sales in 2003. This figure is expected to double in the next four years. Operators are trying to move beyond a flat rate pricing option to leverage this business opportunity.
Through the creation of effective inter-operator roaming agreements and the use of effective billing and settlement systems, the Wi-Fi industry is capable of achieve its goal of revenue optimisation and global domination in the communications space. When this will happen, however, is still anybody?s guess.

Additional customers will be announcing TNETW1130-based products in the upcoming weeks. As a key contributor to the 802.11g task group, TI congratulates the IEEE for approving 802.11g, which will enable the next generation of Wi-Fi products capable of 54Mbps data rates and backwards compatibility to existing 802.11b devices.
"Now that the IEEE Standards Board has approved the 802.11g standard and the Wi-Fi Alliance is going to begin interoperability testing, we will start to see the full application potential and growth of the 802.11g market," said Allen Nogee, principal analyst with In-Stat/MDR. "TI is delivering their differentiated 802.11g solution at the perfect time to capitalize on the growth of 802.11g with customers and ODMs who can quickly take their solution to market."

TI's TNETW1130 provides superior performance and interoperability within mixed mode networks (802.11b and 802.11g) by leveraging TI's success with mixed-mode 802.11b/b+ networks. The TNETW1130 will also provide an 802.11g+ turbo mode for at least a 50 percent throughput improvement over other 802.11g solutions. TI has invested heavily in internal interoperability testing with other 802.11g products to ensure that TNETW1130-based devices will be interoperable and provide high-performance operation in any network with any vendor combination.


"It is great news for TI and the industry that the 802.11g standard has been approved. We have been working to deliver standards-based products to our customers and ODMs that will not require hardware or software upgrades to ensure interoperability, unlike solutions that were deployed based on earlier drafts of the 802.11g standard," said Marc Cetto, general manager of TI's Wireless Networking Business Unit. "Following our success with 802.11b+, the TNETW1130 delivers high performance in mixed-mode networks, improved reach, and an 802.11g+ mode, all of which have been well received by our customers and ODM partners."

The TNETW1130, announced in October of 2002, offers higher throughput at longer distances for 802.11b, 802.11b+ (22Mbps), 802.11g, 802.11a and now 802.11g+ networks leveraging TI's superior multi-path and receiver technology. The solution has been designed to support advanced security modes such as Wi-Fi Protected Access (WPA), Cisco Compatible Extensions and the current 802.11i draft standard. For increased time to market, TI provides OEMs and ODMs complete system reference designs, development tools and regional design support for the TNETW1130. (For more information see: http://www.ti.com/tnetw1130)

About Texas Instruments WLAN

Texas Instruments provides high-performance, low power 802.11 solutions for the growing Wi-Fi market by leveraging the company's history of innovation and leadership in wireless and broadband. TI has Wi-Fi CERTIFIED designs and offers extended reach and rate to customers who want to deliver best in class 802.11 products to market quickly. TI's WLAN business is part of TI's comprehensive portfolio of broadband solutions including cable modems, DSL, Voice over Internet Protocol (VoIP) gateways and carrier infrastructure. (See http://www.ti.com/wlan.)

About Texas Instruments

Texas Instruments Incorporated provides innovative DSP and analog technologies to meet our customers' real world signal processing requirements. In addition to Semiconductor, the company's businesses include Sensors & Controls, and Educational & Productivity Solutions. TI is headquartered in Dallas, Texas, and has manufacturing, design or sales operations in more than 25 countries.

Texas Instruments is traded on the New York Stock Exchange under the symbol TXN. More information is located on the World Wide Web at http://www.ti.com.