Hot Topic--The Status of Carrier Wi-Fi Deployment in Brazil

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Hot Topic—The Status of Carrier Wi-Fi Deployment in Brazil
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Mobile Broadband Growth Pushes Carriers to Offloading Strategies while ISPs Look to Add Value to Fixed Broadband Offers

Executive Summary

- Since the beginning of 2012, carrier Wi-Fi deployment in Brazil has grown nearly tenfold, reaching close to xxhotspots in the fourth quarter of 2013. So far, carriers' Wi-Fi strategies have focused on mobile data offloading, offering public Wi-Fi access on a freemium basis to existing mobile and fixed broadband subscribers.
- Oi led the Brazilian public Wi-Fi boom due to its partnership with Spanish "homespot" company Fon, which has gathered over xxmillion hotspots globally, making it the world's largest Wi-Fi provider with its residential Wi-Fi sharing business model.
- These Fon homespots represent xx% of Brazil's xx hotspots. The business model, which looks to leverage telcos' existing broadband customers to expand their Wi-Fi footprint at a lower cost, is a growing trend globally and in Brazil.
- The year 2012 saw a rapid uptake in smartphone sales, which have now overtaken feature phones as the most sought-after devices. Mobile broadband penetration has also grown, however more slowly, reaching xx% of total mobile lines in 2012, as many new smartphone owners still cannot afford mobile data plans and depend on Wi-Fi connections to make use of their devices' capabilities.

- With the recent sanctions imposed by regulators due to the low quality of mobile services, as well as the peak traffic levels expected during the 2014 FIFA World Cup to be held in Brazil, carriers are faced with an urgent need to develop means to offload data traffic from their networks, which uses many times more bandwidth than voice traffic.
- With limited Wi-Fi coverage, Brazilian carriers' offloading initially focused efforts on data-exclusive HSPA+ and LTE networks, even though these technologies will likely remain inaccessible to most users because of the high price of devices, and despite Wi-Fi being cheaper to implement and much more widespread—including simpler webphones as well as high-end smartphones, tablets, and laptops. However, most carriers limit Wi-Fi to high-value users only.
- Although telcos have begun looking for new opportunities to generate revenue in Wi-Fi, they face competition from specialized providers. With the commoditization of the service and customers unwilling to pay for access, monetization options include value-added services for corporate clients such as network management and advertising.
- Gains in mobile network efficiency will emerge on the other side, with the possibility of improving user experience through indoor voice traffic offloading, and integrating mobile and Wi-Fi data and voice networks to allow for greater speeds.
- Wi-Fi is also an important driver of fixed-mobile convergence, as Brazilian telcos move to merge fixed and wireless operations and offer multi-play services to both residential and corporate clients.
- Wi-Fi hotspots in Brazil are expected to grow at a compound annual growth rate (CAGR) of xx% from 2012 to 2018, with community hotspots representing xx% of total accesses and xx% of total fixed broadband subscribers.

Market Definitions

- Wi-Fi: Abbreviation for Wireless Fidelity, also known as Wireless Local Area Network (WLAN), a popular short-range wireless technology using radio waves to connect devices, such as personal computers and smartphones, to a network through an Access Point, usually connected to a wired network. Most Wi-Fi products use the unlicensed xx GHz (gigahertz) frequency, although new higher-capacity products have begun to emerge in the, also unlicensed, xx GHz frequency. For the Wi-Fi Alliance, the main trade association that establishes technology standards, Wi-Fi products must be based on the Institute of Electrical and Electronics Engineers' (IEEE) 802.11 standards for post-based authentication.
- Authentication: The process that occurs after the association between a device and an Access Point to verify the identity of the wireless device or end user and allow access to a protected network. Most common authentication processes require either a general password or a user-specific login and password, and new technologies—known as Hotspot 2.0—are being developed to allow a more seamless process by using automatic SIM card authentication (EAP-SIM), for example.

- Hotspot: "A location where users can access the Internet using Wi-Fi enabled devices. Access may be provided free or for a fee. Hotspots are often found at coffee shops, hotels, airport lounges, stadiums, and other public meeting areas, and sometimes aboard planes, trains, and buses. Corporations and campuses often offer it to visitors and guests," and these can either be managed internally or by the connectivity provider.
- Roaming: "The ability to move seamlessly from one area of Wi-Fi or cellular phone coverage to another with no loss in connectivity." Roaming agreements among providers allow for the use of a single authentication and authorization scheme to have all charges resolved in a single bill.
- Mobile/Wireless/Cellular Convergence: "The convergence of conventional cellular technology and Wi-Fi technology. Converged phones can switch between conventional cellular and Wi-Fi voice-over-internet-protocol (VoIP) modes, even during the course of a conversation, to allow uninterrupted calls when moving between outdoor and indoor environments."
Executive Summary

Introduction
The Status of Carrier Wi-Fi Deployment
- Carrier Wi-Fi—Hotspot Forecast
- Carrier Wi-Fi—Market Share by Hotspots
Main Carrier Wi-Fi Deployments
Appendix
The Frost & Sullivan Story

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