Why public transport wi-fi makes sense for telcos

With mobile internet use set to skyrocket, should the likes of Telstra look to roll out wi-fi across our public transport networks?

Australia’s love affair with technology is perhaps never better highlighted than during the daily commute. It's pretty unusual not to see people buried in their tablets, phones or readers during their trips to and from work. They’re shooting off emails, checking their Facebook page, reading the news - anything to distract their attention from the daily grind.

With so many people now using the commute as a chance to get ahead with their work and a slew of devices provided by work not 3G enabled, isn't it time we had free public wi-fi in our public transport services?

It makes sense given Australia's high rate of device adoption and with mobile internet use set to skyrocket in the next couple of years. All in all, it would seem like a rather logical, calculated idea. As it turns out the logic isn’t entirely lost on state governments, but progress on the issue has been slower than a congested 3G connection.

New South Wales has been trialling a free wi-fi hotspot program in the Sydney CBD and is currently reviewing the trial. But given that the trial was implemented back in 2010, there is seemingly little urgency on the issue.

Meanwhile in Victoria, political indecision has prompted the independent train operator, Metro to roll out its own system. The operator has contracted internet services company called Netbay to install and run free wi-fi around Flinders St Station.

Metro’s recent move shows that there may be some incentive for a corporate entity to step in and take the issue out of the government's hands. Having said that, is there a case here for Australia's major telcos to step in and rollout wi-fi across Australia’s transport networks? It might seem like a stretch but it is a move worth considering.

Unsurprisingly, Telstra, Optus and Vodafone declined the opportunity to talk on the issue. But there are some in the industry who say that the idea is plausible.

A new way to compete

When Amaysim’s founder and CEO Rolf Hansen was asked whether it would be a good idea for major telcos to enter the public transport wi-fi fray, his response was simple:

“If the telco’s don’t move on the space, someone else will.”

Hansen coloured his answer with an anecdote from his recent trip to America. He says that some smaller US telco providers have taken to bridging the wi-fi gap left by major operators, busy delivering their 3G - and now 4G - strategies.

Hansen says that those operators would undercut the major telcos 3G costs by offloading their mobile data usage into their own local wi-fi points. In other words, when a user walks near wi-fi point owned by the telco, their device would automatically switch to using wi-fi for internet access - thus saving the consumer and the telco money.

A smooth wi-fi to 3G transition may also be of interest to the telcos. Typically, if you want to access a free wi-fi network you need to verify your identity through what’s called an authentication portal, which is a slightly tedious process. People want to access free wi-fi as they would with their home network - they want to be automatically connected.

Principal analyst at Ovum, David Kennedy says that it would be plausible for a telco to provide a seamless 3G, wi-fi transition service if they set up their own network on public transport.

He adds that there might even be a market for it given that the whole issue of making 3G/wi-fi handover and authentication as easy possible is “undercooked”.

Slowing the spectrum crunch

BuddeComm founder and telco industry analyst, Paul Budde has long held that Australia’s 3G internet access has its limitations and could soon slow down to a crawl as more devices are loaded onto the network.

If you have ever tried using 3G during a conference or a lecture then you’ll know all about what Budde is talking about. With so many people using 3G in the one place at the one time, network congestion is commonplace.

While current 3G usage in Australia isn’t enough to cause that much of a concern on public transport, it's growing exponentially and this could soon become an issue for the telcos and their customers.

One way to avoid the crunch is to offload 3G connections into a wi-fi service to free up spectrum space. And with public transport, and peak hour periods being a common time for 3G use, it makes sense for telcos to at least support a wi-fi network on transport.

Although Amaysim’s Hansen says that this line of argument creates a dilemma for telcos.

A public transport wi-fi service would be better for telcos long term spectrum sustainability, but it will eat into its short to medium term profits from 3G data use.

Derailing telcos involvement in public transport wi-fi

If Telstra’s board woke up tomorrow and felt the sudden urge to install a free wi-fi on all of Australia’s transport services; it could probably get it done. After all our three major telcos are powerful enough entities to explore this avenue.

The point is: if there is a viable business case for the service why don't they exist? As Ovum’s David Kennedy points out - and as state governments may have already learned - “implementing a wi-fi service on public transport is easier said than done”.

He says that there are two major impediments. The first is that if they were to roll it out at the moment it would “cannibalise” their own 3G profits and secondly, it would be a costly and difficult to implement.

Kennedy says the most obvious way to make a mobile wi-fi system work would be to create a network that uses a 3G connection or a satellite to connect a wi-fi router to the internet. It would be a costly endeavour for a free service.

Budde says that if telcos were to venture back into wi-fi it would be a “yoyo strategy”. He says that Australia’s telcos pushed wi-fi but have since rolled back the initiative when 3G came into the picture. Who knows what's going to happen once 4G becomes mainstream.

So while there is no clear cut incentive for telcos to dive into the public transport wi-fi issue for the time being there is at least a viable model for them to pursue. The good news is that with the state government’s current pace on the issue, the telcos should have plenty of time to decide their course of action.

Follow @HarrisonPolites on Twitter.

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