When it comes to cellular in the U.S. there are two major carriers, AT&T and Verizon, and everybody else. While Sprint and T-Mobile both also compete in the national market, they have far fewer subscribers and a reputation for poor coverage. This has essentially been the state of affairs since Cingular bought AT&T Wireless in 2004 and continued business using the AT&T brand. There are some smaller regional competitors, but their market share is limited, and their customers roam onto one of these national networks when they leave their regional service area.
I think the combination of Hotspot 2.0 and Voice-over-Wi-Fi (VoWiFi), or “Wi-Fi Calling” as it’s known has the potential to disrupt the current cellular marketplace dynamics.
Sprint and T-Mobile have been dropping their prices to try to attract customers away from the Big Two (AT&T and Verizon) for years, even offering to pay early termination fees and give trade-in credit for phones, but it appears that this has largely been unsuccessful. When you can’t make a call from within your own home or office, who cares how cheap the service is?
Part of the problem for T-Mobile is that a lot of the spectrum they own is higher frequency than their competitors, so it doesn’t penetrate buildings as well due to the increase in attenuation that occurs as wavelength decreases. That’s a tough problem to solve.
VoWiFi and Hotspot 2.0 can change all of that.
VoWiFi extends the network’s voice coverage into the subscriber’s home and office, where subscribers can easily connect their phone to the W-Fi network, which takes care of that concern. Sprint and T-Mobile could also partner with SOHO Wi-Fi router manufacturers so that Hotspot 2.0 roaming integration was preconfigured for their networks on these products. Imagine if a subscriber could buy a NETGEAR “T-Mobile Edition” router and have VoWiFi calling work out of the box, without any configuration on their phones.
Imagine if Sprint and T-Mobile aggressively pursued Hotspot 2.0 integrations with major public Wi-Fi providers. Their subscribers would have seamless VoWiFi coverage in the areas where they currently have the biggest problem: indoors. As public Wi-Fi continues to expand, the voice coverage for these carriers could expand right along with it.
In fact, if we assume a properly designed WLAN, in very high density environments the indoor service for these carriers could be superior to the Big Two. Ever go to a ballgame and been unable to make a call or use data in a full stadium? That’s a common experience and Wi-Fi roaming integration solves that. Wi-Fi was designed to meet LAN access needs like this. Why not actually use it that way?
This could make Sprint and T-Mobile attractive again. Although I don’t imagine the costs would be very significant as it doesn’t involve building new towers and deploying more of their own hardware, they would probably need to compensate large public Wi-Fi operators for the use of their networks. That would allow them to keep their service priced below the Big Two.
Cellular data offload is commonly thought of as a driver for the adoption of Hotspot 2.0. Voice coverage expansion for smaller carriers may be more important.