SP Wi-Fi Monetization Thought Leadership

© 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 1Cisco Confidential 1© 2013 Cisco and/or its affiliates. All rights reserved.

SP Wi-Fi Monetization Thought LeadershipJared Headley

Senior Director, Service Provider Mobility

October 2013

Cisco Public

© 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 2

Service Providers Go Up The Value Chain: Wi-Fi as a Service Platform

Wireless Services

Mobile Offload

Wi-Fi Hotspots

6 BillionMachine-to-Machine Connections in 2017

50%Mobile Data Offload in

2013

94% Users who Turn on

and Find LBS Useful

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Mobile Offload Adoption Accelerating

Growth in mobile data

Lack of Spectrum

Market Drivers

Offload economies

Wi-Fi is ubiquitous

Shift to indoor consumption

46% 71% By 2017, 71% of tablets traffic will be offloaded

By 2017, 46% of smartphones traffic will be offloaded

Source: Cisco Visual Networking Index, 2013

50% of mobile data traffic will be offloaded to Wi-Fi and Small Cells in 2013, equivalent to 10 billion movie downloads or 9000 petabytes per year

( Source: Juniper Research)

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Business Models & Value Creation

Retention & Loyalty

Reduce churn by 50% with

free Wi-Fi

Save Money Make Money

Mobile Data Offload

Offload of 7% of data

traffic results in billions of dollars saved

Managed Services and Wholesale

Create new revenue streams of up to

$5M per venue with B2B

managed wireless services

Location AnalyticsOffer analytic reports for

$50K/moLocation-Based AdvertisingMobile advertising revenue grows

10x with LBS

Cisco Public


SP Wi-Fi Business Models and Value Creation

Retention & Loyalty


Mobile Data Offload


Location Analytics

Location-Based Advertising

Cisco Public


Churn Reduction at North American MSOs

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 180

0.1

0.2

0.3

0.4

0.5

0.6

0.7

Month of Deployment

Re

du

cti

on

in C

hu

rn R

ate

fo

r D

ata

Su

bs

wit

h

Wi-

Fi S

erv

ice

Impact on Broadband Data Churn Following Introduction of Wi-Fi Offer Among Subscribers Who Used Both

28–35% Reduction

12–17% Reduction

53–66% Reduction

MSO #1

MSO #2

MSO #3

Trendline is an immediate benefit, normalizing to ~15% reduction in churn

Source: Cisco and RCBG, August 2012

Retention & Loyalty

Cisco Public


Making The Business Case: North American Cable Operator

$14.0MRetention Savings

OR$10.1MTotal Wi-Fi costs

$6.0MForegone Revenue (net loss)

OPTION A – Differentiate with Wi-Fi

$3.9MNetGain

OPTION B – Match competitive pricing

for Triple-Play package offered by competitor$49 High subscriber

acquisition cost: $495$115 avg. monthly revenue per subscriber

Service Provider ended up ahead by $9.9M by differentiating with Wi-Fi

Retention & Loyalty



Retention & Loyalty


Mobile Data Offload


Location Analytics


Cisco Public


Mobile Offload: Optimization that Complements the Macro Network

Wi-Fi works in tandem with our global network to keep people connected wherever they are. Wi-Fi is a clear factor in mobile use, driving purchase decisions to enriched hospitality, fan & travel experiences

Josh Goodell, AVPAT&T Wi-Fi Services

“

”_

Public Wi-Fi hotspots

32,000

2011

2012

x3

+10% +200%Wi-Fi connections2012

Venues 2012

Mobile Offload

Public Wi-Fi hotspots

3.8 million 50%Smartphone offload

Cisco Public


Offload Value Increases When Based on Owned Network

MNOs offloading via to someone else’s Wi-Fi network are significantly less productive than those moving traffic to their own Wi-Fi network

20%0% 40% 60% 80% 100%

MNO1

MNO2

MNO3

MNO4

MNO5

MNO6

MNO7

% of Mobile Data Traffic Offloaded to Secondary Network

Source: Cisco; as reported by sample of Tier 1 MNOs in US, Asia and Europe (Jul-Sep 2012)

Offload via owned Wi-Fi

Offload via 3rd party Wi-Fi

Mobile Offload

Percentage of Mobile Data Traffic Offloaded to Secondary Network


Representing

savings

Case Study: Middle East Tier-1 Mobile Operator

Service provider subscription and traffic forecast through 2016:

of mobile data traffic to be offloaded by 2020

7%

$3.6Bn

Mobile subscription to grow x53.5 M

17.5 M

2011

2016

Mobile broadband data usage to grow x3550 MB/Mo

1.6 GB/Mo

2011

2016

1.6%

7%• Cost savings based on less data

served over the cellular network

• Intelligent traffic routing and network optimization

• Service improvements in buildings and dense urban topographies

• Coverage extension where service provider has no spectrum2013 2014 2015 2016 2017 2018 2019 2020

$1.1Bn

$830M

$615M

$425M

$290M$185M

Cost Savings (US$) Traffic Offloaded (%)

Mobile Offload

Cisco Public


Case Study: MSO Wi-Fi Used for Mobile Data Offload

Cisco outdoor AP 1552C

3 SSIDs

Mobile SSID is a closed (secured) network with EAP-SIM Authentication

MSO broadband clients eligible for free public Wi-Fi

Passpoint (Hotspot 2.0) secure and automated selection

Mobile Offload

Cisco Public



Retention & Loyalty


Mobile Data Offload


Location Analytics


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Managed Connectivity Services Could be a Natural First Step

Managed Private Networkfor secure business operations

Managed Public Networkfor guest Internet access

Venue and retail owners start using Wi-Fi as a way to improve business

Generate more customer traffic attracting more customers

Increase customer dwell time more time spent = more money

Creates an opportunity for service providers offering managed Wi-Fi

Managed Services

Example:

* Source: AT&T, Hilton McDonald’s and Sam’s Club’s websites

Partners with:


Key Vertical Managed Services Business Models

Transportation Centers• Connecting frequent and occasional travelers• Business models:

• 30 second video every 30-40 minutes of access• Subscription model for higher speeds starting at

$4.95/hour

Hospitality• Connecting hotel guests and visitors• Business models:

• Subscription models: free access for value-hotels and up to $5-30/day for luxury hotels

• Tiered pricing model and customized applications available for VIP customers, such as conference attendees

Stadiums• Connecting fans to social media, check scores and

watch highlights• Business Models:

• Paid subscription to users, as low as $7.95 24 hours

• Paid apps to access in-venue premium content• Ad-supported connectivity

• Opportunity for SPs: $3-5 mill per stadium deployment

Education• Connecting students and faculty to high-bandwidth

information (videos, streaming information)• Opportunity: 15% of school systems expected to

upgrade in 2014 for $300M in opportunity*

*Source: Cisco Systems

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Wholesale Wi-Fi to Other SPs

• Wholesale using installed fiber bundled with VLAN and Wi-Fi SSID



Retention & Loyalty


Mobile Data Offload


Location Analytics


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Location AnalyticsLocation Analytics and Big Data

Location analytics provide insights into device’s journey inside a venue

Where people go? What are the common paths? Most visited places?

How long people stay in each place? Where is the first place they stop?

Analyze patterns of repeat vs. visitorsTrend analysis & history comparison

Quantify & justify rental pricing

Measure signage impact

Perform predictive analytics

Analyze changes impact

Analytics Benefits to Venues:

Cisco Public


Social & Wi-Fi – Joint Analytics and Single Sign-on

• Cisco and Facebook provide an integrated WiFi sign-on platform

• Allows customers to use their Facebook page as the splash page during WiFi login

• Delivers better user experience, encourages users to ‘check-in’ and ‘like’ Page

• Increase traffic on Facebook Page, share offers and announcements

• Facebook provides Page Insights for aggregate demographic data from check-ins

Cisco Public


Analytics Align with Carriers’‘Big Data’ Strategy• Internal optimization and performance benefits• External monetization

Frequency

Customers

Data Volume

Analytic Intensity

Value

Manual Reports Automatic Reports

One-Time Subscription Custom Single Feed Multi-Feed QueryableStatic report on network usage

Recurring report with analyzed data

Project-based analysis, output

API from database / network

API from database / network

Exposed database & network

Retail, SMB

Goodwill

Retail, SMBLarge Retail, Franchises

Larger B2B Larger B2B Multiple B2Bs

Location Analytics

Cisco Public


Service Providers Launching Analytics Business Units

Dynamic Insights by Telefonica

Precision Marketing by Verizon

Pinsight by Sprint

GeoVision by SK Telecom

Location Analytics

Cisco Public



Retention & Loyalty


Mobile Data Offload


Location Analytics


Cisco Public


Mobile Advertising is Broken

$20$0 $40 $60 $80

Cable (highly targeted)

Hulu (popular content)

Cable (local)

Broadcast TV primetime

Online video ad (prem.)

Broadcast TV

Want that

Average CPM $ by Advertising Type

Source:

RCBG analysis of advertisement market

Mobile

Online Banner

Cable Network

Online video ad - UGC

Getting this

Mobile CPMs are below expectations, closer to desktop than television

Location-based Advertising


Cracking the Nut: Moving to Targeted Mobile Advertising

% of Wi-Fi venues enabled for advertising

Source: Cisco & RCBG SP Wi-Fi Monetization Research (2013)

20% 0%40%60%80%100%

Volume-Based Impressions

Venues

LBS

100%No

eCPM $2-$5

Targeting-Based Mobile Ads

Venues

LBS

10%Yes

eCPM $24

ARPU uplift by year 5

$5.82

Volume-Based Impressions Hyper-Targeted


More mobile advertising revenues in 5 years

x2.5

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Highly Targeted Ads Drive CPM Revenues

4 Year Cumulative Revenues from Retail

Source: Cisco and RCBG Wi-Fi Monetization Research (2013)

Mall in Dubai

eCPM

4Y Rev.

$350$430M

Public venues in Western Europe

eCPM

4Y Rev.

$85$125M

Malls in Singapore

eCPM

4Y Rev.

$40$52M

Malls in Canada

eCPM

4Y Rev.

$24$40M$24$2 $40 $85 $350


Cisco Public


Go-To-Market and Value Creation Sources

Service Provider

Business Models Services

Other Service

Providers

Business

Consumers

B2B

B2C

B2SP

Managed Service

Mobile Advertising Analytics

Service Bundling Subscription

Mobile Advertising

Wholesale Services Roaming

Cisco Public


Thank you.

SP Wi-Fi Monetization Thought Leadership

Technology

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