Wi-Fi: Friend or Foe?

The EU’s Hot-Spot Plans Could Pose a Threat to Wireless Operators

In the age of over-the-top services, smartphone users have learned how to be agnostic to the underlying network technology. They prefer robust connectivity, and getting it for free is better than paying the operator a fee. So when governments plan gratis wide area wireless, it could challenge mobile operators. There’s a potential substitution effect at work here, although operators tend to consider, publically at least, that the two technologies complement rather than compete with each other.

On Wednesday, European Commission president, Jean-Claude Juncker, in the annual State of the Union address, proposed supporting free Wi-Fi for populations in the EU. The commission is the decision-making branch of the EU and is responsible for proposing legislation and carrying out the day-to-day business of the union.

The project, entitled WiFi4EU, aims to put free Wi-Fi hot spots in parks, squares, libraries and other public buildings. It’s a grand vision of mass municipal Wi-Fi with a beneficial intention of democratising connectivity.

In addition to suggesting free Wi-Fi, the commission has also proposed a reform of its telecommunication regulations. It wants to make affordable broadband Internet access a part of the universal service obligation for telecommunication operators. It will be up to national governments to ensure people with low incomes have access to such services, perhaps by offering vouchers to cover the cost or by requiring operators to provide special tariff options. The commission plans to provide €120 million through 2019 to subsidise the acquisition and installation of Wi-Fi hot spots in over 6,000 locations.

The goal of digital inclusion is admirable, but municipal Wi-Fi has a mixed track record of success, which indicates that the realities of implementation can’t be easily cancelled out. However, if the commission succeeds with a broad roll-out of wireless Internet, it could be a disruptor to mobile operators and even local Internet service providers. Wi-Fi could be a good substitute for cellular access and subscribers have become clever in juggling their connections. Subscriber growth has reached a ceiling and the EU’s plans could add a dose of uncertainty to the market.

Somewhat ironically, the same proposal also includes plans to deploy 5G mobile networks across the EU by 2025. European wireless operators are already preparing to roll out the next generation of networks, but the same efforts to encourage fast WANs could be slowed by plans to encourage fast WLANs.

The EU’s public endeavours will most likely encourage more-private efforts to keep costs down and connectivity available.