While LTE and 3G adoption remains relatively low for Russia’s 249 million mobile subscribers, Wi-Fi is gaining traction among enterprise customers. In Russia, 3G and LTE adoption is at 5% and 31% respectively according to GSA which is low compared to Europe or other countries in Western Europe. This opens opportunity for Wi-Fi, where businesses pay a fix monthly fee per access point versus actual data usage fees associated with mobile data services provided by mobile operators which is typically much higher.
Enforta, Russia’s largest fixed wireless operator is forging ahead with Wi-Fi deployments at the request of its business customers who are using Wi-Fi as a marketing tool and to track subscriber usage patterns to gain data such as length of time in store and other insights into their customer base. Enforta deployed over 3000 Wi-Fi hotspots to date to provide service to more than 480 enterprise customers. The company uses Cloud4Wi platform to offer its managed Wi-Fi services which include customizable web pages for companies with multiple sites. Enforta is also providing Wi-Fi services for municipalities which include the public transportation system where Wi-Fi is available at over 100 stops in Moscow. Riders access free Wi-Fi services with speeds of up to 10MBps for up to 25 minutes per stop. This model provides revenue through advertising.
Enforta began deploying fixed wireless technology, WiMAX variant in 2003 time and gradually upgraded to fixed variant of LTE. This is where Enforta generates the bulk of it’s almost $100 million USD in annual revenue. However, Wi-Fi provides additional revenue. Unlike other operators who focus on consumers, Enforta only serve business customers. They are not using Wi-Fi to reduce churn as with other fixed line operators in other geographies but the company is charging a monthly fee for each access point it deploys which improves its overall ARPU with minimal investment.
Enforta uses Wi-Fi equipment from Ruckus and Cisco to provide Wi-Fi service in the 5GHz band using 802.11n technology with access points upgradeable to 802.11AC. The company is also interested in some of the advanced roaming capabilities enabled through Passpoint or Hotspot 2.0 but the current price for access points supporting these features is too high to sustain wide scale deployment. Enforta deploys its access point as an extension of its fixed wireless network by connecting to switches or modems in the customer’s communication closet via coax or fiber. Access point management is done through the home -grown fixed wireless network management system which keeps costs low and simplifies overall network management. Vendor provided management tools are used for initial access point configuration only.
By late 2017, Enforta plans to add Wi-Fi offloading as another component of its Wi-Fi monetization strategy. LTE network deployments have increased significantly, reaching more than 199 networks deployed in 79 regions at the end of 2014. Deployments continue in spite of the tough economic conditions resulting from the sanctions against the Russian government and devaluation of the Ruble. The huge geography landscape and lack of handset subsidy are cited as the major inhibitors to LTE adoption but operators are pushing LTE as a means to increase revenue. LTE is expected to increase ARPU by 30%. As user data usage increase mobile operators will need to off-load some of the traffic to Wi-Fi. Enforta is counting on cellular offloading to increase its Wi-Fi revenue even though this strategy is unproven in most market since off-loading the traffic also means potential loss in revenue. Off-loading may work until mobile operators are able to use small cell to fill coverage gaps in their networks especially since Russia has such a large land footprint.
To date, Wi-Fi accounts for approximately 1% of Enforta’s annual revenue and its planned expansion to 20,000 access point will increase this number to 9% to 10% of its current revenue without off-loading. Perhaps off-loading can bring Wi-Fi revenue contribution to 15% or more of Enforta’s overall revenue.
More details about Enforta’s Wi-Fi strategy along with many other operators can be accessed by clients at our online store.
About the Wi-Fi Intelligence Service
The Wireless Intelligence Service (WIS) is a market research initiative from Maravedis and Wi-Fi 360, to profile the carrier Wi-Fi strategies of the leading fixed and mobile operators worldwide. This unique service, which has the support of the Wireless Broadband Alliance, aims to help the carrier Wi-Fi industry to fill the gap in terms of market data and analysis regarding operator deployments. More information.
About Maravedis and Wi-Fi 360
Maravedis is a premier wireless infrastructure analyst firm. We help customers with reliable, unbiased and timely market analysis in the wireless infrastructure industry. We focus on broadband wireless infrastructure (including LTE, carrier WiFi, small cells, core network and wireless backhaul) as well as industry spectrum regulations and operator trends.
Wi-Fi 360’s mission is to empower and inspire professionals to monetize the Wi-Fi opportunity. Wi-Fi 360 provides research and marketing services to the Wi-Fi industry. Wi-Fi 360 is a division of Maravedis.