Carriers embrace WiFi

In the past year, WiFi has exploded on smartphones and in hot spots across the country. This unlicensed spectrum used to be a pain point for many wireless operators keen on keeping subscribers on their cellular networks, but given the momentum, they have been forced to embrace WiFi and – in some cases – even require it.

According to Ovum’s latest data, out of the 77 smartphone models released by key manufacturers between the second quarter of 2008 and first quarter of 2009, 49 had WiFi built in. It was a feature that spanned nearly all smartphones, not just high-end models, and is moving into the feature-phone market, as well as across operators’ triple-play product lines, according to Edgar Figueroa, executive director of the WiFi Alliance. 

Carriers may still be adjusting to the notion that WiFi is increasingly necessary as too much traffic and bandwidth-intensive applications and services tax their network. Ovum said that despite their reluctance, carriers are being forced to include WiFi because consumers’ expect it. In fact, both Sprint and Verizon have pledged to actually require WiFi in their upcoming phones, starting with the next Sprint’s BlackBerry Tour after the recently launched edition was criticized for its lack of WiFi. Verizon’s WiFi-less BlackBerry Storm device was also the subject of criticism when it launched last year, as was Sprint’s BlackBerry Curve and Palm Centro.

Some have postured that the reason for these CDMA carrier’s lack of support is that manufacturing costs for CDMA handsets are higher than for GSM handsets, making WiFi less desirable, but Current Analysis analyst Peter Jarich said it is more likely driven by specific carrier concerns. Verizon, in particular, has a history of condemning WiFi use in its handsets.

“It’s interesting – there is still this belief that we don’t need WiFi,” Jarich said. “It is, to some extent, ingrained in operators.” He pointed out that while Verizon does not have as many WiFi-enabled smartphones in its line up as other carriers, the fact that it is carrying any is significant in showing the acceptance of the technology. “It’s not just that Verizon has five [WiFi] phones, it’s that it’s Verizon, who has long been one of the staunchest opponents or naysayers of WiFi,” he said. “If they have it, it’s coming whether or not you like it.”

Unlike their CDMA competitors, GSM carriers AT&T and T-Mobile extensive WiFi relationships. AT&T has the largest nationwide WiFi network with more than 20,000 hotspots following its 2008 acquisition of WiFi provider Wayport. In the second quarter, AT&T had nearly 15 million WiFi connections on its network – a 41% increase over Q1. Of these, nearly half came from smartphones. Dennis Whiteside, vice president of marketing for AT&T’s WiFi business, said that WiFi is not a specific requirement for handsets on AT&T’s network, but the carrier does requests that some smartphones, as well as emerging devices, do include it so customers have the choice.

“The network is there and it makes it easy for us to put the traffic on the right network,” Whiteside said. “We view it as WiFi and 3G are both wireless broadband, and we’ve brought them together and made them very compatible.”