Consumer and service provider interest in voice over WiFi (VoWiFi) has surged since last year’s June introduction of Apple’s iOS8 and the corresponding Fall launch of iPhone 6. VoWiFi, also known as WiFi Calling, has emerged as a new capability for smartphones that allows a mobile user to use the same phone number and the same smartphone dialer interface whether making a call over the cellular network or over any WiFi network.

The new VoWiFi capability differs from existing VoIP technology like Skype or Facetime in that these ‘Over The Top’ services cannot maintain the call connection when moving from WiFi to cellular coverage, since they require the user to download a separate application, use a separate dialer interface, and make the call using a different phone number.

Very important, however, is the fact that this new VoWiFi capability is only available to consumer phones once the service provider has invested in a VoWiFi infrastructure. Without this investment, VoWiFi services are not available to the consumer. Therefore, in this two-part blog, we will touch on some important VoWiFi services themes that have emerged as catalysts to the SP VoWiFi capital spending investment, as well as what we see as the three different deployment plans being adopted by service providers to support VoWiFi service.

Planning and Network Building Activity

Our discussions with equipment vendors and service providers (SPs) in the months that preceded and followed the Apple launch have shown considerable planning and network-building activity. While most cellular service providers view VoWiFi as a coverage-enhancement strategy for customers, MVNOs view VoWiFi as a means of achieving lower-costs that are then passed onto customers. We have learned of many advantages of using VoWiFi. Quantifying the return on investment is difficult but it is generally positive, and we have learned it varies from operator to operator due to their unique customer bases, competitive dynamics in their markets and the networks they have already deployed. We also have found that the plans that service providers have for adopting VoWiFi vary widely, from immediate adoption to delaying adoption, at least in part due to each operator’s expectation of the financial return and their perception of voice quality.

Early VoWifi Service Offerings

At this point, the “poster child” for VoWiFi adoption is T-Mobile USA. It has made the most out of its WiFi-calling announcement and currently has more customers and calls-made on WiFi than any other service provider we are aware of. The vendor that has supplied the application server technology for this capability is a recently-IPO’d vendor, Mavenir Systems, of Texas. T-Mobile US voice infrastructure also involves other vendors, including Ericsson.

VoWifi Adoption—Common Themes Across all Service Providers (including MVNO’s, etc.)

  • Theme 1 – Five Bars: The availability of VoWiFi service increases the likelihood that consumers will have ‘five bars’ of coverage. WiFi coverage is becoming very common at homes, businesses and in public places – most often in indoor settings. Nearly all cellular coverage deployed worldwide today is delivered using outdoor ‘macro’ systems that work well outdoors but generally coverage does not penetrate inside buildings very well (yes, there is a very significant technical discussion one could have about frequencies, physics, small cells and many other related topics).
  • Theme 2 – Improved Relationship between SP and Consumer: VoWiFi allows SPs to maintain a stronger service relationship with customers. T-Mobile US, for instance, claims that it is experiencing fewer customer disconnects from its service, at least in part due to its Uncarrier 7.0 announcement of WiFi Calling. In fact as of December 2014, 6.6 million Wi-Fi Calling calls were made each day by its customers. Our expectation is that offering VoWiFi service may also reduce reliance on services like Facetime, Skype or their alternatives. H3 UK also views WiFi Calling to be a differentiator, according to [3 UK website literature].
  • Theme 3 – VoWiFi is viewed as financially attractive to SPs : VoWiFi is viewed as financially attractive by many SPs. Either due to reduced customer churn, adoption of VoWiFi before VoLTE at a fraction of VoLTE’s cost, as a customer acquisition tool, as a means of increasing coverage without deploying additional cellular towers or femtocells, or as primary means of enabling lower-cost services.
  • Theme 4 – VoWiFi is a complement, not a replacement, to cellular service: VoWiFi service without cellular coverage is not worth all that much. This is because consumers expect to have coverage everywhere – not just at home and business. [Cablevision], a large cable operator in New York, [announced in late January 2015], that it will launch a WiFi-only mobile phone service – this will be a test of this theme, especially since it is charging relatively high prices. Other operators like [Freedompop] and [Republic Wireless] are offering WiFi-only plans at low monthly prices, but also have arrangements with facilities-based cellular operators to allow much broader coverage at higher costs.
  • Theme 5 – WiFi is popular and users prefer it in many cases: Using WiFi is viewed favorably by a growing portion of users. WiFi is becoming ubiquitous in many indoor settings like home, work and a growing number of public places including airplanes. We calculate that the installed base of WiFi infrastructure devices such as access points and routers [will approach 1 billion devices] in several years.

In the second part of this blog, we will talk about what the response has been from service providers and we will discuss their roll-out plans.


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Chris DePuy

Posted by Chris DePuy on February 24, 2015

About Chris

Chris DePuy is responsible for Dell’Oro Group’s Carrier IP Telephony, Wireless LAN, Wireless Packet Core And Storage Systems market research programs. He has more than 20 years of financial and business analysis, and engineering experience.