Exclusive Insights into Impact of Google’s Project Fi and VoWiFi

Analyst and contributing editor Frank Ohrtman sees potential 20% market share loss for AT&T, Verizon

Google’s April 22, 2015 announcement of its long-rumored mobile service, Project Fi, could trigger a 20% loss of subscribers for AT&T and Verizon.   According to market analyst and author Frank Ohrtman, the technology at the center of that announcement, Voice over WiFi (VoWiFi)  is already in wide use by cable and cellular providers alike. Despite its market clout, Google may be more market follower than leader in this case.

The recently released report “Project Fi: Twenty Percent Carrier Market Share Loss in 20 Months” which studies existing VoWiFi  operators such as Cablevision and Scratch Wireless, is exclusively available through a partnership of TelecomEngine.com Mind Commerce research.

VoWiFi, also known as WiFi calling, is the technology where a voice stream is packetized (VoIP) and transmitted from the handset to the network over Wi-Fi. “That handset requires the somewhat simple technology to packetize voice and connect to a Wi-Fi network. Any smartphone can do this using any array of apps and associated service provider networks (skype, others) connecting to any available Wi-Fi network (home, office, hotspot),” according to Ohrtman, author of the book “Voice over 802.11” (Artech House 2004).

The technology enables VoIP calls on Wi-Fi networks and more importantly, enables a seamless migration from cellular to Wi-Fi networks. T-Mobile and Sprint have been using this technology to great effect to woo AT&T and Verizon subscribers with unlimited calling, texts and data.

Google positions Project Fi as a program to deliver a fast, easy wireless experience in close partnership with leading carriers, hardware makers, and our users. The company will use more than a million Wi-Fi hotspots as the foundation of its network, filling in the gaps with cellular based on deals with Sprint and T-Mobile.

Mind Commerce predicts that AT&T and Verizon will lose 20% of their cellular customers within 20 months of the launch of Google’s Project Fi. The immediate driver for that may be a simple churn of customers away from the number one and number two providers toward the number three (Sprint) and number four (T-Mobile). However, other market forces will contribute to that 20% loss of market share.

Two concepts support this premise: disruption and disaggregation. Verizon and AT&T’s premium mobile services are disrupted and disaggregated by low cost Wi-Fi and VoIP offerings offered through competing mobile providers, cable providers and Wi-Fi-only services.

Ohrtman sees cable providers potentially benefiting the most by deploying VoWiFi as it affords them a mobile play completing the long sought after native quadruple offering of voice, video, data and mobile services delivering high margins relative to reselling a cellular service. Ultimately, cable providers could accrue a total market domination of household telecommunications expenditures as those providers offer all services taking revenues from cellular providers AT&T and Verizon.

“It will especially interesting to watch the level of disruption occurring to blue chip telecommunications providers who fail to anticipate loss of market share to a technology like VoWiFi,” Ohrtman said.

The report, “Project Fi: Twenty Percent Carrier Market Share Loss in 20 Months,” evaluates the potential impact of Project Fi and makes predictions of the impact on the ecosystem including cable operators and mobile network operators. Highlights include:

Google – Most notably, Google has announced its Project Fi as a VoWiFi service with roaming onto the cellular networks of Sprint and T-Mobile when or where Wi-Fi is not available. By virtue of enjoying over 50% of the smartphone operating system market (Android), Google has the market clout to direct traffic away from providers like Verizon and AT&T.

T-Mobile and Sprint – Both the number 3 and number 4 US cellular providers are transitioning their service offering to move callers onto Wi-Fi when an accessible Wi-Fi network is available.  While there are many economies for doing this, it may indirectly portend a move to VoWiFi for even the most competitive cellular providers.

Cablevision – One of the larger US cable TV providers, which recently launched its Wi-Fi-only mobile voice service with the brand name Freewheel.

Microsoft – Lest we forget, Skype service has been around longer than smartphones.

Ohrtman, who predicted the rise of VoWiFi with relative accuracy looking out 10 years from 2004, shared additional thoughts with TelecomEngine.com to put the emerging, disruptive trend in context:

“In the enterprise, VoIP is now standard,” he said. “Almost all long distance voice is converted to VoIP at some point. Cable TV providers offering voice services do so using VoIP and 4G/LTE providers are migrating voice services to VoIP. Landline telephone service providers have lost upwards of 50% of their voice subscribers to other service providers and technologies.”

Focusing ten years into the future, let me make more predictions:

1. VoWiFi will be the dominant voice technology.

2. Landline telephony will no longer exist in the enterprise and may vanish from the residential market

3. VoWiFi will constitute 80% of all voice traffic

4. The enterprise market will no longer relay on cellular provider. Rather, they will equip their employees with VoWiFi-optimized smartphones with VoWiFi  apps that make calls via the corporate, cloud hosted VoIP platform. This will eliminate a large percentage of their telecommunications costs.

“Given that consumers spend 80% of their time in a Wi-Fi zone and that 80% of data traveling through a smartphone is done via Wi-Fi, these are not hard predictions to make,” Ohrtman said.

Featured Report

Project Fi: Twenty Percent Carrier Market Share Loss in 20 Months
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• What is VoWiFi? And why is it important?

• What drives migration from premium cellular?

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