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, low numbers when compared to Europe or other countries in Western Europe. The low adoption rate opens up the opportunity for Wi-Fi, where businesses pay a fixed monthly fee per access point vs. 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 that use Wi-Fi as both a marketing tool and to track subscriber usage patterns to gain data such as length of time spent in the store and other insights into their customer base. Enforta has deployed more than 3,000 Wi-Fi hot spots to date, providing service to more than 480 enterprise customers. The company uses the Cloud4Wi platform to offer its managed Wi-Fi services, which include customizable Web pages for companies with multiple sites. Enforta also is providing Wi-Fi services for municipalities, which includes 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 10 MBps for up to 25 minutes. This model provides revenue through advertising.
Enforta began deploying fixed wireless technology, a WiMAX variant, in 2003 and gradually upgraded to a fixed variant of LTE, where Enforta generates the bulk of it’s almost $100 million in annual revenue. However, Wi-Fi provides additional revenue. Unlike other operators that focus on consumers, Enforta only serves business customers. It is not using Wi-Fi to reduce churn as do 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 5 GHz 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 widescale deployment. Enforta deploys its access points 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 homegrown 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 geographic landscape and lack of handset subsidies 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 data usage increases, mobile operators will need to offload 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 markets since offloading the traffic also means a potential loss in revenue. Offloading may work until mobile operators are able to use small cells 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 points will increase this number to 9-10% of its current revenue without offloading. Perhaps offloading can raise the Wi-Fi revenue contribution to 15% or more of Enforta’s overall revenue.
More details about Enforta’s Wi-Fi strategy can be accessed by clients here.
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