Report for Arqiva. Public Wi-Fi networks in a 4G world. 19 November Tom Rebbeck & Matt Yardley. Ref:

Transcription

1 . Report for Arqiva Public Wi-Fi networks in a 4G world 19 November 2014 Tom Rebbeck & Matt Yardley Ref:

2 Contents 1 Executive summary 1 2 Introduction Overview of the sample 3 3 Results of the survey The usage and perception of public Wi-Fi networks Role of mobile operators in provision of public Wi-Fi networks 18 4 Implications of the survey 21 Annex A Annex B Conjoint analysis, utility scores for all price options Responses of people in London and those aged compared to the overall sample

3 Public Wi-Fi networks in a 4G world Confidentiality Notice: This document and the information contained herein are strictly private and confidential, and are solely for the use of Arqiva. Copyright The information contained herein is the property of Analysys Mason Limited and is provided on condition that it will not be reproduced, copied, lent or disclosed, directly or indirectly, nor used for any purpose other than that for which it was specifically furnished. Analysys Mason Limited Bush House, North West Wing Aldwych London WC2B 4PJ UK Tel: +44 (0) Fax: +44 (0) london@analysysmason.com Registered in England No

4 Public Wi-Fi networks in a 4G world 1 1 Executive summary In July 2014, Arqiva commissioned Analysys Mason to explore how UK consumers perceive public Wi-Fi services. In our survey of 2000 UK residents, respondents answered questions about how much they use public Wi-Fi networks 1 and what they think of them, and how they compare to cellular networks. This research explores the trade-off between public Wi-Fi networks, which are typically free but only available in certain locations (e.g. cafés, shopping centres), and cellular networks, which involve a cost to the user but are almost ubiquitously available. This report outlines the findings from our research, as well as indicating some of the future implications of the results. The key conclusions are: Public Wi-Fi networks are highly relevant for 4G subscribers. Subscribers with 4G devices use and value public Wi-Fi networks. 4G subscribers, more than the average subscriber, place high value on public wireless data access 2, regardless of the network technology used (cellular or Wi-Fi). The survey shows that: 4G subscribers are as likely as non-4g subscribers to use public Wi-Fi networks. 4G subscribers place a slightly higher monetary value on access to public Wi-Fi networks than non-4g subscribers. 4G subscribers would be more likely than non-4g users to switch to a mobile operator that provided public Wi-Fi connectivity as part of their contract. Non-4G subscribers prefer public Wi-Fi networks to cellular networks. Non-4G users rate public Wi-Fi networks more highly than cellular connectivity. These users also place a relatively high monetary value on public Wi-Fi connectivity and would take into account the provision of public Wi-Fi services as part of their choice of network provider. The results are significant as the overwhelming majority of handsets in use today are 2G/3G-only and will continue to be for a number of years (until 2018 according to Analysys Mason forecasts). UK mobile subscribers would rather have an equal balance of cellular and public Wi-Fi access in their data allowance rather than a bundle that favours either cellular or public Wi-Fi access. When offered a bundle of data (e.g. 10GB) for a given price (e.g. GBP10), respondents preferred to have an equal balance of data across public Wi-Fi and cellular networks, rather than opting for a bundle favouring either cellular or public Wi-Fi access. This is a strong indication of the value users place on public Wi-Fi connectivity. Furthermore 80% of all tablets and laptops are only used on Wi-Fi networks. 1 2 By public Wi-Fi we mean Wi-Fi access in public places, i.e. locations outside the home or usual place of work By public wireless data we mean data connectivity on all wireless networks outside of the home or office, i.e. cellular and Wi-Fi networks

5 Public Wi-Fi networks in a 4G world 2 Users see mobile operators as the most likely provider of public Wi-Fi networks. Customers see mobile network operators as the obvious providers of Wi-Fi services outside the home or place of work, even if customers do not fully appreciate who is providing the public Wi-Fi infrastructure. Offering public Wi-Fi services may help win new customers and assist in retention. 59% of respondents cited their mobile operator as the provider they would most likely use for public Wi-Fi connectivity. 58% of respondents (and more for 4G subscribers) would churn to a mobile network operator that provided public Wi-Fi connectivity as part of the subscription. These findings provide a snapshot of opinion at a specific moment in time, though clearly the market is not static: a number of factors will create changes in the market for public wireless data connectivity. For example 4G will be rolled out and adopted more widely, while Hotspot 2.0 will make Wi-Fi network log-in simpler. However, we do not expect that these developments will significantly shift the balance of perceived performance of the two technologies. Overall, the survey provides evidence that the usage and deployment of public Wi-Fi connectivity is needed as a complement to cellular networks in order to meet consumer communications needs in a variety of contexts. The move to 4G does not reduce the need for public Wi-Fi infrastructure and may in fact reinforce the requirement for high-quality wireless networks of all types.

6 Public Wi-Fi networks in a 4G world 3 2 Introduction In July 2014, Arqiva commissioned Analysys Mason to explore how UK consumers perceive public Wi-Fi services. In our survey of 2000 UK residents, respondents answered questions about how much they use public Wi-Fi networks 3 and what they think of them, and how they feel they compare to cellular networks. In the survey we asked about: the respondent (age, gender etc.) communications services used devices used use and satisfaction of public Wi-Fi and cellular services. The survey was performed by Survey Sampling International 4, using an online questionnaire developed by Analysys Mason. The analysis and interpretation of the results was performed by Analysys Mason. This report outlines the findings from our research. We have also provided some indications of the future implications of the work. This report is intended to help answer some of the key questions and dispel myths surrounding public Wi-Fi networks by providing a detailed understanding of end user perceptions of different networks. This report is structured as follows: Section 2.1 provides more details of the sample and basic information on the sample of survey respondents. Section 3 reports the results of the survey. Section 4 discusses the implications of the survey results with some discussion of technology and market developments. 2.1 Overview of the sample The sample was designed to reflect accurately the UK population The sample of 2000 adults was designed to be representative of the UK adult population overall, with quotas for age, sex, region and employment status. We are confident that the overall results 3 4 By public Wi-Fi we mean Wi-Fi access in public places, i.e. locations outside the home or usual place of work See

7 Scotland North East Wales North West Yorkshire and the Humber East Midlands West Midlands East Anglia South East London South West Northern Ireland Public Wi-Fi networks in a 4G world 4 are a good reflection of the overall UK population. For example, as can be seen in Figure 1, the survey provides a very close match to the overall UK population. 14% 12% 10% Figure 1: UK population by region 5 [Source: Analysys Mason, 2014] 8% 6% 4% 2% 0% Survey UK population The sample is representative of the UK telecoms market Although we did not set quotas for subscribers choice of telecoms service provider, the results from the survey give a reasonable representation of the UK market. In Figure 2, we can see the relationship between survey respondents and UK mobile subscribers, which we believe shows that the sample is a reasonable reflection of UK subscribers. 5 Question: Which of the following regions best describes where you live? n=2003

8 Public Wi-Fi networks in a 4G world 5 40% 35% 30% Figure 2: Share of mobile network providers 6 [Source: Analysys Mason, 2014] 25% 20% 15% 10% 5% 0% EE O2 Vodafone 3 Others Survey Q1 2014, UK market In Figure 3, we can see the relationship between survey respondents and the UK s fixed broadband market. Again, the match is not exact, but we believe it is close enough to provide a reasonable representation of the UK market. 35% 30% 25% Figure 3: Share of home broadband provider [Source: Analysys Mason, 2014] 20% 15% 10% 5% 0% BT Sky TalkTalk Virgin Media Others Survey Q1 2014, UK market The respondents appear to be slightly more technologically sophisticated than the UK average The results of the survey suggest that our respondents are more technologically sophisticated than the overall market as a whole. Online surveys by definition tend to exhibit a slight bias in towards people who are slightly more technologically literate than the average. While we do not believe 6 All subscribers to MVNOs have been included with the host network operator to make the results comparable with published market data. All data on market shares is taken from Analysys Mason s Telecoms Market Matrix, Western Europe 1Q 2014 (see

9 Public Wi-Fi networks in a 4G world 6 this affects the main findings of the survey, it means we need to exercise some caution in translating the results to the population as a whole. The evidence for concluding that the respondents may be somewhat more technologically advanced than the general population can be seen in two metrics: Firstly, and as can be seen in Figure 4, while across the overall UK market, around 75% of UK mobile subscribers had a smartphone 7, in our survey the figure was higher, at 95%. Secondly, almost 30% of the respondents believed that they have a 4G device (Figure 5), whereas for the overall market, 4G devices account for closer to 10% of handsets. The difference between the survey responses and the market may be down to self-reporting. While the question was explicit ( Does your mobile phone service include 4G? ) the results reflect what the respondents think they have, rather than what they actually have (e.g. an owner of an iphone 4 may believe that it is a 4G device). The survey results remain valid as we are concerned here with perceptions of services and service quality, which may differ from actual performance. Figure 4: Percentage of smartphone owners, survey results compared to UK market 8 [Source: Analysys Mason, 2014] Figure 5: Ownership of a 4G handset, survey results compared to UK market 9 [Source: Analysys Mason, 2014] 100% 90% 80% 70% 60% 50% 95% 40% 77% 30% 20% 10% 0% Survey UK market Survey UK market Yes No Don't know Source: Analysys Mason Western Europe telecoms market: concise trends and forecasts (8 countries) , RDDG0/ Question: Is your primary mobile phone a smartphone? n=2003; Question: Does your mobile phone service include 4G? n=2003

10 Public Wi-Fi networks in a 4G world 7 Respondents were well placed to answer questions on Wi-Fi network usage from devices other than mobile handsets The survey was filtered so that all respondents had a mobile handset. As part of the survey, we also asked respondents about access to devices 10 other than mobile handsets. The vast majority of respondents to our survey had access to multiple Wi-Fi-enabled devices. As can be seen in Figure 6, just 4% of the sample did not have access to a Wi-Fi device other than their handset. Respondents were therefore in a good position to answer question on Wi-Fi network usage. Laptop PC Tablet Figure 6: Access to connected devices other than mobile handsets 11 [Source: Analysys Mason, 2014] E-book reader Handheld console Other None of these 0% 20% 40% 60% 80% 100% Note that the survey did not ask about device ownership, but access to a device, so including respondents who may use a tablet on a regular basis even if it does not belong to them ~ for example within the family or provided by work. Question: Which of the following devices do you own, or have regular access to (for example, through someone who lives with you)? n=2003

11 Public Wi-Fi networks in a 4G world 8 3 Results of the survey The main survey focused on two areas: the usage and perception of public Wi-Fi networks compared to cellular networks the role of mobile operators in providing public Wi-Fi services. Each of these is covered in a separate section below. 3.1 The usage and perception of public Wi-Fi networks The key findings relating to the usage and perception of public Wi-Fi networks are: Public Wi-Fi networks are highly relevant for 4G subscribers. Subscribers with 4G devices use and value public Wi-Fi networks. We believe that 4G subscribers, more than the average subscriber, place high value on wireless data, regardless of the network technology used (cellular or Wi-Fi). The survey shows that: 4G subscribers are as likely as non-4g subscribers to use public Wi-Fi networks. 4G subscribers place a slightly higher monetary value on access to public Wi-Fi networks than non-4g subscribers. 4G subscribers would be more likely than non-4g users to switch to a mobile operator that provided public Wi-Fi as part of their contract. Non-4G subscribers prefer public Wi-Fi networks to cellular networks. Non-4G users rate public Wi-Fi networks more highly than cellular connectivity. These users also place a relatively high monetary value on public Wi-Fi connectivity and would take into account the provision of public Wi-Fi services as part of their choice of network provider. The results are significant as the overwhelming majority of handsets in use today are 2G/3G-only and will continue to be for a number of years (until 2018 according to Analysys Mason forecasts). UK mobile subscribers would rather have an equal balance of cellular and public Wi-Fi access in their data allowance rather than a bundle that favours either cellular or public Wi-Fi access. When offered a bundle of data (e.g. 10GB) for a given price (e.g. GBP10), respondents preferred to have a balance of data across public Wi-Fi and cellular networks, rather than opting for a bundle favouring either cellular or public Wi-Fi access. This is a strong indication of the value users place in public Wi-Fi connectivity. Furthermore, 80% of all laptops and tablets are only used on Wi-Fi networks.

12 Public Wi-Fi networks in a 4G world 9 The vast majority of respondents use public Wi-Fi networks, and 4G subscribers are only marginally less likely to use them than others We asked respondents about their usage of public Wi-Fi networks. As can be seen in Figure 7, more than three quarters of respondents use public Wi-Fi services, with very little difference between the results from non-4g users and the results from users who believe they are on 4G. Public Wi-Fi connectivity is relevant to all users. Figure 7: Portion of respondents that use public Wi-Fi networks 12 [Source: Analysys Mason, 2014] 76% 75% 76% Respondents who use public Wi-Fi networks 4G respondents who use public Wi-Fi networks Non-4G respondents who use public Wi-Fi networks Price emerges as the main reason for using public Wi-Fi connectivity; though for 4G users the speed of the alternative cellular network matters greatly We asked respondents why they choose to use public Wi-Fi connectivity. As is to be expected, for the majority, price was the key driver for usage of public Wi-Fi networks (see Figure 8). In many locations (e.g. cafés, shopping centres) access to public Wi-Fi access is provided to the user for no additional charge. 12 Questions: Do you ever use Wi-Fi offered by your mobile phone provider/home broadband provider/other Wi-Fi providers outside of your home or usual place of work (e.g. public transport, shopping centres, cafes)? n=2003

13 Public Wi-Fi networks in a 4G world 10 Figure 8: Highest rated It is free No mobile data signal 19% 16% 23% 45% 56% 63% reason for using public Wi-Fi networks. Percentage of respondents giving highest response 13 [Source: Analysys Mason, 2014] Faster than my mobile data signal 11% 16% 24% 0% 10% 20% 30% 40% 50% 60% 70% All respondents Non-4G users 4G users Price is not the only factor affecting usage of public Wi-Fi infrastructure. Almost a fifth of users (19%) connect to a public Wi-Fi network because no mobile signal is available. This figure is slightly higher for 4G users (23%). Differences between 4G and non-4g users are striking. Price is notably less of a constraint for 4G users. This may be a short-term effect early adopters of 4G may well have more disposable income and larger data bundles and so are less price-sensitive than other users. The relative importance of the mobile data speed between 4G and non-4g users is notable, with 4G users much more likely to use (faster) public Wi-Fi connectivity. Reasons for this difference could be: Many 4G subscribers spend time outside 4G coverage, and so public Wi-Fi access may be a faster option than resorting to 3G or 2G coverage. 4G users may be more demanding about data speeds (which is partly why they are on 4G) and so will use a public Wi-Fi network when it appears to be better than the cellular network (e.g. when no 4G connectivity is available). Lack of availability and inconvenience are the key barriers to using public Wi-Fi networks Respondents were asked about the reasons for not using public Wi-Fi services. The highest rated reasons given for not connecting to public Wi-Fi infrastructure, shown in Figure 9, are lack of availability ( can t find it ) or the effort required to establish a connection ( too much hassle to connect ). As will be discussed in Section 4, we expect some of these barriers to be reduced over time, for example as Hotspot 2.0 removes the need for subscribers to manually log on to a Wi-Fi network. 13 Question: When you choose to use [public Wi-Fi], on what do you base this decision? Please rank all options that apply in order of their relevance/importance to you. Response options were: I have no signal for my mobile data connection, It is faster than my mobile data connection, It is free, I pay for it, but it is cheaper than mobile data, I don't want to use up my mobile data allowance, I'm not sure (exclusive), Other, please specify. n=1450

14 Public Wi-Fi networks in a 4G world 11 Can't find it Quality not good enough 29% 32% 24% 27% 23% 34% Figure 9: Highest rated reason for not using public Wi-Fi networks. Percentage of respondents giving highest response 14 [Source: Analysys Mason, 2014] Too much hassle to connect 24% 23% 26% 0% 10% 20% 30% 40% All respondents Non-4G users 4G users Results are broadly consistent between 4G and non-4g users (though 4G users are more sensitive to the quality of public Wi-Fi networks). In performance terms, respondents believe that public Wi-Fi networks are better than cellular networks in general Respondents were asked two sets of questions about the overall performance of public Wi-Fi and cellular networks. We asked respondents to score the performance of public Wi-Fi, cellular and (where applicable) 4G networks. These questions were asked in isolation with no comparison between different technologies. We also asked respondents to score public Wi-Fi services relative to cellular connectivity and (where applicable) 4G connectivity. We asked whether, overall, public Wi-Fi or cellular connectivity was superior. Overall, respondents believe that public Wi-Fi networks are better than non-4g cellular networks but not as good as 4G networks. When asked for the absolute score for services in isolation, as can be seen in Figure 10 and as we would have expected, 4G connectivity scored best, followed by public Wi-Fi and then cellular networks. We see similar results when the panel was asked about the relative performance of networks. 14 Question: On the occasions you DON'T use this service, on what do you base this decision? Please rank all options that apply in order of their relevance/importance to you. Response options were: I cannot find it, I have to pay for it and I think it should be free, I am willing to pay for it but it is too expensive/not good value for money, It is too much of a hassle to connect to, The quality of the connection isn't good enough, I don't trust the provider with my personal data, I m not sure (exclusive), Other, please specify. n=1052

15 Satisfaction (5 = very satisfied) Public Wi-Fi networks in a 4G world 12 Figure 10: Perceptions of performance of all cellular networks, public Wi-Fi and 4G networks 15 [Source: Analysys Mason, 2014] Figure 11: Relative performance of public Wi-Fi networks compared to cellular and 4G networks 16 [Source: Analysys Mason, 2014] 5.0 Preference for cellular Preference for Wi-Fi 4.0 Non-4G users 3.0 4G users All users Cellular networks, overall 4G networks Public Wi-Fi networks Relative result The strong performance of public Wi-Fi connectivity is important as most tablets will never use a cellular network We asked respondents with access to a tablet whether their tablet is capable of cellular connectivity if so, whether cellular connectivity is used. As can be seen in Figure 12, the survey found that the majority of tablets do not have cellular connectivity, and fewer than 40% use cellular connectivity. The majority of tablet users therefore have no alternative to public Wi-Fi networks when out of the home. In Figure 12, we also show the results from a previous Analysys Mason tablet survey, which asked a very similar question about cellular connectivity. This comparison suggests that usage of cellular connectivity among respondents to the current survey is higher than for the market as a whole, which may reflect the fact that respondents are more technologically sophisticated than average consumers. For devices other than their primary handset, most UK subscribers will only have the Questions: How would you score the following when you are using the data connection of your mobile phone (e.g. your 3G connection, NOT Wi-Fi)? n=1247; How would you score the following when you are using the 4G data connection of your mobile phone? n=587; How would you score your satisfaction with any Wi-Fi services you use outside your home or usual place of work? n=2003 Question: How do you perceive mobile data compared to Wi-Fi when outside your home and usual place of work? n=2003. Note that the positive/negative used on the chart is used to illustrate the results only. In the questionnaire, respondents were simply asked which service was superior on a five point scale

16 Public Wi-Fi networks in a 4G world 13 option of public Wi-Fi connectivity. From a previous survey performed by Analysys Mason, only 17% of UK consumers use tethering % 45% 40% 35% 30% 25% 20% Figure 12: Usage of tablet on cellular networks from this survey 18 and from Analysys Mason s previous tablet survey 19 [Source: Analysys Mason, 2014] 15% 10% 5% 0% Tablets with cellular connectivity Tablets that use cellular connectivity Tablets that use cellular connectivity often Survey Analysys Mason's previous tablet survey The Van Westerndorp price analysis suggests that users place a higher value on public Wi-Fi connectivity than is commonly assumed To gain a view of the pricing for cellular, public Wi-Fi and 4G services, respondents were asked a series of questions about an unlimited package of public Wi-Fi or cellular data. Respondents were asked at what price the package would be too expensive to be considered expensive but worth considering very good value for money priced so low that the quality could not be very good. Based on the intersection of the range of results to these four questions, the Van Westerndorp price sensitivity analysis provides an indication of the range of prices people are willing to pay. The results of this for the entire sample are illustrated in Figure See The Connected Consumer Survey 2013: smartphones, mobile data access and monetisation, Question: Do you ever use your smartphone for 'tethering'? n=6610 Questions: Which of the following devices do you own, or have regular access to (for example, through someone who lives with you)? n=2003; Does your tablet have a mobile broadband connection (i.e. 3G/4G)?, n=1226; How often do you use your tablet's 3G/4G mobile broadband connection? n=569 Source: Analysys Mason Tablet survey worldwide 2013: devices, data plans and connectivity current usage, future intentions, RDMM0/#15%20November% The specific question asked was: Is your tablet 3G/4G compatible, or is it only able to support Wi-Fi connectivity?

17 GBP Cellular connectivity Public Wi-Fi connectivity Public Wi-Fi networks in a 4G world Figure 13: Range of values assigned to unlimited monthly data bundle, all respondents [Source: Analysys Mason, 2014] Looking at the ranges, some of the responses are to be expected: The maximum price of cellular connectivity is higher than public Wi-Fi connectivity. Given the greater utility of cellular networks (i.e. they can be accessed in a wider range of locations) this output is in line with expectation. The minimum price of cellular connectivity is higher than for public Wi-Fi connectivity. Again, it is to be expected that the minimum value of cellular connectivity is higher than public Wi-Fi connectivity due to the greater utility. However some of the results are more surprising and illustrate the value users place on public Wi- Fi networks. Subscribers place relatively high value on public Wi-Fi connectivity. Considerable overlap exists between the values for public Wi-Fi and cellular connectivity. Given the additional utility of cellular networks, it would be reasonable to assume that the difference between Wi-Fi and cellular connectivity would be greater. Below, we see the same results but this time for 4G users (Figure 14) and non-4g users (Figure 15).

18 GBP Cellular connectivity Public Wi-Fi connectivity GBP Cellular connectivity Public Wi-Fi connectivity Public Wi-Fi networks in a 4G world 15 Figure 14: Range of values assigned to unlimited monthly data bundle, 4G users [Source: Analysys Mason, 2014] Figure 15: Range of values assigned to unlimited monthly data bundle, non-4g users [Source: Analysys Mason, 2014] In both cases, cellular connectivity is valued slightly higher than public Wi-Fi access, but again, there is considerable overlap between the values respondents assigned to public Wi-Fi and cellular connectivity. There are two distinct messages about 4G subscribers: 4G users value all wireless data connectivity more highly than other respondents. This is as we would expect 4G users are a self-selecting group who value wireless data connectivity sufficiently highly that they have chosen (or believe they have chosen) 4G contracts. 4G users place greater value on public Wi-Fi connectivity than non-4g users. It might be reasonable to expect that 4G subscribers would place less value on public Wi-Fi connectivity than other users. In fact, the opposite is true. It appears that 4G subscribers place greater value on data connectivity regardless of the network technology used (cellular or Wi-Fi): our 4G respondents value public Wi-Fi access more highly than the rest of the market. As with the result comparing network performance, we need to be cautious about placing too much emphasis on these answers. For example, we cannot know what respondents had in mind, when asked to place a price on unlimited public Wi-Fi access. It is possible that respondents were considering unlimited public Wi-Fi connectivity to mean a network with a much greater coverage than is currently the case. Nonetheless, the results point to the considerable value that all users place on public Wi-Fi connectivity.

19 Public Wi-Fi networks in a 4G world 16 Respondents clearly preferred a balance of public Wi-Fi and cellular connectivity In the final question on usage, respondents were asked to rank a range of different options. In assessing how they ranked these different options we can gain some insight into the priorities of our panel. Respondents were asked to rank a mix of: data allowances (500MB 2GB) price points (GBP6 15) connectivity type (i.e. splitting the data allowance between public Wi-Fi networks and the cellular network by varying proportions). The conventional view would be to expect that users would opt for a greater weighting of cellular data as this can be used in a wider range of locations, followed by a 50% mix of cellular and public Wi-Fi connectivity, with the package that was weighted to public Wi-Fi connectivity being the least favoured option. In fact the results of this analysis shows that respondents prefer the data allowance to be split equally between cellular and public Wi-Fi networks. This was deemed more attractive than a split in which a larger share of the allowance can be used on the cellular network. In Figure 16, we can see the utility scores 20 for each of the 2GB/GBP10 options. We can see that users preference by network was: 1. An equal 50:50 split of data on the public Wi-Fi and cellular networks 2. A 75:25 split of data in favour of cellular networks 3. A 75:25 split of data in favour of public Wi-Fi networks. 20 Note that the utility scores in themselves carry no meaning. What we are interested here is the relative utility score of the different options.

20 Utility score 2GB 2GB 2GB Public Wi-Fi networks in a 4G world % public Wi-Fi 50% public Wi-Fi 75% public Wi-Fi Figure 16: Conjoint analysis, utility scores for 2GB, GBP10 options 21 [Source: Analysys Mason, 2014] In Figure 17 and Figure 18, we see the same order of results for 1GB and 500MB data volumes. Respondents, again, preferred to have their data allowance balanced between cellular and public Wi-Fi networks, rather than opt for a package weighted in favour of purely cellular connectivity. 21 Questions: When considering data connectivity outside of the home as part of a monthly bill, which of the following combinations of connection and data allowance would be the most useful to you? Please rank all 9 options in order of preference (1 = most favoured, 9 = least favoured), 125MB cellular, 375MB Wi-Fi;250MB cellular, 250MB Wi- Fi;375MB cellular, 125MB Wi-Fi;250MB cellular, 750MB Wi-Fi;500MB cellular, 500MB Wi-Fi;750MB cellular, 250MB Wi-Fi; 500MB cellular, 1.5GB Wi-Fi;1GB cellular, 1GB Wi-Fi;1.5GB cellular, 500MB Wi-Fi n=2003, When considering data connectivity outside of the home as part of a monthly bill, which of the following combinations of price and data allowance would be the most useful to you? Please rank all 9 options in order of importance (1 = most favoured, 9 = least favoured), 500MB, 6;1GB, 6; 2GB, 6;500MB, 10;1GB, 10; 2GB, 10; 500MB, 15; 1GB, 15; 2GB, 15, n=2003.

21 Utility score 1GB 1GB 1GB Utility score 500MB 500MB 500MB Public Wi-Fi networks in a 4G world 18 Figure 17: Conjoint analysis, utility scores for 1GB, GBP10 options 21 [Source: Analysys Mason, 2014] Figure 18: Conjoint analysis, utility scores for 500MB, GBP10 options 21 Source: Analysys Mason, 2014] % public Wi-Fi 25% public Wi-Fi % public Wi-Fi % public Wi-Fi % public Wi-Fi % public Wi-Fi The results reinforce the idea that users place significant value on public Wi-Fi networks. As with the previous results, some caution is needed in assessing these results. What users say they prefer may not be reflected in their actual choices and we cannot be certain about how the respondents interpreted the question. For example, while limitations on the data allowance are usual for cellular contracts, public Wi-Fi access is typically limited in duration of time and not volume of data used. This difference may make it harder for users to compare the different options. While would be prudent not to draw too firm a set of conclusions from the data, we believe that this assessment of different options highlights once again the value that users get from public Wi- Fi networks. 3.2 Role of mobile operators in provision of public Wi-Fi networks We asked respondents about suppliers of public Wi-Fi networks and which organisations they believed were best placed to provide public Wi-Fi networks. Our key findings are that: users see mobile operators as the most likely provider of public Wi-Fi networks respondents would consider moving provider in order to receive access to public Wi-Fi networks for no additional cost.

22 Public Wi-Fi networks in a 4G world 19 Respondents would prefer to take public Wi-Fi connectivity provided by their mobile network supplier Consumers have a clear expectation that public Wi-Fi connectivity has a strong fit with their mobile network provider. We asked respondents who they would be most likely to use for public Wi-Fi access. 58% ranked their mobile service provider as the most likely option (see Figure 19) significantly ahead of their home broadband provider (26%). The results are not especially surprising as public Wi-Fi connectivity is used while the subscriber is away from home and on a mobile device (e.g. handset, tablet) and so may be a logical extension of the existing cellular contract. However, it is worth noting that some of the main providers of public Wi-Fi connectivity are not mobile but fixed operators (e.g. BT, Sky) and Wi-Fi-only operators (e.g. Boingo). Your mobile service provider Figure 19: Preferred supplier of public Wi-Fi connectivity 22 [Source: Analysys Mason, 2014] Your home broadband provider Another mobile service provider A 3rd party provider Other 0% 10% 20% 30% 40% 50% 60% More than half of respondents say they would switch to a provider that offered free public Wi-Fi network access; 4G subscribers are even more likely to switch We asked consumers if they would be willing to change their mobile network provider if offered unlimited public Wi-Fi access, for no additional charge, from a different provider. While we would expect a strong portion of users to agree, the results are nevertheless instructive. A clear majority of subscribers would switch to a provider offering unlimited public Wi-Fi connectivity as part of the contract. Even if the result exaggerates the impact of unlimited Wi- 22 Question: Which provider would you be most likely to connect to if they offered Wi-Fi outside the home and your usual place of work? n=2003

23 Public Wi-Fi networks in a 4G world 20 Fi access, it at least indicates that public Wi-Fi services would be part of a consumer s selection criteria when considering providers. The attraction of unlimited Wi-Fi access is even greater for 4G subscribers. A higher portion of 4G subscribers would switch to a provider offering unlimited public Wi-Fi connectivity than for the market as a whole. This result indicates that: 4G subscribers appear to be most interested in having access to data connectivity, regardless of the network technology used (cellular or WiFi) 4G does not reduce subscribers interest in public Wi-Fi access. Indeed, 4G subscribers are more interested in public Wi-Fi networks than non-4g subscribers. Figure 20: Percentage of respondents willing to change provider for unlimited public Wi-Fi access for no additional cost 23 [Source: Analysys Mason, 2014] 59% 66% 56% All respondents 4G users Non-4G users 23 Question: Would you switch mobile provider if offered unlimited public Wi-Fi for no additional cost? n= 1834

24 Public Wi-Fi networks in a 4G world 21 4 Implications of the survey Most subscribers will still be using non-4g devices at the end of 2017; public Wi-Fi connectivity offers a way to improve their data connectivity experience As was seen in Figure 10 and Figure 11, non-4g users rate public Wi-Fi networks more highly than non-4g networks. This result is important as, according to Analysys Mason s forecasts, at the end of 2017, fewer than 50% of subscribers will have a 4G handset and even at the end of 2019 more than a third of subscribers will be on sub-4g devices. Figure 21: Mobile 11% 21% 34% 47% 57% 65% subscribers by handset generation based on Analysys Mason forecast 24 [Source: Analysys Mason, 2014] 62% 57% 48% 4G 3G 2G 38% 30% 24% 27% 22% 18% 15% 12% 11% G users see public Wi-Fi access as a valuable addition to standard cellular solutions and we do not expect this to change In developed markets with modern 3G and 4G networks we have yet to see a significant substitution of user traffic when 4G or Wi-Fi services were added to an existing mobile network service. Rather, usage of both cellular and Wi-Fi networks tends to increase with the added (and improved) connectivity. We have long tracked a difference in usage patterns of users of cellular and Wi-Fi services, especially in relation to key applications. For example, bulk video is mainly consumed over Wi-Fi connections. Operators initiatives to provide greater coverage and improved performance look set to be based around the concept of small cells, which will increase the density of the UK s 4G networks. The small cell hardware is likely to include a Wi-Fi radio in addition to the cellular radio. The UK 24 Source: Analysys Mason Western Europe telecoms market: concise trends and forecasts (8 countries) , RDDG0/

25 Petabytes Public Wi-Fi networks in a 4G world 22 already has one of the highest levels of public Wi-Fi deployment and usage. The deployment of small cells should further improve indoor and outdoor 3G and 4G coverage. The UK s largely independent fixed-line industry views Wi-Fi networks as an extension of its broadband service and uses it to defend its market share without fear of cannibalisation. Of the five largest public Wi-Fi network service providers, only one (Telefónica UK) is a mobile network operator. From the information released by these service providers, we calculate that in the UK public Wi-Fi accounted for traffic equivalent to about 24% of all public wireless data traffic in 2012 (i.e. data traffic on public Wi-Fi and cellular networks outside the home), and that this rose to about 35% in 2013 (Figure 22). This figure includes so-called homespot traffic (the sharing of a private Wi-Fi router with the public) Forecast 50% 45% 40% Figure 22: Public Wi-Fi traffic volumes and as a proportion of all public wireless data [Source: % Analysys Mason, 2014] % % % % % 50 5% % Public Wi-Fi data traffic Percentage of public data traffic on public Wi-Fi networks While the survey provides a snapshot of opinion at a given moment in time, the market is not static. A number of factors will change the market for public Wi-Fi and cellular connectivity. For example, developments in public Wi-Fi networks include support for ac 5GHz technology which should suffer less interference than 2.4GHz technology; ac phase 2, will also support Multi-User MIMO (MU-MIMO), which will increase the number of concurrent devices that can use a single Wi-Fi access point; advances in cellular technology, such as LTE-A, will likely take at least the next three years to deploy and are likely to require new devices to support the upgrade (compared to the current 4G devices being sold). Next-generation Hotspot 2.0 and Passpoint will serve to improve quality of Wi-Fi service and user experience. In Figure 23 we provide a summary of the main developments that will affect both 4G network and public Wi-Fi network performance. The impact of each factor will differ but in our view there is nothing to suggest a dramatic change in the balance in performance that would affect our interpretation of the results.

26 Public Wi-Fi networks in a 4G world 23 Figure 23: Summary of the main forthcoming developments in 4G and public Wi-Fi networks [Source: Analysys Mason, 2014] Developments favouring 4G networks Greater coverage of 4G. According to Ofcom, at the end of June, 73% of UK premises had 4G network coverage from at least one provider. By the end of 2017, at least 95% of premises will receive 4G connectivity from more than one mobile network. Increased speeds of 4G networks. The first rollouts of LTE-A are expected in early 2015 and will bring speeds over 200Mbit/s and possibly up to 300Mbit/s to users. Improved backhaul capacity tied to LTE-A deployments will increase per-site throughput. The cost of 4G devices will decrease. Developments favouring public Wi-Fi networks Increased usage of 4G. As more consumers upgrade to 4G devices and as these devices become more capable, demands on the network will increase, potentially reducing available capacity per user. Improved Wi-Fi performance. Fixed-line upgrades and improvements provide increased throughput for Wi-Fi access points. With the number of Wi-Fi access points increasing, usage is spread over a larger number of APs and backhaul lines ac phase 2 will support MU- MIMO, increasing the number of devices that can use an AP concurrently Passpoint. Increased deployment of Hotspot 2.0 and support of Passpoint by larger number of key device vendors (Apple, Samsung, etc.) will mean that users no longer need to log on manually to a public Wi-Fi hotspot, reducing a major barrier to usage. Users will be connected to known Wi-Fi providers, increasing security for users. Increased roll-out of public Wi-Fi hotspots. Device developments. Every 4G mobile device also supports Wi-Fi and many devices (such as most laptops and tablets) only support Wi-Fi. We expect devices to be increasingly able to work with both Wi-Fi and cellular networks simultaneously, either selecting the network with the greater capacity or bond both Wi-Fi and cellular channels to increase performance

27 Utility score 2GB 2GB 2GB 1GB 500MB 1GB 500MB 1GB 500MB Error! No text of specified style in document. A 1 Annex A Conjoint analysis, utility scores for all price options Figure 24 shows all of the utility scores for GBP10 options. As discussed in Section 3.1, our panel preferred an equal split of public Wi-Fi and cellular connectivity over a package weighted in favour of cellular or public Wi-Fi connectivity. Figure 24: Conjoint analysis, utility scores for GBP10 options 25 [Source: Analysys Mason, 2014] % public Wi-Fi 50% public Wi-Fi 75% public Wi-Fi Questions: When considering data connectivity outside of the home as part of a monthly bill, which of the following combinations of connection and data allowance would be the most useful to you? Please rank all 9 options in order of preference (1 = most favoured, 9 = least favoured), 125MB cellular, 375MB Wi-Fi;250MB cellular, 250MB Wi- Fi;375MB cellular, 125MB Wi-Fi;250MB cellular, 750MB Wi-Fi;500MB cellular, 500MB Wi-Fi;750MB cellular, 250MB Wi-Fi; 500MB cellular, 1.5GB Wi-Fi;1GB cellular, 1GB Wi-Fi;1.5GB cellular, 500MB Wi-Fi n=2003, When considering data connectivity outside of the home as part of a monthly bill, which of the following combinations of price and data allowance would be the most useful to you? Please rank all 9 options in order of importance (1 = most favoured, 9 = least favoured), 500MB, 6;1GB, 6; 2GB, 6;500MB, 10;1GB, 10; 2GB, 10; 500MB, 15; 1GB, 15; 2GB, 15, n=2003.

28 Utility score GBP6, 2GB GBP6, 2GB GBP6, 2GB GBP6, 1GB GBP6, 500MB GBP6, 1GB GBP10, 2GB GBP6, 500MB GBP15, 2GB GBP6, 1GB GBP6, 500MB GBP10, 2GB GBP15, 2GB GBP10, 2GB GBP15, 2GB GBP10, 1GB GBP15, 1GB GBP10, 500MB GBP15, 500MB GBP10, 1GB GBP15, 1GB GBP10, 500MB GBP15, 500MB GBP10, 1GB GBP15, 1GB GBP10, 500MB GBP15, 500MB Error! No text of specified style in document. A 2 Figure 25 shows the results for all prices. Again, the option of an equal balance of public Wi-Fi and cellular connectivity is preferred over a data bundle with a larger allowance on cellular networks. Figure 25: Conjoint analysis, utility scores for all price options [Source: Analysys Mason, 2014] % public Wi-Fi 50% public Wi-Fi 75% public Wi-Fi

29 Error! No text of specified style in document. B 1 Annex B Responses of people in London and those aged compared to the overall sample In the second annex, we have compared the overall results with two subsets of users: people resident in London people between years of age Our sample provided large enough subsets for us to do meaningful analysis on this data. 260 respondents lived in London and we had 354 respondents in the age bracket. As can be seen in Figure 26, both of our subsets were slightly more likely than the average respondent to use a public Wi-Fi network. For London respondents, this may be because of slightly greater availability of public Wi-Fi connectivity in the capital. Figure 26: Profile of users of public Wi-Fi networks 26 [Source: Analysys Mason, 2014] 76% 78% 77% Respondents who use People in London who public Wi-Fi networks use public Wi-Fi networks People aged who use public Wi-Fi networks 26 Questions: Do you ever use Wi-Fi offered by your mobile phone provider/home broadband provider/other Wi-Fi providers outside of your home or usual place of work (e.g. public transport, shopping centres, cafes)? n=2003

30 Error! No text of specified style in document. B 2 Figure 27 compares the reasons given by our panel for using public Wi-Fi networks. For people living in London, and those aged 35 44, price is less of a driving factor. As both groups are likely to be slightly wealthier than the average respondent, this result is unsurprising. Significantly however, both groups see speed as a key reason for using public Wi-Fi networks; people aged 35 44, 24% ranked speed as the top reason for choosing public Wi-Fi over the cellular network. It is free 51% 50% 56% Figure 27: Principal reason for using public Wi-Fi networks 27 [Source: Analysys Mason, 2014] No mobile data signal 19% 18% 19% Faster than my mobile data signal 16% 24% 22% 0% 10% 20% 30% 40% 50% 60% All respondents People aged People in London 27 Question: When you choose to use [public Wi-Fi], on what do you base this decision? Please rank all options that apply in order of their relevance/importance to you. n=1450

31 Error! No text of specified style in document. B 3 Looking at the reasons for not using public Wi-Fi networks, availability was much less of an issue for respondents in London than for the rest of the sample; only 21% of these respondents ranked availability as the main reason for not using public Wi-Fi connectivity. For respondents in London, quality and convenience are more important factors in why they do not use public Wi-Fi access. Figure 28: Principal Can't find it 21% 25% 29% reason for not using public Wi-Fi networks 28 [Source: Analysys Mason, 2014] Quality not good enough 27% 29% 33% Too much hassle to connect 24% 22% 27% 0% 5% 10% 15% 20% 25% 30% 35% All respondents People aged People in London 28 Question: On the occasions you DON'T use this service, on what do you base this decision? Please rank all options that apply in order of their relevance/importance to you. n=1052

32 (1 = very unsatisfied; 5 = very satisfied) Error! No text of specified style in document. B 4 The perception of performance across different wireless network technologies is similar across the two subsets and the overall sample. Notably, people living in London rank the quality of all network technologies slightly higher than the overall sample. The overall ranking of networks is consistent across all respondent types. Figure 29: Perceptions of performance of all cellular networks, public Wi-Fi networks and 4G networks 29 [Source: Analysys Mason, 2014] Cellular networks, overall 4G networks Overall view of public Wi- Fi networks Cellular networks, overall 4G networks Overall view of public Wi- Fi networks Cellular networks, overall 4G networks All respondents People in London People aged Overall view of public Wi- Fi networks 29 Questions: How would you score the following when you are using the data connection of your mobile phone (e.g. your 3G connection, NOT Wi-Fi)? n=1247; How would you score the following when you are using the 4G data connection of your mobile phone? n=587; How would you score your satisfaction with any Wi-Fi services you use outside your home or usual place of work? n=2003

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