iPhone in WiFi Hotspots and AT&T Mobile Revenue

Implications: Boingo’s increased hotspot usage from WiFi-enabled devices indicates that VoIP-over-WiFi could impact mobile revenue for carriers.  

Analysis:

Boingo’s increase from 1% to 15% for hotspot access from WiFi-enabled devices could change the carrier strategies for driving 3G network usage.  AT&T Mobility’s President had introduced the new 3G iPhone with its lower price point as reaching out for the “mass market” and to “drive more volume”.  He had further commented that the $199 handset price is “an almost magical price point where customers buy in big numbers”.  The question becomes if the “big numbers” are driven by using the iPhone for VoIP-over-WiFi to lower voice costs. 

Apple is allowing the Global IP Solutions for VoIP at the App Store for WiFi but not on AT&T’s 3G network.  With Boingo’s increased device access, the question becomes the threat to mobile revenue.  Sprint Nextel strategically offered the Samsung Instinct handset with a $99 Simply Everything plan for unlimited voice and data, but the Instinct is not WiFi-capable.  Verizon has restrained from WiFi-capable handsets in trying to protect the high ARPU from its unlimited domestic plans that range from $99-$139.  And AT&T originally announced that its 17,000 WiFi hotspots would be available to iPhone customers, but later withdrew the offer without comment.  The risk is that the projection of iPhone user having double the average $50 ARPU reverts to the lowest $70 iPhone rate plan instead of the $130 unlimited anytime.  The carriers will be evaluating the type of user at WiFi hotspots and the overall value for features and content beyond network usage.