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How iPass & 60M Hotspots Could Disrupt the Mobile Industry

Mari Silbey
7/21/2016
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As a consumer, you'd be forgiven for not knowing the brand iPass. Unlike WiFi hotspot aggregator Boingo, iPass doesn't do any direct-to-consumer business. But with almost 60 million WiFi hotspots across the globe (roughly half in the US), the company is a serious player in the increasingly heterogeneous wireless networking world.

Here's what iPass Inc. (Nasdaq: IPAS) offers: WiFi access around the world through partnerships with carriers and venue owners; automatic connections to the best hotspots available; WiFi security not guaranteed on typical public hotspots; and predictable costs for business customers. Any business that signs up gets licensed access to the service for its employees with availability through the iPass app on Windows, Mac, Android and iOS devices.

iPass has flown largely under the radar because it hasn't been entirely successful in its 20-year history. In fact, iPass hasn't recorded growth in almost 10 years, and its revenue dropped precipitously from nearly $70 million in 2014 to less than $63 million in 2015. However, the company has made some dramatic shifts recently – including bringing in a new CEO – and it's positioning itself well in a wireless market that's hungry for new choices and flexible service plans.

Since a change in executive leadership in 2015, iPass has made three key strategic moves. First, it opened up its service plans to offer unlimited data, which is attracting new customers. Second, the company created the SmartConnect software development kit (SDK), which gives developers WiFi tools to integrate into their own devices and applications. And third, iPass has signed new partnerships with companies addressing the consumer market -- from device makers like HP Inc. (NYSE: HPQ) to technology companies serving telecom carriers like Tata Communications Ltd. .

"We're very confident that we're going to have the first growth year that the company has had almost in a decade," says iPass CEO Gary Griffiths. "And we're very, very excited about the prospect of being profitable this year, which will be the first time ever."

iPass is scheduled to announce earnings for the second quarter on August 3.


Want to know more about WiFi and the wireless industry? Check out our cable WiFi channel here on Light Reading.


iPass has some bold plans for the future too. The company is collecting data on things like access location, signal stress and connectivity success rate, and it's starting to explore how it could use that data for new revenue streams. Griffiths says there's a lot of interest in using information on WiFi connects as a proxy for foot traffic at venues like amusement parts and shopping malls. The company isn't forecasting any revenue from big data services in 2016, but Griffiths believes analytics offerings could make a substantial contribution to the business starting in 2017.

From an industry perspective, iPass also offers the potential for more non-incumbent wireless service providers to enter and disrupt the market. According to the National Cable & Telecommunications Association (NCTA) , the Cable WiFi Alliance just reached a total of 500,000 hotspots in its network, and Comcast Corp. (Nasdaq: CMCSA, CMCSK) is boasting more than 15 million hotspots even as it strategizes on a way to combine those hotspots with possible new mobile spectrum assets. (See Comcast Could Be Your Next Mobile Provider and US Cable WiFi Hotspots Near 17 Million.)

Any cable operator that partnered with iPass could massively extend its reach and give itself a leg up in competition with traditional mobile carriers.

The same is true for any internet company -- like Alphabet Inc. and its subsidiary Google Fiber Inc. -- with ambition to deliver wireless broadband services. (See Google Fiber Buys Webpass in Wireless Play.)

As Griffiths puts it, iPass is in an enviable position now that it's done the hard work of creating a global footprint that ensures secure and consistent WiFi access.

In a parting note he adds, "We're very happy we started down this path when we did."

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

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Foundera45132
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Foundera45132,
User Rank: Light Beer
7/22/2016 | 10:20:01 AM
No money to be made in WiFi
The huge growth in WiFi offload that Ericsson is referring to is happening at home and office. The native connection managers on Android and iOS are already doing that. So, carriers really don't have to do anything to faciliate that. Most of the carriers that I have talked to (in US) are scaling down their WiFI offloading projects and instead realying to the native features of the devices to offload automatically at home/office. I was not saying that customers are not using WiFi. I was saying that they are using it for free and there is no money to be made.
Infostack
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Infostack,
User Rank: Moderator
7/22/2016 | 10:06:41 AM
Re: No money to be made in WiFi
"the whole cellular offloading to WiFi opportunity is overblown" flies in the face of recent data from ericsson which claims that video consumption on smartphones has increased 60%+, while the share claimed by wifi has grown from under 75% to 85% in the past year.  You are saying one thing, but the market is saying another.  Certainly 4G coverage supersedes wifi so an overall lift "should" benefit 4G access, but it is not.  So what does that tell you?
Foundera45132
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Foundera45132,
User Rank: Light Beer
7/22/2016 | 1:14:53 AM
No money to be made in WiFi
When was the last time anybody spent any $$ on buying WiFi? Although the industry started with the assumption that carriers/aggregators will generate billions of dollars in access revenue, the unfortunate truth is that customers are now used to getting WiFI for free - at home, in office, restaurants, coffee shops, airports, and even hotels. Even big cable carriers are giving it free to their customers. I have travelled in Europe, and Asia recently without having to spend a single dime on WiFi connection (agree that some airports only allowed a few hours of access - but there was always a workaround). There are other reasons why the picture seems even more bleak:

First, any value that some of the over-the-top players added for WiFi connection manager is now superceded by the very sophisticated native WiFi connection managers. The current WiFi connectivity solutions on the Android and iOS devices can seamlessy connect you to any hotspots, and would even trasntion from WiFi to cellular (and back) seamlessly.

Second, the whole cellular offloading to WiFi opportunity is overblown. 4G (and 5G) have substantially narriowed the gap between WiFi and cellular by a) reducing the cost per GB on cellular and b) higher broadband speeds. And, WiFi has never been able to figure out the QoS fully (yes, it will happen but still ways out). A lot of people still turn their WiFi off on their phone because of the quality issue. Also, where there is a good guarantee of quality (i.e. home and office), cellular carriers can always offload for free by simply relying on the native connection manager.

Lastly, the data collection (and subsequent monetization) opportunity on WiFi is debatable. Apple already closed the loophole on their iOS devices by not providing the unique client subscriber ID information to any 3rd party apps on the device. So, you cannot really figure out the foot traffic by sniffing on the WiFI signal any more. Android will close this loophole if not already. Furthermore, there are still issues on customer privacy and permissions (for data collection), which are not easily overcome.

The only way some of these players in the WiFI value chain can survive is to keep up with the trends and try to find niche opportunities to work with carriers and others (e.g. enhancing building coverage, advertising driven models, etc.). Hotspot 2.0 will open some new doors but unfortunately it will close some doors for others (that one is a complex topic by itself).

 

 

 
komatineni
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komatineni,
User Rank: Lightning
7/21/2016 | 8:02:57 PM
Not sure if it even can getback to standard IT installer on enterprise laptops
My first business travel was almsot 10-12 years ago. Those days every traveller must have an iPass acount on top of passport, visa etc. In the the last 5 years people do not even talk about it. iPass still work very closely with operators, wifi providers to simplify experience but the customer preferences have changed IMHO. Thanks to roaming alliances i can get unlimited 3G/LTE at the same rate or slightly lower than iPass with better performance. For cost concious traveller the local SIM is a great deal. Barring US/some EU nations, WiFi is expected Free and the moment people hear '$$$', they started to open up their mobile phones. So not sure it can go "up" any more with raw connectivity provider. They can try to augment IOT story or some other services but i doubt WiFi players can distrupt any more.
Mitch Wagner
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50%
Mitch Wagner,
User Rank: Lightning
7/21/2016 | 4:23:20 PM
Convenience
I'm coming off a period of heavy travel, and I'd give a cherished body part to avoid the daily ritual of logging into WiFi from multiple locations, or the same location every day or two. If iPass can deliver that in advance of Hotspot 2.0, then wonderful!

And the ability to deliver customer information will be a boon to enterprises, turning WiFi from a cost center to a value add. 
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