Own the Experience With Managed Wi-Fi or Lose the Subscriber —
Thanks to ongoing service provider investments in various access network technologies, many homes across North America can receive gigabit-speed Internet connections. Despite these advances in the access network, many consumers are still not able to enjoy a high-speed experience inside their home because of limitations with Wi-Fi technology.
Recent research from Parks Associates (documented in the white paper “Staking a Claim in the Connected Home: Service Provider Solutions”) indicates that 50% of consumers have issues with their Wi-Fi connection, ranging from coverage problems, slow speeds, dropped connections, and interference. In many cases — as much as half for many service providers — these issues result in calls to the help desk. This is bad news for service providers, as increased numbers of calls result in rising support costs.
In response to their growing frustration with Wi-Fi, some consumers are turning to the consumer electronics industry for solutions. In fact, nearly 4 of 10 (39%) of home gateways are obtained from sources other than a service provider. It might seem natural for some subscribers to turn to alternate sources for solutions to their Wi-Fi frustrations, but this is only exacerbating the situation for service providers.
Subscribers are turning to other companies for more than just routers. As it turns out, there is no shortage of companies willing to provide consumers with the help that they require in dealing with their Wi-Fi headaches.
• In July 2017, Amazon announced the roll-out of new services under the umbrella of Amazon Smart Home Services. One of the offers, called Amazon Expert Home Assessment, costs $99 and includes a Wi-Fi assessment, a 45-minute consultation to discuss how Amazon can enhance the customer’s home, and one-on-one assistance ordering products and services.
• In May 2018, Best Buy/Geek Squad expanded its nationwide subscription-based Total Tech Support offer. For $200 a year, customers get unlimited phone/online support and discounted prices on in-home visits, which can be scheduled to fix broken laptops, install TVs, and set up a new home network.
• Plume, a manufacturer of Mesh Wi-Fi extenders, announced in June 2018 that it plans to turn home Wi-Fi into a subscription service. Plume will start charging customers an annual fee of $60 (a lifetime membership costs $200) for their Adaptive Wi-Fi service. The cost for this service is above and beyond the price that customers already pay for the initial purchase of the hardware, which starts at $179. Consumers need to pay the monthly fee to keep their devices fully functional. Those that do not continue with their subscription will find that the Plume systems “won’t work as well as they’re supposed to.” Other suppliers of consumer-grade Wi-Fi systems have announced similar plans, including Eero and Luma.
These offers should cause service providers to sit up and take notice for a few reasons. First, companies like Best Buy and Amazon are not only going to happily sell routers to consumers, but they’re now also going to try to expand that relationship, selling them in-home Wi-Fi assessments and home network set-up services, extended warranties, and technical support.
When their new subscription-based offer was announced, Best Buy’s vice president of services said: “We’re transitioning from a transactional business to having more of a support relationship — supporting all of the technology in a customer’s home.”
Second, if consumers see value in paying monthly fees to these other companies, it is going to be very difficult for their service provider to sell additional services; especially if they are seen to be potentially overlapping with what they are already paying for.
Letting these competitors establish ever-stronger relationships with consumers results in service providers being relegated to providing ever-faster, but ever-cheaper, Internet access to the home. And nothing else.
Finally, regardless of where network devices are purchased, or what kind of support they get from other suppliers, consumers are still likely to call their service provider for technical support when the others can’t solve their issues.
The good news is that service providers have an established claim to new business by virtue of existing subscriber relationships. The bad news is that this claim is by no means secure in today’s competitive environment. In order to compete effectively, increase revenue from broadband services, and expand the footprint in the home, service providers will need to add value. One way to respond is to offer a Managed Wi-Fi solution.
What Is “Managed Wi-Fi”?
Typically, a Managed Wi-Fi solution involves providing a carrier-class residential gateway (RG) that can be managed remotely. This means moving away from the BYOD model, where you let subscribers use any old router they want which, inevitably, is going to cause them issues. (This serves the dual purpose of interrupting the relationship that could easily be established if consumers purchase their gateway from a company like Amazon or Best Buy.)
Managed Wi-Fi also involves deploying software that provides visibility into, and control over, what’s going
on in the home network. This not only allows service providers to deliver advanced troubleshooting support, but also proactively finds and fixes issues. Innovative tools like these can extend built-in automation and empower service providers to manage all aspects of the customers’ connected experience. The real-world benefits of this approach are well documented, and include:
• enhanced customer satisfaction
• improved revenue
• fewer truck rolls
• reduced average handle times (AHT)
• improved first call resolution (FCR) rates
• lower customer support costs
Many service providers are either already charging for Managed Wi-Fi services or seriously considering it. Most are offering Managed Wi-Fi for a flat monthly fee of between $5 and $15, plus an initial installation fee.
And what about those who aren’t charging? Among the service providers who are including Managed Wi-Fi in their existing monthly Internet packages, there’s one primary reason: the associated costs — to provide the gateway and the support services — are typically offset by a corresponding drop in support costs. When subscribers have their Managed Wi-Fi service up and running, they have fewer problems and make fewer support calls. As a result, support costs are reduced.
A solid compromise is to build a business case on a combination of expected cost savings and revenue generation. In other words, service providers should calculate what kind of cost savings are they expecting to realize by reducing call times and truck rolls, then consider charging a monthly fee that will cover the costs of providing and installing a residential gateway.
All West Communications is a great example of the benefits associated with a Managed Wi-Fi offering, proving that these metrics are not merely aspirational. Providing services in Northeast Utah and Southwest Wyoming, All West has approximately 16,000 subscribers. In 2017, they successfully rolled out a Managed Wi-Fi service — based on the Calix GigaCenter and Calix Support Cloud products — with an ambitious desire to deliver an exceptional Wi-Fi experience to the communities that they serve.
This approach has allowed them to increase their revenues by $250,000 a year, while simultaneously reducing support costs by $20 per trouble ticket through improvements made to their FCR rates and AHTs. All West has also significantly reduced their initial installation times and their field technician deployments related to help desk calls.
The bottom line is that service providers need to provide more than just an Internet connection for subscribers. Not responding to the threats posed by these new competitors — and letting them establish ever-stronger relationships with subscribers — will result in service providers’ eventual relegation to a provider of nothing but an Internet connection to the home.
For more information about Parks Associates’ white paper “Staking a Claim in the Connected Home: Service Provider Solutions”), please visit http://www.parksassociates.com/calix-connectedhome.