Interview: Ericsson CEO on the role of Wi-Fi in mobile

Earlier this month, I wrote about a new study penned by former industry regulator and economist Richard Thanki, which proposed that unlicensed technologies like Wi-Fi no longer be viewed as just supplemental to 3G and 4G mobile broadband networks. Instead he proposed they become the core focus of carrier mobile data networks.
The post generated a lot of discussion on GigaOM and at the Center for Internet and Society conference that followed, building on Wi-Fi’s growing popularity as a mobile offload technology. But the CEO of the world’s largest mobile infrastructure maker Ericsson(s eric) thinks that Wi-Fi’s biggest boosters might be viewing the problem of mobile bandwidth through the rose-colored glasses of the first world. In an interview, Ericsson’s Hans Vestberg told GigaOM that Wi-Fi has a big role to play in the future of networks, but it can’t be the end-all of mobile broadband.
“There are few countries in the world that have that luxury,” Vestberg said, referring to the density of Wi-Fi in developed markets. “In the U.S., we’ve built up a very strong infrastructure where not just Wi-Fi is strong but also cable broadband.”
That cable penetration is key because ultimately those cheap last-mile links provide the capacity any large-scale Wi-Fi deployment requires, Vestberg said. And while cheap residential and business broadband is common place in North America, parts of Asia, and – to a lesser extent – Europe; in many developing markets mobile broadband from new 3G networks is the only broadband most people have access to.
Even in developed markets, Wi-Fi can’t supplant cellular, Vestberg said. “If it was possible it already would have happened,” Vestberg said. Wi-Fi only devices like Apple’s iPod Touch(s aapl) have been on the market for years, but they haven’t made a dent in smartphone – or even iPhone – sales. Wi-Fi-only tablet sales may surpass those of 3G/4G-connected slates, but the tablet has by no means replaced the smartphone as consumer’s primary mobile data device. Issues of coverage, interference and security prevent Wi-Fi from usurping cellular’s role even in the most Wi-Fi-plentiful countries.

Ericsson CEO Hans Vestberg

As a manufacturer or highly specialized cellular equipment, you would expect Ericsson to have a dimmer view of Wi-Fi — a much cheaper technology with a much broader range of equipment vendors. But Ericsson is among the most pro-Wi-Fi vendors of its peers. While every major mobile equipment maker has included Wi-Fi in some form in their network portfolios, Ericsson has taken the additional step of buying BelAir Networks, a specialist on outdoor carrier-grade Wi-Fi gear.
Vestberg said that Ericsson is bullish that Wi-Fi will eventually add enormous quantities of capacity to mobile networks, but he said that Wi-Fi will only be one component among many in a future mobile architecture called the heterogeneous network, or HetNet (a topic Vestberg discussed in length in a previous interview with GigaOM).
Today Wi-Fi is being used to create the first small cell networks, where a dense layer of access points is used to add capacity in the most high-traffic areas. Eventually, though, small cells using carrier’s licensed airwaves will assume much of the Wi-Fi’s capacity load, Vestberg said. Wi-Fi will by no means disappear, he added, but our future devices will have multiple connections to chose from and will even be able to connect to multiple networks simultaneously.
Whether Vestberg’s more cautious view of Wi-Fi proves true, there’s no doubt Wi-Fi is growing astronomically as carriers look to relieve their cellular networks and consumers look to avoid expensive mobile data fees. Carriers like Iliad’s Free Mobile in France and Republic Wireless in the U.S. are making Wi-Fi offload a key component of their mobile data strategies (and offering dirt cheap rates in the process). Wi-Fi access point and hotspot aggregators like Boingo(s wifi), Fon and Devicescape are seeing their businesses rejuvenated by the smartphone and carrier partnerships. Some operators like AT&T(s t) and Japan’s KDDI are investing heavily in their own Wi-Fi infrastructure.
Wi-Fi is here to stay. It’s just a question of whether it and other unlicensed spectrum technologies will supplant cellular in our mobile devices, rather than merely enhance it.