Does the improvement of public Wi-Fi technology undermine mobile network operators’ profits? Evidence from consumer preferences

Abstract

Cellular data consumption by users is the main revenue source for mobile network operators (MNOs). On the one hand, technological development and expansion in Wi-Fi coverage can reduce cellular data usage. On the other hand, Wi-Fi offloading, which entails redirecting cellular traffic to a Wi-Fi network, can prevent network quality degradation as a result of explosive cellular traffic. Thus, the advancement and expansion of public Wi-Fi are both beneficial and detrimental for MNOs. Therefore, in this study, we analyze consumer preferences based on changes in the properties of Wi-Fi and cellular networks by employing a mixed logit model with stated preference data. The results indicate high consumer preference when the cellular and Wi-Fi networks are fast, Wi-Fi usability range is wide, and price is low. To analyze the impact of improving public Wi-Fi technology on MNOs, we conduct a scenario analysis. When the Wi-Fi service speed increases to 100 Mbps or more and its coverage expands to span an entire public transportation area, consumers reduce the amount of their monthly cell phone plan by 1347 Korean won (KRW) (1.15 USD) and 5141 KRW (4.40 USD), respectively. The results of this study can facilitate the determination of appropriate public Wi-Fi speeds, establish the quality of cellular networks by considering the effect on MNOs, and improve social welfare by expanding public Wi-Fi networks.