Is Wi-Fi the answer to mobile operators' woes?

July 18, 2012: 1:33 PM ET

The days of free Wi-Fi might be numbered.

FORTUNE -- Remember the days when mobile operators shunned Wi-Fi? Times have changed.

AT&T's Andy Geisse speaks at Brainstorm Tech.

"There was resistance to Wi-Fi by the mobile operators before, but that has just gone away," Selina Lo, CEO of Ruckus Wireless, said during a panel on how companies can spin opportunity from technological constraints, which took place at Fortune's Brainstorm Tech conference in Aspen. Indeed, mobile operators are now looking to Wi-Fi as a way to offset the flood of video streams and other data-hogging demands currently taxing cellular networks. But that doesn't mean the wireless technology solves carriers' mounting challenges.

According to Andy Geisse, senior executive vice president of AT&T's business and home solutions, Wi-Fi will soon be integrated into the mobile network. Consumers won't be able to tell when a normal voice call becomes a VoIP call, which utilizes Wi-Fi networks. The quest for seamless switch-off between cellular and Wi-Fi networks isn't new, but mobile operators have not successfully made it happen to date.

It's clear something needs to change, especially when it comes to providing coverage and sufficient bandwidth inside of buildings. The so-called "tablet generation" expects to quickly upload and stream online videos whenever they want, where they want. If they can't, they blame their carrier.

Even AT&T CEO Randall Stephenson admitted that the smartphone era caught carriers by surprise. According to Stephenson, data traffic has grown an astounding 20,000% in recent years.

"Our current planning assumption is that that continues for 4 years, 5 years," Stephenson told Brainstorm goers during an on-stage interview earlier in the week.

AT&T has already stopped offering unlimited data plans to new customers. Just today, the company announced a "Mobile Share" plan which lets subscribers sign up for buckets of data for multiple devices, similar to Verizon's "Share Everything" plan. And there have been rumors that AT&T will soon charge iPhone users for using Apple's (AAPL) FaceTime videoconferencing app.

Of course, even if carriers like AT&T can successfully blanket the world with Wi-Fi (and integrate the technology with its cellular networks), that doesn't necessarily solve the problem. For starters, there are technology barriers, like dealing with more and more signal interference. But there's also a bigger challenge of making Wi-Fi pay off.

"The big question is, can Wi-Fi really be operated, managed and monetized like cellular?" said Ruckus Wireless CEO Lo. "People are used to free Wi-Fi."

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About This Author
Michal Lev-Ram
Michal Lev-Ram
Writer, Fortune

Based in Silicon Valley, Michal Lev-Ram covers enterprise and mobile technologies for FORTUNE. Prior to joining FORTUNE, she wrote for CNNMoney, Fast Company, Popular Science and other business and technology publications. She was also a staff writer at Business 2.0 and holds a B.A. in journalism from San Francisco State University.

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