Hotspots are all the Rage

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Imagine a new business model that offers the potential of a quick profit for a small investment. That's what HotSpots provide. North America, Singapore, Korea and Japan have led this Wi-Fi trend, offering traveling laptop users temporary wireless Internet access in various types of public gathering spots including, for example, hotels and cafés. According to Gartner Inc., the number of HotSpots will grow to more than 71,000 in 2003 from about 1200 in 2001.

Imagine a relatively inexpensive way of providing customers with a "value-add" service and while doing so keeping them in your place of business for longer, spending more. That's what a HotSpot offers.

The wireless LAN is extending its domain beyond the home and enterprise and is rapidly growing in popularity due to its public HotSpot application. A HotSpot is a specific geographic location in which an access point provides public wireless broadband network services to mobile visitors through a wireless LAN. HotSpots typically require that the end-user pay a fee before they can access the network and are usually situated in places that are heavily populated with mobile computer users, e.g. airports.

Wi-Fi HotSpots are targeted toward both business users and consumers, as is reflected in the wide range of different access packages offered by this new crop of service providers. Some HotSpot providers are targeting the business market by offering monthly and annual subscriptions. Others allow users to purchase as little as 30 minutes worth of wireless access for the equivalent of a few dollars. Still other HotSpots are in their trial phase, meaning they are initially providing free Internet access.

Unfortunately, a subscription to one HotSpot provider doesn't entitle the user to log on to HotSpots operated by a rival operator (although this is changing) and it must be realized that these individual networks typically have a short range (300 or so feet), although this range limit may soon be expanded. However, when you look at the Wi-Fi HotSpot market, think of the Internet and the potpourri of networks and Internet Service Providers (ISPs) who saw life in the early days. Over time, many of these providers, especially the smaller ones, consolidated and a seamless network emerged. It's expected that the same thing will happen in the Wi-Fi HotSpot marketplace.

According to Sky Dayton, CEO of wireless aggregator Boingo Wireless, "HotSpots are appearing worldwide. Grassroots organic growth and media attention have helped make the term 'Wi-Fi' a household word. And justifiably, because Wi-Fi is the first revolution in Internet access since the commercial Internet launched."

The numbers, while inconsistent, still have a tale to tell.

TeleAnalytics, a research firm, says that as of December 2002, there were 24,000 Wi-Fi HotSpots worldwide. Moreover, the hi-tech research firm In-Stat/MDR expects the Wi-Fi marketplace to expand to 42,000 sites worldwide by 2006, although Gartner offers a more optimistic figure of 152,000. Furthermore, many experts predict that the current mass of Wi-Fi installations in the U.S. and elsewhere could quickly expand to millions of access points representing even more millions of potential users. For instance, Canadian wireless industry observers predict that wireless access points will more than double every two years. In fact, Brantz Myers, of Cisco Systems Canada (a global firm that specializes in Internet networking services), predicts, "wireless networking will overtake copper and fiber lines in the near future."

In the U.S., the rapid emergence of the 802.11 standard has been such a remarkable, unplanned phenomenon that it has moved forward largely without the backing of major corporate service providers. Two good examples of this are Joltage and Boingo. These two companies (and others) are selling services that allow a computer user to sign up once and then access the Internet from a wide range of "HotSpots" via wireless access points located at various places around the country.

However, well-established corporations and telecommunication providers are starting to enter the market too. The cellular provider formerly known as VoiceStream, operating under its new moniker, T-Mobile, is busy dotting the country's urban centers with HotSpots, from Starbucks to hotels to airports.

In December 2002, Toronto start-up Spotnik Mobile secured an investment of $6 million from Telus Corp., enabling Spotnik to provide Telus customers access to wireless networks. Bell Canada also has big plans for Wi-Fi. Both providers see smart devices such as cell phones, PDAs, laptops and tablets working in each other's wireless worlds and, of course, they plan to charge plenty for it.

Unlike the U.S., where start-up companies often assume the role of the typical wireless public access provider, in the Pacific Rim it's the large established corporations, telecom carriers and ISPs that are leading the way. For example, McDonald's Corp. has announced that it plans to outfit 4000 of its fast-food restaurants in Japan with Wi-Fi networks. In Singapore-where interest in Wi-Fi is huge-two major carriers, SingTel and StarHub, set the pace. Singtel has invested more than $560,000 in wireless zones, while StarHub claims to have the largest public HotSpot in Suntec City. And SingNet Broadband, which has more than a 50 percent share of the domestic broadband market, has launched "Home Wireless Surf" to provide households with wireless broadband Internet connectivity anywhere within the home.

Although Wi-Fi has yet to gather steam in most of Europe (it took two years of working with national governments and Europe's standards bodies to open Europe's doors), again it's the established telcos who are in the forefront of this nascent market. For instance, Sweden's Telia AB, Finland's Sonera Oyj, and Norway's Telenor Mobile AS are in the vanguard of installing public access points in Scandinavia; among them, they have managed to install a few hundred HotSpots across the region.

Other European telecom operators, such as BT Group PLC in Britain, also provide HotSpots. BT already has announced that it plans to establish approximately 400 HotSpots in Britain by June 2003 with plans to expand to 4000 by 2005.

A number of European airports feature HotSpots, including Amsterdam's Schiphol Airport and the Copenhagen airport. And industry analysts state that the HotSpot market is steadily gaining momentum; by 2003 telecom operators and start-up companies in the Wireless Internet Service Provider (WISP) industry are expected to seize the low-cost opportunity that Wi-Fi offers to link up today's on-the-go populace.

What About the Future?

It is expected that the wireless public access business will be fragmented for the near future, with services being offered piecemeal by entrepreneurial start-up companies, ISPs, mobile operators, infrastructure operators, city networks, established corporations and organizations, property owners, and even underground organizations (offering free access in apartment buildings and neighborhoods, for example).

Currently, only a small number of people are making money off of Wi-Fi installations, but that will change in the near future. Don't believe me? Well, consider this: three industry powerhouses have bet that there's going to be big money in Wi-Fi. AT&T, IBM, and Intel, along with two venture capital firms, announced in December 2002 that they had formed a company called Cometa Networks that will provide wholesale broadband access services nationwide.

So, although the industry is in its early stages and still faces many challenges and questions about its development, Wi-Fi has changed the paradigm in which the communications industry and its technology operates. And, once Wi-Fi can provide roaming virtually anywhere, and can overcome Quality of Service (QoS) and security issues, it will achieve its true potential. When Wi-Fi does this (and it will), it will quickly hit critical mass-making it ubiquitous-a part of our culture.

Wi-Fi's success is enhanced by the plummeting cost of a Wi-Fi installation, making such a network a no-risk financial decision, especially for small businesses and companies in hard-to-wire locations. But another prime factor that's driving the Wi-Fi boom are a new collection of chips from Intel that are designed to transform laptops and tablet PCs into portable offices. Products bearing these chips carry the Centrino label and have built-in support for both the 802.11b and 802.11a standards. After those chips and their products proliferate, it will be almost impossible to find a device that's not 802.11 compliant. Then all of those wireless Internet access providers, suffering because there weren't enough 802.11 devices in the market, will be in a commanding position.

Craig Mathias, a principal with the Farpoint Group, an advisory firm specializing in wireless communications and mobile computing, predicts, "In the next five years, we'll all be using [Wireless Internet Access]. It will be as big as cellular in terms of number of subscribers. Whether you use a wireless LAN at home, in the office, or in public, the login and security is all the same."

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