FRIDAY IN FOCUS
Will Wi-Fi hotspots go cold for operators?
20-06-2003
by Andrew McLindon
Wi-Fi hotspots offer high-speed, wireless Internet access in public venues like hotels and airports, but despite the technology's increasing prevalence in Ireland, questions have been raised about its commercial viability.
It is a comparison that should send shivers down the spines of Wi-Fi's proponents and backers. According to one independent expert, Wi-Fi "hotspots" as a current commercial proposition are very similar to e-commerce operations in the run-up to the dot-com crash.
Put simply, public Wi-Fi access is over-hyped and difficult to make money from, according to Forward Concepts, a US research firm. Daniel Sweeney, author of the report, likened the frenzy over Wi-Fi hotspots to the hype that surrounded e-commerce before 2001. Unfortunately for those rolling out the technology, Sweeney predicts that Wi-Fi ventures may suffer the same unpleasant fate as many on-line shopping sites.
Sweeney wrote that unless hotspots can inspire the same degree of grassroots enthusiasm that the Internet roused in its early days, vendor zeal is destined to outstrip market acceptance.
Sweeney is not alone in his scepticism. It's true that the idea of Wi-Fi hotspots -- high-speed, wireless Internet access zones in public venues like hotels and airports -- has captured the imagination of telecoms executives. Hotspot roll-outs have increased dramatically in the US, Asia and Europe over the last couple of years, but some industry watchers aren't so taken with the idea.
Another US research firm, In-Stat/MDR, pointed out that while the number of hotspot venues has increased from several hundreds to tens of thousands worldwide in the past three years, usage has not grown at the same rate and usage remains "very low." Poor usage is mostly blamed on a lack of awareness, deployment of the technology in areas where potential users won't use it (such as cafes and retail venues), and high prices.
If people aren't using a technology that has been expensive to roll-out, operators are going to take a hit. This is especially likely since few operators have identified a profitable business model for hotspots, says Current Analysis, another ICT research firm.
Current Analysis said that profitability for Wi-Fi will remain relatively flat unless operators also deliver applications, content and valued-added services (such as voice, which is happening in Asia) on top of Net access. Wi-Fi operators must also make tariffs clearer and address concerns over Wi-Fi security.
If this all sounds familiar, that's because it is -- experts recommended similar steps a few years ago as a way to increase Internet usage by the public and businesses.
Alex French, director of Enigma Consulting, certainly sees the parallels. "It reminds me of when the Internet was starting to catch on in Ireland six to eight years ago, because the problem then was explaining to people about the Net's potential," remarked French.
French estimates that there are only around 20 live hotspots across Ireland, probably due to the high cost of installation. He advocates a large-scale rollout country-wide, with operators potentially cooperating on deployment to reduce costs, backed by a major public awareness campaign.
One of the few Irish hotspot operators, O2 Ireland, admits that awareness of hotspots must be raised. It currently operates 13 hotspots in the Republic of Ireland -- 12 in hotels and one in Heuston Station, and shortly it will introduce new merchandising and promotions in these hotels to encourage their use.
Orlagh Nevin, head of business solutions, O2 Ireland, said there was a need to inform people about the benefits of Wi-Fi, but she is optimistic that once users see more Wi-Fi enabled PDAs and laptops, such as those with the Intel Centrino Wi-Fi chipset, usage will increase. In-Stat/MDR also pointed to these factors as a positive for the future of the sector.
O2 Ireland certainly appears to be adopting a cautious approach to its hotspots business. Nevin said that O2 doesn't regard it as a core business, but as more a complement to its GPRS service. As such, O2 has conservative targets for its hotspots, which were rolled out in January and, said Nevin, are performing "as expected."
O2 Ireland is planning to install further hotspots in the coming months in hotels, conference centres and exhibition halls, but only if they match the needs of its customers, added Nevin.
Esat BT is also enthusiastic about Wi-Fi's potential and is planning a wider deployment than O2. It is due to unveil its first hotspot in mid-June in the ferry passenger terminal in Dun Laoghaire Harbour and is to follow this up with installations in 100 venues such as hotels, airports, coffee shops and bars in the Republic of Ireland and 20 in Northern Ireland by the end of the year, according to Robert Henderson, senior technical products engineer with Esat BT.
Henderson remains optimistic about the future take-up of Wi-Fi. "I think that it will eventually get to the stage where, for example, people will use a small Wi-Fi-enabled device to send e-mails and make calls to their mates from a pub rather than use their mobiles, because it will cheaper," he said. "Wi-Fi is a hot technology."
But the question still remains -- will the public ever have the hots for hotspots?
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