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Big Dogs Chow on WISPs

Light Reading
LR Mobile News Analysis
Light Reading
5/23/2003

LONDON -- The WLAN Event -- European carriers will dominate the hotspot business in the region but must sort out roaming issues if they want the public to flock to their 802.11 services, according to industry bigwigs here at the WLAN Event tradeshow.

It is already becoming obvious that the large operators are best placed to dominate this nascent market; and speakers at today's show predicted that consolidation will continue, with the majority of smaller WISPs (Wireless Internet Service Providers) being swallowed whole by the larger players (see Europe's Vanishing WISPs).

Ex-Megabeam CEO Ryan Jarvis -- whose startup business was acquired by Swisscom AG (NYSE: SCM) in March this year (see Swisscom Buys a Bevy of PWLAN) -- is convinced that his recent experience is merely the start of a global trend. “We will see a shakeout of smaller WISPs whose interconnection rates will not support their cost base,” he predicts. “There will be tremendous pressure on them, and consolidation has already begun.”

“Mobile operators will be the winners of tomorrow’s market,” agrees Lodewijk Cornelis, CEO of Excilan. Herman Rooseboom, product development manager at O2 Ireland, goes one step further, denigrating the lofty aspirations of recent newcomers to the market. “Startups have started business way too late,” he states. “It will only be a matter of time before those wireless operators that haven’t already entered the market come on board.”

However, Jarvis claims that the lack of a uniform roaming agreement among carriers is strangling market development. “Roaming is a necessity if this market is to reach its potential,” he warns. “There is a lack of roaming amongst major WISPs today, due to the recent round of acquisition in the hotspot market. European carriers are restrained by fear of opening up their networks in a competitive market.”

The latest report from BWCS claims that the lack of multilateral roaming deals between public wireless LAN carriers is costing service providers up to 30 percent of potential revenues. According to WISP Roaming: Single Subscription, Global Reach, only 12 out of the 26 largest hotspot operators worldwide have any kind of roaming agreement in place. For those that do, it argues that many are simply bilateral free agreements that involve no clearing or settlement of service fees.

The report stresses that “workable commercial roaming agreements are vital to the future of the fragmented wireless LAN hotspot market.”

In the face of such problems, "phoenix from the ashes" network operator Interoute Telecommunications has taken a surprise step into the wireless LAN market with the launch of its European roaming exchange service -- an attempt to enable carriers to increase the number of wireless locations through which their subscribers can gain access to hotspots (see Interoute Launches WLAN Roaming).

— Justin Springham, Senior Editor, Europe, Unstrung

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