Cloud Creates a Storm
Launched in March with the aim of installing 3,000 wireless LAN access points in pubs around the U.K., The Cloud later outlined its intention to more than double this number through a partnership with payphone operator NWP Spectrum (see Cloud Looms Over UK Hotspots and Cloud Prepares to Reign).
Its most recent announcement -- released yesterday -- marks an aggressive attempt to break out of its home country and dominate the global wholesale wireless LAN network market (see The Cloud Covers Europe). Deals with Boingo Wireless Inc., Togewanet AG, Service Factory, and Sun Microsystems Inc. (Nasdaq: SUNW) are designed to drive user traffic across The Cloud’s network and allow carriers to launch services without having to roll out hotspots of their own.
“As a wholesale network operator we are certainly now the largest provider with the single largest footprint,” says the project’s CTO, Niall Murphy. “Despite a certain amount of skepticism out there, there is a clear market demand for these services.”
The U.K. firm is following in the footsteps of Cometa Networks Inc. in the U.S., which unveiled its wholesale network rollout plans early this year. However, the U.S. initiative has struggled to hit anywhere near its original targets, a fact Ovum Ltd.’s Richard Dineen is quick to point out (see Cometa's Hotspot Hassles). “These problems do not augur well for this wholesale model,” he warns. “Demand is very uncertain at the moment.”
Dineen cites the demise of defunct wireless service provider Mobilestar Inc. as a perfect example of a hotspot business growing beyond existing market demand (see Starbucks Hotspots (Slight Return)). “It [The Cloud] has undertones of Mobilestar [ed. note: Teenage Kicks?] and there are lessons to be learnt there. They expanded too quickly without enough people having the capability, inclination, and awareness of the fact these services actually existed. They are a classic example of one of the WiFi burnouts. There is the risk of over-shooting the market.”
The Eggman is also concerned as to the general number of deals being struck in the hotspot space. “There is a worry over how much complexity we are adding to the value chain. It is by no means a sign that the landscape is getting any clearer.”
Not that this will stop The Cloud from drifting forward. “We have some significant U.K. announcements in the pipeline that we hope to announce before the end of the year,” adds Murphy.
— Justin Springham, Senior Editor, Europe, Unstrung