Carrier WiFi

Is the Hotspot Honeymoon Over?

Analysts are predicting that the honeymoon for 802.11 hotspot services is just about over.

Unstrung has been saying for quite some time that there are lots of similarities between some areas of the wireless LAN market and the hothouse environment of the Internet boom years (see WLAN: The Quiet Bubble?). Now analysts are predicting that the hotspotters could largely go the way of the dotcoms. (see WLAN: The Next Dot-Com Crash? and Hotspot SPs to Face Challenges)

"I think we've just about reached the peak of the hype and excitement associated with hotspots," says IDC analyst Keith Waryas. "This bubble is going to pop." "The greatest role for WLAN will be in home networks, not in public hotspots," says Forrester Research Inc.'s Lars Godell.

"I am not saying that all the public hotspots will go bust, but there is an overexpansion and I don't think there is a good business case underneath it," he adds.

IDC's Waryas does not expect the fallout to be as dramatic as it was for many of the dotcom companies. "I still see a lot of value in this technology," he says, but he does expect a shakeout in the market.

Wireless service providers need to think about how they roll out these services and focus on providing good services in places where people want wireless Internet access (airports, hotels, etc.) rather than developing grandiose schemes to provide wide-area coverage using technology that requires vast amounts of expensive, wired backhaul.

"Wireless LAN is almost unbeatable as a local-area technology," says Waryas. "But for wide-area applications, it's horrible." (See Commentary: Why 2.5G Plus WLAN Doesn't Equal 3G, 4G: Running Before You Can Walk, and 802.11: The New WAP? for more on the WLAN difficulties.)

Waryas says that it costs about $1 million to set up a cellular site that will provide about one mile of wireless coverage. Covering the same area by networking lots of little access points will cost around three-and-half times that, he reckons.

In the U.S., Waryas envisages the hotspot market developing in two stages. The next 12 to 18 months will involve building out selective coverage in the right areas. Waryas reckons that service providers will need to install 25,000 to 30,000 hotspots before they can start aggressively trying to acquire customers.

"That's when the fun starts," he says. "Prices will really start to come down."

Nearly all the major carriers in the U.S. now have public and private WLAN projects. Smaller, local service providers are also heavily involved in the market.

Meanwhile in Europe, where the hotspot market is largely dominated by national carriers, Forrester is predicting that there will only be around 7.7 million hotspot users by 2008. "You have to put this into perspective -- only 10 per cent of Europeans have laptops," says Godell. "That is really going to affect the business case of WLAN."

In fact, says Waryas, more than 50 percent of the 19,800-plus hotspots that have so far been installed worldwide are actually in that Mecca of broadband: South Korea. Carriers in that potential hotspot are offering WLAN as an extension of their wired broadband services.

— Dan Jones, Senior Editor, and Justin Springham, Senior Editor, Europe, Unstrung

lrmobile_erhan 12/4/2012 | 11:52:38 PM
re: Is the Hotspot Honeymoon Over? Who ever said that WLAN should be a WAN system? There are technologies for Wireless WANs, such as GSM, CDMA, etc. Wireless LOCAL AREA NETWORK. Look at its name... It is not trying to be a Wireless WIDE AREA NETWORK. Therefore, you can not compare apples with oranges and conclude that it will take 3,5 times more money to deploy connectivity for a 1-mile radius cell with WLAN. Thta is not the idea. The ultimate goal is to build a hybrid network, where you get switched over from WAN to LAN based on your mobility. We call this "mobility matched bandwidth". Please do not compare apples with oranges, or let those who want to sell 5000 dollar reports to large corporations come with such "uneducated" conclusions in comparing the oarnges with apples.

wap545 12/4/2012 | 11:52:09 PM
re: Is the Hotspot Honeymoon Over? What we have here is a failure to communicate and Define terms:
1.WHo are the Service providers referred to in this piece??
If he means the Nationwide Carriers, there is no Business Case that justifies the deployment of the HotSPots as in Cafe and other public areas, other then as a Loss Leader to get customers to stay on their National CELL networks. Now there may be a case for select Airport waiting areas, but still not sure of that.
MAIN REASON FOR FAILURE: This will fail for the same reason the Nationwide CLECs failed in there business plans: They did not own or adequately address the true costs of Local Access (Broadband Connections-DSL etc) to the HotSpots, much less the Internet as a Service.

The Service Providers they need to address here are the ones that own all the "LAST MILE" Distribution (Fiber and Copper) as well as the Broadband Services operating over them. An increasing number of these companies(and do not just focus on the 3 Big RBOC Folks there are some 1500 independants that are going to really lead here)Local Access Service providers are looking at this space and can and will be a major force in this space.
They can and will make this a real business, as they expand their DSL Subscribers range of operations and even begin to interconnect with the various GPRS and CDMA Carriers-Hand offs between systems.
Verizon has already begun some of this in NY.

Another big factor here is the emergence of some powerful new (Unlicensed) Wireless Switched/Radios and Smart Antennas that are effectively extending the reach of these 802.11b/g/a Radios to address a Sector (60-100 Degrees) of 1-2 Miles with true Broadband (1-2Mbps/Portable and Fixed)services.
If you keep an eye on what these new Service providers are doing you will see a new type service being deployed-what I would call a "Virtual Broadband HotSpot" covering a MAN Niche and addressing only there subscribers.

However the smart National carriers will look to team with these Providers regardless of whether they are GSM or CDMA (or 2.5/3G or GPRS)based networks. The 802.11 WLAN is agnostic when it comes to the interface here.

It is just beginning and these New Breed Of Service providers (who are also beginning to play in the CATV/VOD Space)will be a major player long term.

Just ask Cisco Chambers who finally realized that if one does not address "The Last Mile" one will go away.


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