Local hotspot revenues expected to hit US$100K

Revenues generated from public wireless local area network (WLAN) services in the Philippines are expected to reach US$1,000 per hotspot by 2003, according to the latest figures released by market research firm IDC.

Taking the current and prospective hotspot deployments of leading wireless fidelity (Wi-Fi) access providers GlobeQuest and ePLDT, this figure means that local hotspot revenues in the country could hit approximately US$100,000 by yearend.

A hotspot is a geographical location where wireless broadband Internet can be accessed via a WLAN access point using Wi-Fi-enabled laptops or personal digital assistants. Locally, hotspot operators are using the 802.11b standard to wirelessly stream data in the 2.4 GHz frequency band.

To date, there are about 100 deployed and soon-to-be-installed Wi-Fi access points in various locations throughout the country. GlobeQuest, the corporate data arm of Innove Communications, has about 17 Wireless Internet Zones (WIZs), with about a dozen more coming by the early part of next year. ePLDT, the Internet and data arm of local telecom giant Philippine Long Distance Telephone Company (PLDT), on the other hand, has already deployed some 42 Wi-Fi access points as of the second week of December, with 18 more coming by the next couple of weeks.

The rate of hotspot deployment in the country is consistent with the recent IDC findings on the Asia-Pacific public WLAN services market, the results of which were released early this month Based on this report, hotspot services grew steadily over the past 18 months.

Between the first half of 2002 and the first half of 2003, the market for hotspot services also increased 13-fold in subscriber terms. As of June 2003, there were already some 400,000 subscribers across the Asia-Pacific (excluding Japan) region, generating a total revenue of US$13 million.

“The public WLAN hotspot services market in the Asia-Pacific grew steadily in the first half of 2003, as fixed-line operators ramped up location deployments,” said Tim Crowley, senior analyst of broadband markets and technologies at IDC.

“Despite the existence of several different business and revenue models across the region, and the absence of proven business plans, service providers are moving forward with providing public WLAN services as a value-added service for subscribers.”

IDC projects the PWLAN subscriber market in Asia-Pacific to reach 700,000 by the end of 2003, generating a total revenue of almost US$44 milllion. By 2008, this PWLAN subscriber base is projected to hit close to seven million, with total revenues exceeding US$600 million.

There are currently three business models used for the provision of PWLAN services in the region: the fixed-line, mobile, and reseller models. The most popular among the three is the fixed-line model, while the mobile model seems to be the least popular in the region because of its late entry into the PWLAN space.

Although Wi-Fi users are not likely to ever outnumber dial-up and wired broadband subscribers (as of June 2003, WiFi users only accounted for 0.03 percent of the total Internet access services market), IDC believes more operators will continue to invest in the infrastructure to accommodate the provision of PWLAN services to help them remain competitive.

GlobeQuest seems to be threading along this line as its Applications and Solutions Delivery Group head Francisco Claravall IV admitted that the company’s focus at the moment is PWLAN (infrastructure) build-up, not as a sole product offering but as a value-add to its existing access services, particularly in the enterprise market.

“We are very conservative in terms of commercial deployment,” he said, adding that what they really intend to provide their customers through this wireless Internet services is “universal access.”

Claravall expressed hope that as GlobeQuest continues to expand its hotspot network in the country, more users — especially in the enterprise space — will increasingly take advantage of the service. The key to achieving higher usage rates, he said, are compelling mobile applications at the most affordable prices.

“There must be readily available applications, particularly those tailored for SMEs (small and medium enterprises), for them to truly benefit from this technology. These applications should also be properly priced for the SMEs to afford. An ASP (application service provider) model is very apt in this respect, since this model helps SMEs avoid capital expenditures while cutting down operational expenses,” he said.

The IDC study identified the same factors for making PWLAN a success. “The success of PWLAN is dependant on several factors including the types of operators involved, the roaming agreements (both domestic and international) that will be put in place, the tariff/pricing structure (either complementary to or competitive with existing services such as fixed broadband and cellular services), user awareness and marketing efforts as well as the positioning of carriers/service providers (business vis-

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