Wi-Fi hotspots keep growing

A recent report from research firm In-Stat suggests that Wi-Fi use is on the rise due to the proliferation of hotspots. The data are mixed, however, in that some areas are a lot hotter than others.

“People use Wi-Fi in hotels, airports, and cafes,” says Daryl Schoolar, senior analyst at In-Stat and the author of the report. “You don’t have a lot of people using Wi-Fi outdoors.”

Schoolar says that this is one of the reasons why municipal Wi-Fi networks have struggled: the blanket access model doesn’t reflect usage.

Piero DePaoli, director of global product marketing at iPass, a participant in the In-Stat study, confirms that airports and hotels are where the Wi-Fi demand is. The company started in 1996 with a vision of offering global Internet access to individual accounts; at present iPass has agreements securing just shy of 80,000 Wi-Fi locations in 88 countries.

“We have a couple of muni Wi-Fi networks as part of our footprint,” says DePaoli.

“We’re not so surprised that municipal Wi-Fi has been difficult. It was highly political, and it wasn’t clear how the service was going to pay for itself.”

iPass did its own study, released in September of this year, that confirmed the heavy emphasis on Wi-Fi business use in airports and hotels. Data was gathered from nearly two million sessions for the first half of 2007. Europe out-paced the US in hotspot growth, though the US was still in the overall lead with 56 per cent of global Wi-Fi usage. London was the world Wi-Fi capital, with nearly four times the sessions of runner-up New York. Big jumps were seen in Australia and China.

In the In-Stat study Schooler argues that WiMAX will limit revenue growth for municipal Wi-Fi networks, as will constraints on indoor coverage.

“We’ll see a proliferation of Wi-Fi hotspots,” says Schooler, “but that won’t necessarily translate into revenue. Airports and hotels are where the business is. And when you look at a bigger footprint, WiMAX is going to impact that market.”

Another big part of the story is that Wi-Fi is being used in different ways. Although iPass sees traffic — and profits — coming from business travel, In-Stat has noted a shift to personal use, with service providers reporting that more sessions are being initiated off of consumer devices.

“This is good from a hotspot provider perspective,” says Schooler. “But connections are a problem, because log-ons are designed for keyboards and laptops. What’s been is lagging is seamless device connectivity – most of it has been towards sign-on and splash pages for the laptop. Now the focus is on getting other devices to sign on just as easily.”

And, whereas analysts firms like In-Stat, and Wi-Fi aggregators like iPass and Boingo, see Wi-Fi and WiMAX as complimentary, there is still the odd die-hard contrarian out there.

Bert Williams, vice-president of marketing for Proxim Wireless Corporation, which makes core-to-client solutions for broadband municipal wireless networks, says that WiMAX has been over-hyped. Why? Because 802.11n is good enough, and applications such as surveillance systems and machine-to-machine communications are working just fine.

“We don’t believe that WiMAX, in the foreseeable future, is going to be a client access technology,” says Williams. “We have anticipated In-Stat’s observations on the Wi-Fi trends: the iPhone, Sony’s mylo, these function as a compliment to cellular connections.”

These devices also support another trend: youth-oriented use of (and expectations of), Wi-Fi networks.

“More and more young people would rather text than talk, and that’s driving some of the business away from voice and towards SMS,” says Williams.

They’d also rather Skype off a Wi-Fi hotspot than pay for a phone call, further eroding the appeal of Canada’s expensive cellular networks.

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