Monday, 21 July 2008

Wi-Fi Hotspots get "Hotter" in 2008

Starbucks’ recent announcement to go virtually free Wi-Fi is strong evidence that Wi-Fi hotspots are continuing their ‘torrid growth’ in 2008 says ABI Research.

“Hotspot owners are beginning to see Wi-Fi as a cost of doing business and an operational expense, rather than as a profit center…. The first phase is likely to be a free or almost free service for good customers, those who have signed up for loyalty cards,” said Stan Schatt, vice president and research director, ABI Research.

By the end of this year global Wi-Fi hotspots are expected to grow by 40% over 2007 with the greatest growth and the largest number of hotspots continue to be found in Europe. While the UK has long led in European Wi-Fi hotspots, there is also marked growth in France, Germany, and Russia.

One reason hotspot owners are willing to move towards such a business model, according to Schatt, is the realization that, “Charging for service is counter-productive in the long run because the real money will be in value-add content downloads.”

“In the near future hotspots are likely to encourage users to pay to download the latest music and TV shows. Airport clubs are likely to offer hotspot users the chance to download movies for their upcoming trips. Starbucks has already begun selling music CDs in its stores. The next logical step will be to move to selling music downloads.”

According to ABI, the proliferation of devices that support Wi-Fi also makes charging for such services more complex for hotspot owners.

If a person is on a 3G connection on a dual-band phone and then moves into a Wi-Fi hotspot, how does the Wi-Fi billing take place? How many separate accounts must a customer who has both a dual-band phone and a Wi-Fi enabled laptop have in order to use a Wi-Fi network? Garnering money for downloads is a much more straightforward matter.