Are hot spots a lot of hot air?

It is not that often that an analyst company stands up and says ‘we don’t think this is going to work’, mostly because they are paid by the IT vendors to produce reports that say why things will work to help convince customers that they need to buy them, but Forrester has decided its time to stop the hype over wireless hotspots.

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By  Mark Sutton Published  June 21, 2003

It is not that often that an analyst company stands up and says ‘we don’t think this is going to work’, mostly because they are paid by the IT vendors to produce reports that say why things will work to help convince customers that they need to buy them, but Forrester has decided its time to stop the hype over wireless hotspots.

Other analysts are trotting out predictions about how by 2007 we will all be surfing the Internet on our laptops whether we are waiting for a plane or sipping on a double-mocka-chocka latte decaf or whatever, all through the wonder of the public wireless hotspot, and naturally enough predicting that the companies supplying the hardware, the Internet service and the owners of the hotspot themselves will be so rich that they will be able to print their own money, and so on and so forth. As Lars Godell, senior analyst at Forrester commented: “It’s as if the dot-com boom and bust never happened.”

Of course with any new technology there is always an element of crystal ball gazing required to predict the markets, but some of the claims made about public WLAN access really are going too far. IDC predicts that in Western Europe alone, the hotspot market will be worth $1.4 billion by 2007. Stock prices for wireless providers are sky high, and businesses that have a public face are rushing out to buy kit to set up hot spots. But, says Godell, this money will mostly be wasted.

There are a few reasons for this. Primarily, the problem is lack of notebook penetration, with only 10% of Europeans owning a lap-top. This might be different in the richer countries in the GCC, but then the whole issue of lack of Arabic Internet content raises its head again. This lack of penetration limits the number of customers.

Secondly, there is the security threat. The majority of WLAN equipment has gone into private homes or enterprise, and public fears over wireless security have yet to be addressed properly.

Actual usage and billing may be difficult to manage too, as diversification among networks will make it difficult for users to roam between hotspots, meaning that on-the-spot, one-time charging is the easiest way to get users to pay.

On the other side of the equation, providing enough back-end bandwidth for customers will likely be expensive for the hot spot owner—consequently it will be difficult for all but the busiest hot spot locations, such as airports and train stations to make a profit on public access.

Of course, Intel and its $300 million hotspot development fund may have some effect on the market, but unless hotspots are cheap, plentiful, easy to use and secure, it is unlikely that we are about to see thousands of people taking to the streets with their laptops, surfing the web as they soak up the sun.

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