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Despite a slow start, the public wireless LAN hot spot market will show strong growth over the next four years.

Business travellers' appetite for cheap and fast remote access to the Internet will see revenues blossom in both Europe and the USA, according to a report by telecoms consultancy Analysys, published today.

According to the report, Public WLAN Access in Western Europe and the USA: market analysis and forecasts, revenue will grow from a lowly $33.4 million in 2002 ($10.9 million in Western Europe and $22.5 million in the USA) to a lofty $5.5 billion by 2007. Western Europe will account for $2.64 billion of this revenue, with the US chipping in just shy of $2.8 billion, Analysys' projections.

Hotspots are currently being installed in airports, hotels, conference facilities, cafes, restaurants and rail stations and are estimated to grow from 4,800 in 2002 (1,400 in Western Europe and 3400 in the USA) to 57,000 by 2007 (30,000 in Western Europe and 27,000 in the USA).

"Whilst take-up of public WLAN services has been slower than we anticipated, it still represents a significant opportunity for operators and other service providers," said Maja Kecman, an author of the report.

"Telecoms operators have shown interest in the WLAN market as a complement to their existing networks, but have been cautious about investing in an uncertain market where there are still technological and regulatory issues to be resolved."

Market uncertainty is compounded by the fact that no single business model has yet emerged, but this is set to change.

"We expect the dominant business models to evolve significantly in the next three or four years," said co-author, Monica Paolini. "By 2007, the US market will be characterized by a non-integrated value chain, with retail service providers not having exclusive control of the network infrastructure.

"In Europe, we expect fixed and mobile operators to prevail as they are able to leverage their existing customer base and backhaul agreements more effectively." ®

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