A sunny future for European hotspots?
Cash cow - or lamb to the slaughter
An optimistic research forecasts a bright outlook for European wireless hotspots. ON World, a small US-based wireless technology research firm, predicts that European hotspots will generate $1bn (€0.83bn) for operators by 2009. There will be 174,000 hotspots in the region by that time, generating $898m (€741.32m) in revenues, according to the report, "European Hotspots: A Rapidly Growing Ecosystem".
"Hotspots are a way for European fixed line operators to extend their broadband networks and for mobile operators to finally profit their 3G investments," said Colin Carroll, a senior research analyst for ON World. "European fixed line and mobile network operators today have evolved from debating about whether the hotspot business model makes sense or not to chasing after choice locations."
The European environment is nearly ideal for offering public broadband access, according to ON World, due to its concentrated population, high mobile phone penetration, growing broadband adoption, cafe culture and centralised telecom infrastructure.
User adoption, however, continues to drag because of high access costs, limited roaming and because managed network providers bought out Wireless Internet Service Providers (WISPs) before they had a chance to educate the market at the local level.
ON World believes these limitations are only short term and the network operators who dwell on these problems will miss out on a "powerful way to extend their broadband reach and create compelling new services and sources of revenue".
In contrast to ON World's rather optimistic outlook, many other research analysts predict challenges for European hotspot providers.
A January report by London-based consultancy, BroadGroup, found that while the market is moving towards standardised tariffs, competition from North American players looms. The company examined service tariff categories offered by 97 providers in 20 countries across Europe and Eastern Europe.
Entry by North American companies with significantly lower price levels and, although very limited at present, could have a major impact in the long term.
ON World, meanwhile, predicts that only about 15 per cent of all European hotspot users will be frequent users and most of these will be subscribers.
"The land grab phase of the hotspot rollout in Europe is quickly closing," Carroll said, "and as Wi-Fi devices proliferate, the next phase of Wi-Fi enabled services will soon arrive."