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US to embrace Wi-Fi - not 3G - for data

Mobile networks outstripped by 2007

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The WLAN equipment market saw year-on-year growth of 82 per cent in revenue terms last year, according to researchers iSuppli.

The company said that, in 2003, WLAN equipment sales totalled $2.8bn, up from $1.6bn a year earlier, while chipsets brought in $760m, up from $436m. Projections for the future are that the number of Wi-Fi devices will reach 167.8m units in 2008, 12 times greater than the 2003 figure of 14.2m worldwide.

With these levels of growth, it is perhaps unsurprising that another research company, Pyramid, predicts that more Americans will use Wi-Fi than 2.5G or 3G cellular networks for data purposes by 2007. It forecasts that revenues from hotspots will be $1.5bn by 2008, although the growth of Wi-Fi will also help boost cellular operators' business since Pyramid has found a high correlation between hotspot usage and cellular data subscriptions, suggesting that many users will fork out for multiple data services in order to ensure access wherever they are.

T-Mobile, for instance, says that 30 per cent of its hotspot subscribers also have cellular data plans based on GPRS. "This trend should be a wake-up call to any carrier offering or planning to offer a cellular data service," Pyramid said, endorsing T-Mobile's strategy of early, heavy investment in hotspots.

"We believe that by bundling Wi-Fi and cellular, T-Mobile has created a service worth more than the sum of its parts," the report concluded. It is critical of operators that have chosen to position their cellular service as competitive with Wi-Fi rather than offering a dual platform.

Analysts at IDC agree that the combination of services is key to driving uptake of mobile data, especially as bundling will drive down prices.

© Copyright 2004 Wireless Watch

Wireless Watch is published by Rethink Research, a London-based IT publishing and consulting firm. This weekly newsletter delivers in-depth analysis and market research of mobile and wireless for business. Subscription details are here.

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