Ericsson CMO says Wi-Fi hotspots' days are numbered
'The telephone boxes of the broadband era'
Ericsson's chief marketing officer, Johan Bergendahl, caused a huge commotion last week when he predicted that Wi-Fi hotspots would become as "irrelevant as telephone boxes". Even allowing for Ericsson's self-interest in a world where cellular networks will be the main route for users to reach the internet while on the move, the surprise that greeted Bergendahl's remarks was strangely anachronistic.
Three years ago, when the hotspot boom was at its height, similar comments by executives from Verizon and Qualcomm were rightly met with cynicism, because at that time 3G was not delivering the 'any time anywhere' broadband experience users were increasingly demanding, either in terms of its data rates or its availability. Now the market has moved on, and in developed mobile economies HSPA is starting to become commonplace, at least in the centers of affluence and business usage that were the only locations where Wi-Fi hotspots could guarantee to be found either.
Speaking at a conference in the Swedish capital Stockholm, Bergendahl made it clear that the cellular interest groups now believe their offerings are sufficiently real and mature to sideline public Wi -Fi and its operators. Of course, they are helped in this aim by Wi-Fi's own failure to deliver operators a profit model, largely because of the problems of supporting differentiation and quality in unlicensed spectrum.
This is not to say that Wi-Fi has no place outside the home network – it works well for some publicly funded models, such as those geared to emergency response; it is an obvious choice for community-based provision of low cost access and VoIP, from free social initiatives to FON, and these will play a significant role in some areas, particularly outside the population groups that are of interest to commercial operators and advertisers; it will have a role in developing economies where 3G networks and devices are not yet present. But for mainstream mobile or nomadic broadband, and anywhere access, the market is now for HSPA to grasp.
Bergendahl said: "Hotspots at places like Starbucks are becoming the telephone boxes of the broadband era”, pointing out that in some countries such as Austria mobile broadband use will surpass fixed broadband before this year is out. He attributed such developments to cheaper and even flat rate subscriptions to mobile broadband packages, combined with the wider availability of HSPA services, especially in notebooks. He did, however, admit the HSPA model has not yet been perfected, with coverage, availability, and price - especially for roaming services – still throwing obstacles in the way of power users and their providers.
Once HSPA takes off, this will clearly benefit the cellcos and their suppliers, such as handset makers, and disadvantage vendors that have relied heavily on Wi-Fi and failed in 3G, notably Intel. There will also be fall-out for Wi-Fi hotspot operators, though the most successful of these have also been cellcos such as T-Mobile, which have used hotspots mainly to complement 3G and reduce churn; or aggregators like iPass, which are not exclusively Wi-Fi.
Most hotspot owners and many metrozone operators have struggled to find a successful business model, and Wi-Fi has mainly benefited companies that have used it to promote and enhance another, non-communications brand. Hotels and restaurants have been prime movers, and Bergendahl went as far as to accuse hotel owners of artificially helping the Wi-Fi industry, "They would never admit it, but I think hotels are stopping the mobile radio signals. They see data access as a business opportunity," he said.