Letters Is there money in public hotspots?

The decision by Singapore carrier MobileTel to drop WiFi for 3G has set a few of you thinking. Benedict Evans, the analyst to first identify the mania as "having all the elements of a classic bubble" in an equity report, has something to add.

In March he wrote that "much comment on this technology's future has more to do with axes being ground than industry reality." Incumbent telcos and landlords would be the winners, he predicted. Ben sums up his position for us here:-

What really skews the Wi-Fi versus 3G argument, I think, is the assumption by most commentators (who tend to travel a lot with laptops) that 3G is about connecting people who travel a lot with laptops. In fact, mobile operators really don't care whether anyone ever connects a laptop to 3G. 
 
3G isn't 'Wireless DSL/mobile broadband/hi-speed internet' - it's a complete replacement for the existing cellular system with more capacity and lower operating costs.Mainly, that capacity gets used to attack fixed voice, which is still 80% of European voice traffic versus 20% on cellular.

Listen for the giant sucking sound of all that traffic migrating over the next five years. Plus of course all of the mobile internet stuff that no-one would ever use if they had a PC, the way no-one would every buy a cell phone if they had a landline...

Pricing is a widespread concern...

Actually, it's not WiFi that doesn't pay. It's me. I won't be gouged by greedy in-the-bubble companies. I had a run-in with one company that was operating a hot spot in an airport and charging access fees that were higher than their PC kiosks in the same airport. When I pointed out the inconsistency they responded by raising prices on the kiosks..

I'm happy to pay for broadband coverage (in a hotel for example), and I'm very happy to use a WiFi connection rather than wired Ethernet. But I'm not prepared to pay horrendous access fees that make GPRS look cheap.

The economics are really simple. $10/day is what people charge for hotel room with Ethernet. Why do companies think they can charge much much more for a WiFi connection?

Ken Tindell

Subject: Why Rabbit failed...

Rabbit failed not because it was a bad idea, but because it was delivered the concept several years late at which point Orange and One2One were imminent and clearly about to significantly reduce the cost of a full mobile phone.

If its competitors (phonezone et al) had been as thoroughly rolled out years earlier (when the concept was launched) as rabbit managed when it appeared we might well be looking at things in a rather different way. Whether this would have been a good thing is an interesting question (-:

As for why wifi hotspots appear not to have taken off - well that's an easy one: firstly you need critical masses of both hotspots and suitably equipped users and I don't think we're quite there yet /especially/ given that the ongoing depression in the industry means that pcs (laptops) are not being replaced as aggressively. Secondly you need sensible pricing - if you pitch wifi at enterprise prices then you're only going to get enterprise users (assuming that the enterprise chooses to play which in the current economic climate it may not) whereas its been demonstrated time and time again that "little and often" (cf text messages) is at least as likely to be profitable (there's a business model for pubs that suggest that you can put a /free/ hotspot in for clients off the back of which need to sell only one extra meal a day to pay for it...)

James Murphy

A WLAN entrepreneur steps into the ring.

I read with interest your article in The Register today, concerning Singapore's move to 3G and away from Wi-Fi.

I have to agree with your (and MobileOne's) conclusions in relation to ubiquity.

However I have to disagree that public Wi-Fi does not pay. Just like Internet kiosks, there are certain locations with a certain audience who will pay for Internet access using Wi-Fi. Just like Internet kiosks, public Wi-Fi is not a business that the major Telcos should be getting into. There are revenues to be made in offering public Wi-Fi...it's just not the kind of revenues that get Telcos excited.

Wi-Fi does offer some advantage over 3G: it is or will be already built into your laptop. You can purchase connections on an as-needed, pay-as-you-go basis.

Ronan Higgins
CEO, Cafe.com
Wireless Broadband Internet

Thanks Ronan. ®