Ericsson CMO says Wi-Fi hotspots' days are numbered

Original URL: https://www.theregister.com/2008/03/20/wi_fi_hotspots_claim/

'The telephone boxes of the broadband era'

Posted in Channel, 20th March 2008 10:10 GMT

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.

HSPA in the laptop

Since most broadband data applications are not used while fully mobile, but in a nomadic way – wherever the user chooses to sit down – the laptop is currently the key driver of HSPA usage, as it was for Wi-Fi and will be for WiMAX. As 3G and HSPA are increasingly embedded in the notebook, Wi-Fi becomes less relevant. Ericsson itself is working on embedded HSPA with PC makers like Lenovo, and Qualcomm threw down its most serious gauntlet yet to Intel with the launch of Gobi, an embedded product that can be configured in software to work with W-CDMA or CDMA2000 (and other networks in future) in different frequencies, and regardless of specific operator. This takes 3G a major step towards the carrier-agnostic, universal access dream that Wi-Fi was chasing.

Embedded 3G has been a key step on the way to making cellular networks a genuinely viable option for the all-important business traveller market, the one on which Wi-Fi laptops made their fortune (even if the operators found it hard to make profit on a data-only model). Unlike them, cellcos, however much pressure their traditional businesses may be under, do have the advantage of brand awareness, still-lucrative voice revenues and multiple service bundling options to cushion the blow of having to grasp the nettle of flat rate pricing and reduced roaming fees.

However, their next move will have to be to make roaming even cheaper and easier, and to introduce hotspot-style casual use mechanisms, so that 3G laptop owners are not restricted in their choice of network, or faced with exorbitant charges every time they log onto another carrier's system. There is a long way to go, but operators like T-Mobile in Germany and Carphone Warehouse in the UK have already experimented with subsidizing laptops in the same way they do phones, and AT&T is one of the cellcos talking up plans for prepaid data plans and SIM cards, and hourly access rates, for non -customers in future.

Hope for Wi-Fi

Not that we should write off public Wi-Fi too hastily. While HSPA may be coming into its own, in many regions and user groups it will remain unavailable or expensive, and Wi-Fi will fill the gap for many years to come. According to the latest twice-yearly report from enterprise broadband access firm iPass, which covers hotspot and enterprise 3G usage, the business uptake of Wi -Fi hotspots is still booming. The report found that use of hotspots among business people increased by 89 per cent in the second half of 2007, compared to the same period in 2006. IPass said that its survey is based on data gathered from over two million sessions during the six-month period.

Its findings saw European growth rapidly outpacing that in the US, with Europe expanding its worldwide share of hotspot use to 40 per cent, up from 31 per cent, as the US dropped from 59 per cent to 51 per cent. London extended its lead as the world capital of Wi-Fi with usage rising by 156 per cent over the same period, and an average session length of 72 minutes. Latin America saw hotspot usage leaping by 133 per cent year-on-year, with Brazil entering the top 10 list after trebling its Wi-Fi usage. Among cities, Singapore was second after London, followed by Tokyo and New York. Business travel locations such as airports, hotels and railway stations, predictably, continued to dominate use. Monthly usage increased steadily throughout the year, growing from an average of 152Mb per user in the first quarter of 2007 to 190Mb in the fourth quarter.

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