A new study claims that there are 10,000 hotspots in the world, which should grow to 40,000 by the end of the year. This is fewer than more optimistic estimates from other sources, but the resolutely feet-on-the-ground study from UK analyst Juniper Research, reckons it is still more than the current users require.

“Some studies are predicting up to 70,000 hotspots in this period,” said the report’s co-author Tony Crabtree. “I can’t see where the numbers come from. They must be double counting.” If a hotspot provider has a partnership, or uses an intermediate provider such as Boingo in the US, or the Cloud in the UK, it is easy to count it twice, he said.

Even with this lower figure, he believes there is an imbalance: “Hotspots are mushrooming, but there are not enough people with Wi-Fi enabled notebooks or PDAs and smartphones,” he said. “There is a widening gap between the population that can use hotspots and the number of hotspots themselves.”

He believes this gap will close after the next two years, which will be very tough times for service providers. “We do believe that a critical mass of devices will be reached within a two year timeframe,” said the report’s other author, Alan Stewart. “Our forecasts for the sector, in the medium term continue to be strong.”

Unlike other studies Juniper believes that Wi-Fi will ultimately be a profitable service, generating around $1.3bn by 2006. “There is no licence fee and the infrastructure is very very cheap,” said Crabtree. “Why won’t it succeed? The industry is very downbeat, and people are not seeing opportunities where they are.”

Juniper believes that regular users will contribute most of the revenue ($760 million), with a small group of heavy users contributing $285 million and the rest coming from a big group of occasional users. Prices will adjust downwards – Crabtree reckons that providers expecting £60 per month for use of hotspots is unrealistic, when use of Wi-Fi is still optional for business users.

Juniper said that 41 million Wi-Fi chipsets would be shipped in 2003, with a massive short-term shift to the 802.11g standard, and then to multi-mode chipsets.