The number of wireless LAN (WLAN) hot spots worldwide will more than double by 2005, but the services are unlikely to reach "critical mass" until three to five years from now, according to a Gartner analyst.
Potential fans of the hot spots, where Internet access is available to users of notebook PCs and other devices equipped with IEEE 802.11 technology, are frustrated by the limited number of hot spots available and the lack of consistency among billing systems, according to Gartner's Ken Dulaney.
The report forecasts there will be 71,079 hot spots worldwide this year, up from just 14,752 in 2002 and 1,214 in 2001. The number of hot spots will grow to 151,768 in 2005.
There will be 9.3 million visitors to hot spots in 2003, up from 2.5 million in 2002, Gartner said. North America, with 4.7 million users, will top both Europe and Asia-Pacific this year. The report projects 2.7 million users in Asia-Pacific and 1.7 million in Europe this year.
Unlike in the cellular revolution, Europe is behind the United States in the hot spot trend, according to Dulaney. Prices for access are higher there because the various parties involved, such as the service provider, wireline backhaul carrier and venue operator, demand more money than they do in the U.S., he said. In addition, no one there has successfully led a movement toward billing interoperability, he added.
Professional users of notebook PCs increasingly have the capability to use WLANs, with a majority projected to have 802.11 capability on their notebooks in 2004, but hot spot use probably won't reach "critical mass" for three to five years, Dulaney said. He defined the term to mean that more than half of users pay for hot spot access on a monthly bill rather than per use. Before that happens, users will need pervasive access to hot spots, a consistent login experience and a single bill.
Coverage is good but won't draw that critical mass of dedicated users until enough of them find they can walk to a hot spot or reach it by driving a short distance, he said.
In addition, they want to be able to log on to different service providers' hot spots, linked through a roaming agreement, without having to go through different sign-on procedures, Dulaney said. This poses both technical and business issues for the service providers, he said. Issues include what the rates should be, who should get what portion of the revenue and what the quality of service should be.
"It's a serious problem. It's going to take some time to get sorted out," Dulaney said.
The good news is that not all hot spots will have to turn a profit before that happens, he added. In fact, most will lose money for three to five years.
"There are other motives for doing this which give (the industry) plenty of time to sort out the issues," Dulaney said.
A public WLAN can benefit the provider, either a carrier or an enterprise, in ways other than bringing in its own revenue stream, he said. For example, a fast food restaurant might adopt a WLAN to give its workers mobility and improve their productivity. It could use that same WLAN as a carrot to draw customers. It wouldn't be there as a profit center itself, and in some cases, access might even be free, which would save the provider the cost of a billing system, he added.
By the same token, a cellular phone operator might wrap an all-you-can-eat hot spot access service into a customer's monthly bill as an enticement.
The carrier "might not make a profit on that, but they get you as a customer. ... What they would do is make a profit on the overall package of services they give you," Dulaney said.