Falling prices of public Wi-Fi services could spell trouble for operators - and may mean less public Wi-Fi than some optimists have predicted. US mobile operators will lose $12 billion in revenue - because there are too many of them competing too aggressively.
"Operators, including Verizon, Cingular/AT&T and Sprint/Nextel will make more than $100 billion in investments into advanced wireless capabilites over the next four years," said Harvey Cohen, president of Strategy Analytics. "But the returns may not be as high as initially expected due to the growing intensity of competitive forces."
He doesn't actually call it a bubble, but that's basically the message. Too many providers have jumped in on inflated estimates of the amount of demand. Now, Strategy Analytics is re-estimating the price of Wi-Fi, and the results get worse, the further out you go. This year the average revenue per user will be $3.20 per month, instead of an expected $3.40. In 2008, operators will only be able to squeeze $7.20 per month out of users, instead of the expected $10.
This result will raise a wry smile from European Wi-Fi users, still paying way more than US users. BT OpenZone, for example, currently sells vouchers at £6 for an hour, £10 for a day, or £40 for a month, and contracts at £25 for 4000 minutes, or £10 for 250 minutes a month, with existing customers getting the offer of £5 a month.
Perhaps the fact that we pay more for Wi-Fi over here will protect us from the shockwaves of the bursting bubble in the US.
Meanwhile, for people actually buying Wi-Fi equipment, Wi-Fi kit for the enterprise is keeping its price, nicely.