Industry commits to Wi-Fidelity

12 Feb 2003

Having backed itself down enough alleyways and cul-de-sacs, namely in the form of data centres, fibre networks and 3G licences that have failed to spark the imagination of either the investment community or the buying public, redemption in the form of wireless local area networks (WLAN) or Wi-Fi is the current plat du jour amongst long-established telcos and start-ups keen for a slice of the action.

Penniless telecom equipment makers, those most hurt by the telecom downturn of the past two years, are also vying for a piece of the action, dedicating what’s left of their depleted resources towards lower cost devices such as Wi-Fi cards and network hubs that they expect will sell in high volumes but at low prices.

Credence to this statement was demonstrated last week, when the annual Irish Telecoms Conference in Dublin dedicated two thirds of its time to wireless issues. Of the three-day event, only one day dealt with the murky fibre optic issues. The remainder consisted of a day dedicated to wireless issues and a final day focusing on Wi-Fi workshops.

The attraction of Wi-Fi to businesses and future home users is flexibility and price. A Wi-Fi network hub can be bought for €350 and access cards for less than €100, providing offices and/or homes with some 300sq ft of 11Mbps (megabits per second) data transmission. The Wi-Fi revolution has firmly gripped the US where entire cities (especially New York) are covered in public and private WLANs, as businesses, coffee shops and academic institutions succumb to Wi-Fi’s charms.

The same revolution is predicted for Europe and Ireland is well up there with various operators and start-ups establishing relationships with hotels, coffee shops, pubs, railway stations and eventually airports to provide business users wireless broadband internet access for a fee.

Just one problem that people politely refrain from bringing up – no one who has rolled out a public Wi-Fi network has made any money out of it yet.

Nevertheless, in the belief that money can be garnered from a perceived enthusiastic take up of Wi-Fi, existing telecoms companies and start-up enthusiasts are looking to roll out public and private Wi-Fi networks in Ireland, echoing a trend that the International Data Corporation (IDC) believes is gripping Europe. However, unlike the white elephant that saw the telecom industry lavish €160bn on almost defunct 3G mobile licences, the consensus is that Wi-Fi is here and now, whilst 3G could possibly be replaced by a more sophisticated use of 2.5G mobile services.

A report last Friday by IDC claimed that demand for ‘anytime, anywhere’ mobile connectivity is attracting many new WLAN hotspot players. The European hotspot market, it says, increased by 327pc over the last year from 269 locations at the end of 2001 to around 1,150 locations at the end of 2002.

“In 2003, new players will continue to enter the hotspot market,” says Evelien Wiggers, senior research analyst at IDC’s European telecommunications and networking research division. “Not only specialised WLAN companies will start deploying public services, incumbent mobile operators and fixed operators are expected to combine WLAN services into their existing mobile offering.”

This was demonstrated last week in the Irish market when O2 launched the rollout of public hotspots in locations in Dublin, Galway, Limerick and Cork, aiming to capture a share of the market amongst business travellers.

Also due to launch public Wi-Fi hotspots later this month is national carrier Eircom, which will be rolling out hotspots in a variety of locations, including the O’Callaghan Hotel Group, the Red Cow Moran Hotel, the Silver Springs Moran Hotel in Cork and Citywest Hotel in Dublin. Eircom and the hotels will partner to provide hotel guests with optional one-hour or 24-hour Wi-Fi access through scratch cards that can be bought in hotel lobbies.

According to Damian Allen, director of finance at the O’Callaghan Hotel Group, the potential to generate revenues from Wi-Fi will be through the added value that hotels can offer guests that increasingly come to expect Wi-Fi to be in place, particularly US travellers.

“Apart from accommodation, people use hotels all the time for business dealings, whether it is for holding or attending conferences, having coffee in the lobby or in many cases using hotel lobbies as offices away from the office. If it is done properly then the potential gain from Wi-Fi can be classed in the same way that other business services are provided by hotels,” he says.

Peter O’Shaughnessy, WLAN programme manager at Eircom, revealed that in the second quarter of this year, Eircom will be going a step further to bundle digital subscriber line (DSL) internet access with WLAN packages to small office and home workers. The cost of the combined package is estimated to be in the region of €500, including DSL access, a WLAN hub and wireless data cards for laptops and personal digital assistants.

“There is a great opportunity in the market for such services. Our aim is to make such a competitive offering that it will ultimately stimulate the WLAN and DSL market collectively. Individuals or small companies working from home offices can enjoy complete wireless access at speeds of up to 11Mbps,” says O’Shaughnessy.

Efforts at rolling out Wi-Fi networks in Europe on a pay-for-use basis in comparison with the US, where coffee shops such as Starbucks offer Wi-Fi access for free, may offset the nasty stigma attached to the money-losing image it has already attracted. For hotels, airports and other venues that have partnered with telcos and start-ups to establish hotspots, it presents a chance to gain return on investment as well as a potential revenue stream.

However, there are already rumblings that the prices being charged for such access (in most cases around €2 or €3 for an hour) are too high, presenting another interesting conundrum if the prices only serve to push potential users or subscribers away.

By John Kennedy

Pictured: Dermot Ahern TD, Minister for Communications, Marine and Natural Resources, and Peter O’Shaughnessy, head of business IP products at Eircom