RealTime IT News

Hotspot Hookups to be Lucrative

"No matter the shape or size of a hotspot," says Daryl Schoolar, "they must have backhaul."

Backhaul, the connection from a location that goes back to the Internet backbone (sometimes called the final- or last-mile connection) can take a lot of forms, both wired and wireless, costly to downright cheap. Schoolar, a senior analyst with In-Stat/MDR says the revenue potential for WAN providers could grow from being worth $70.5 million last year to $500 million by 2007 -- and that's just for pipes to sites with pubic access hotspots.

The cost of backhaul can be a major issue for hotspot providers. The key, says Schoolar, is for the provider of the backhaul to make sure that the venue owners that house the hotspots are sold not just on the wireless access they can sell to end-users, but also on the plethora of other options the connection provides to the business itself.

"There's more you can do with that [connection] than just public access," he says. "You can connect multiple sites, or install Voice over IP solutions, or VPN security solutions. You're spreading that cost over more than one function."

In/Stat's research says that backhaul providers have to be aware that not all hotspots are the same -- some require more quality of service than others (say an airport's data vs. that from a coffee shop).

Full or fractional T1 lines are still the most prevalent form of backhaul now, even though they are the most expensive. For example, T-Mobile, the company behind the larges hotspot network in the United States, providing access at Starbucks Coffee Shops, Borders Books & Music, and eventually Kinko's copy shops, uses T1 lines exclusively for its backhaul despite the cost. T-Mobile spokesperson Bryan Zidar says the reason is: "We want a consistent network topology so it's consistent across all locations -- like a Starbucks cup of coffee, [it should be] the same in all locations. It's...a consistent experience."

Schoolar says that DSL is the most common runner up to T1 connections for backhaul because cable modems have issues with shared bandwidth and fixed wireless is in extremely short supply. However, with the advent of the 802.16a WirelessMAN (metropolitan area network) standard fixed wireless, that could change in time for vendors to take advantage of what In-Stat predicts for growth.

"Fixed wireless will play a role in the market -- some people are already using it," says Schoolar. "Most is proprietary. Once 802.16 rolls out, you'll see a lot of license exempt carriers moving to that over time." The industry group pushing WirelessMANs, the WiMAX Forum, doesn't expect products to be available in quantity until at least the end of 2004. WiMAX will do interoperability testing and certification on 802.16a fixed wireless products, just like the Wi-Fi Alliance does today for 802.11 products.

The message here is that backhaul is the beginning of the opportunity "not the end unto itself," according to Schoolar. Hotspots should be an opportunity for backhaul providers to sell into markets they would otherwise overlook -- sell the backhaul and make the hotspot the value add, not the other way around.

In-Stat/MDR's full report "Hooking up at the Hot Spot - Backhaul Opportunities in Wireless Public Access" is available now.

802.11 Planet Conference Wondering about the latest on last-mile wireless solutions yourself? Join us at the 802.11 Planet Conference & Expo, June 25 - 27, 2003 at the World Trade Center Boston in Boston, MA. Intel speakers will be there and we'll have a panel addressing hotspots and backhaul connections to the Internet.