RealTime IT News

European Hotspots No Threat to 3G

In a new report out today entitled "Public Access WLAN in Europe: A Technology in Search of a Business Case?", the Yankee Group's Declan Lonergan says that public wireless LANs (PWLANs) in Europe will not have a major impact on the existing 3G wireless telecommunications networks there.

"I have seen and heard it discussed numerous times, pretty much every time the PWLAN opportunity is being discussed," says Lonergan. His report, however, says it won't happen. Even though public WLANs throughout Europe will grow to be worth $1.8 billion with over 7.7 million regular users by 2007, this growth will not "cannibalize" 3G revenue to a significant degree.

"The basic 802.11b standard is now well defined, and interoperability of equipment is no longer a problem," says Lonergan. "The next phase of technology advances, therefore, must focus on the commercialization of the existing PWLAN technologies." Service models are the next major hurdle to overcome for European WISPs -- a public WLAN isn't viable as a stand-alone business for smaller companies, and revenue sharing won't provide realistic money for years. The only path to success, according to the report, is the end-user experience: it's got to be good, with flexible pricing.

The costs of starting up hotspots are low, so there's less of a barrier for new players -- but Lonergan advises caution for all players considering going into the PWLAN business.

"Just because the barriers to entry are low does not make it a worthwhile venture," he warns. "Just because you have a loyal customer base does not mean they will choose you as their communications service provider."

The players with the best chance of success are existing wired phone carriers and ISPs, plus virtual WISPS that outsource infrastructure management.

The report lists significant public WLAN rollouts by providers like Sonera, Telia, and Telenor, with announcements from companies including BT and Jippii, though the latter recently scaled back its hotspot investments.

Lonergan says we're years away from seamless roaming between WLANs and GPRS/3G networks. "Technological solutions to authentication, billing, and QoS management must be provided before inter-network roaming becomes a commercial reality," it says in his report. Even if 3G does fail, it won't be attributable to public WLANs taking over.