It’s a sure sign that a technology or business idea is gaining acceptance when
market research and consulting firms fall all over themselves publishing studies
on it. In the last several months industry watching organizations have been
intensely studying the Wi-Fi hotspot phenomenon, and writing about it endlessly
— especially overseas.
We looked at three recent reports that emanate from the other side of the pond
but have global implications:
- Pricing and Marketing Hotspots, an in-depth, 109-page report by Philip
Low, managing consultant at UK-based start-up BroadGroup.
It sells for about $1,400.
- 10 Ways to Profit from Public Access Wi-Fi, a four-page white paper
by Anthony Behan of Am-Beo Ltd., an Irish
rating and revenue settlement software firm. It’s available free to registered
visitors at the company’s Web site.
- A WLAN Primer from UK-based consulting firm FirstPartner
maps and taxonomizes the emerging WLAN and hotspot industries. It’s written
by Philip Bates, founder of WLAN security firm Bluesocket,
and consultant Kurt Lyall. This study is available free at the firm’s Web
site.
BroadGroup Says…
The BroadGroup study by Low, a veteran telecom consultant and researcher in
the
the most substantial of the three. It is also global in perspective. The firm
did a fairly comprehensive and in-depth survey of industry players worldwide,
55 in all. The report profiles participants and analyses pricing and marketing
models and trends.
Pricing, the report argues, along with marketing models, will be key differentiators
and key determinants of success for hotspot service providers. Well, no big
surprise there. Low identifies three broad approaches to pricing — mobile (mimicking
mobile carrier pricing models), location specific, and fixed Internet (mimicking
ISP pricing models) — and analyses pros and cons and risks of each.
Current trends are probably preliminary indicators at best, but the study found
that a significant proportion of service providers — 37 percent — are offering
monthly subscriptions, an indication, Low suggests, that providers are most
"prone" to adopting fixed Internet marketing and pricing models.
The BroadGroup report also provides some interesting analysis of current pricing
data from survey participants. It found, for example, that
is expensive for subscriptions — with an average monthly subscription price
of $62.
price of $16.47. The average in the
is $39.50; globally it’s $41.50.
Prices for short-term use also vary widely. Cheapest in
for one hour is (well, was) Joltage — $1.99.
Most expensive is T-Mobile — $11.96.
Cheapest in Asian is $2.30 (Navigator).
The report examines a number of possible future market scenarios and their
implications for pricing. The evolution from hotspots to hot zones (entire neighborhoods
with Wi-Fi coverage), for example, will likely produce more mobile-type "behavior"
among users and put downward pressure on prices as hot zone services are bundled
with ISP and mobile carrier offerings.
On the other hand, because of demands on service providers for increased interoperability,
improved security, ease of access and ubiquity, it isn’t practical for them
to bring their prices down very far in the short term, Low says — unless a
"loss leader entrant" forces their hands.
It seems unlikely that kind of pressure would come from major telcos and mobile
carriers, but the report notes that the imminent entry of these players will
radically alter the hotspot market in the coming months.
A related scenario BroadGroup believes will play an important role in the evolution
of the market is the entry of content providers offering content specific to
the environment and personalized to the end user — similar to content providers
in the mobile data market.
Ubiquity of location and download speed may be the primary differentiators
and generators of business value in the hotspot market right now, but Low suggests
content will likely be a key differentiator in the future.
Am-Beo Says…
Who knew there were as many as ten ways to profit from hotspots? Behan,
whose company Am-Beo wants to sell its billing and settlement solutions to anyone
generating revenues directly or indirectly from hotspots, brings together some
interesting ideas.
Number one on the list is, of course, access, and number two roaming — both
to your own customers and others’ — but then the list gets more interesting.
Advertising is next, both on the splash screens on the products customers use
to enter the network and attached to local services or content delivered by
the access provider.
Services and content themselves — Behan cites short message service (SMS),
multimedia message service (MMS) and location-based content as possibilities
— can also be offered at the gateways through which all hotspot traffic must
pass.
The list goes on. Revenue-sharing partnerships with other service providers.
Bundling with other services and products — mobile services, of course, but
also coffee shop products. Wholesaling use of hotspot network infrastructure
rather than trying to create a brand. Helping site owners install and manage
hotspot infrastructure. Selling or trading backhaul services.
"Wi-Fi offers an opportunity to make significant revenues on a low cost
base, and an ideal way to increase ARPU [Average Revenue Per User] on existing
customers in wireless and wireline networks," Behan concludes.
"Whatever strategy your company pursues, the Wi-Fi opportunity will grow
and grow through the next few years. It may represent a threat to your current
business, but moving quickly can render it into an opportunity from which your
business can grow and expand."
FirstPartner Says…
FirstPartner’s WLAN Primer is a useful tool for new participants and
observers trying to get a grip on the complexity of the current WLAN market.
It also summarizes market share and market growth data available elsewhere.
One of its most interesting top-level observations is that despite strong growth,
the enterprise WLAN market — which obviously has an impact on the hotspot market
— has been held back by macroeconomic factors. However, the authors expect
this market to "catalyze" in 2004 — consulting-ese for "take
off."
The report notes that while hotspots have gained the most publicity, they actually
represent the smallest share in the WLAN market. Maybe so, but after the predominantly
hardware markets — enterprise and home — are saturated, revenues from hotspots
should continue to grow.
Finally, despite the authors’ and the report’s Euro focus, FirstPartner concludes
that the
will remain the focus of WLAN market activity for the foreseeable future.
The most useful part of the report may be its WLAN industry taxonomy, an analysis
of the different types of companies involved, how they interact and who the
main players are in each category. It even includes a perhaps overly-complex
flow diagram designed to show those roles and relationships at a glance.
You could print it and pin it up on your bulletin board.
