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Wi-Fi Hot Spot Market Picking Up

A new report predicts there will be rapid growth in the global market for Wi-Fi hot spots, or private locations around the world to link to public wireless networks.

Allied Business Intelligence, based in Oyster Bay, N.Y., says in its new report on Wi-Fi that hot spots will grow from their current level of 28,000 locations to more than 200,000 within five years.

ABI says that while North America is home to more than 12,400 hot spots, the Asia-Pacific region is expected to grow at a faster rate in the next few years. The study focuses on commercial hot spots, inside coffee shops, fast food restaurants, airports, railroad terminals and other establishments.

"For the Wi-Fi market to grow over the next few years, several things have to happen. For one, roaming agreements between operators need to happen. Secondly, there has to be a clear single message to consumers on the value of Wi-Fi," says Tim Shelton, director of wireless research for ABI.

"The greatest opportunity could potentially be with the cellular providers, because it will help them drive consumers to the data usage model," says Shelton, adding that T-Mobile is currently the biggest operator of hot spots around North America, other operators include Wayport, and a host of smaller players.

Shelton said one private company making a major push into the Wi-Fi market is Boingo. "They are not strictly an operator, but more of an aggregator. They don't own the actual network, but they enter to roaming agreements to offer Wi-Fi based services."

And beyond wireless network service providers, if the Wi-Fi hot spot market grows, there will be other beneficiaries.

"The hot spot market certainly will provide opportunities for access point hardware manufacturers and other backend solutions," Shelton said.

Despite the rosy market outlook, ABI's Shelton does say that there are concerns about hackers being able to violate the integrity of Wi-Fi-based wireless networks.

"While there's no question there will be growth, wireless security remains a must for the credibility of the hot spot market," says Shelton.

Shelton expects that hotel chains, restaurant franchises and other national retail chains will potentially use hot spot technology "to drive customers to their doors and to capture a competitive advantage by offering an innovative wireless service."

Starbucks , McDonald's and Borders are three national chains which have gotten behind the wireless technology by putting Wi-Fi hot spots inside their commercial establishments.

Shelton said these companies believe it will provide added-value to their customers and predicts revenue generated from hot spot technology will rise from $59 million this year to $3.1 billion in 2008. Users pay either an hourly, daily or monthly fee to access Wi-Fi networks.

"Some of the issues facing the hotspot industry range from interoperability between hotspot locations to the need for operators and aggregators to acquire more users," Shelton writes in his report.

ABI's report is called "Wi-Fi Public Hotspots: Business Case Analysis through Deployment and Subscriber Forecasts."