The Hindu Business Line : Where's the money?

Wi-Fi lets you surf the Net from poolside or coffee shop. Its hotspots are mushrooming, like dotcoms, but with no clear revenue model. A look at the economics of technology.

IT'S been sometime since Wi-Fi or Wireless Fidelity, which offers wireless Internet, arrived and made all the noise, but how many users do we get to see, surfing the Net at restaurants or by the seashore? Well, they are all there, though few and far between, at least in this part of the world. Wi-Fi is surely catching up in countries such as the US, but as its popularity increases, so do the problems and complexities surrounding it.

For those uninitiated to the world of wire-free freedom, Wi-Fi is a wireless technology that lets computers access the Internet using the wireless standard called the 802.11. This gives users freedom to surf from wherever they want to - from the balcony, from coffee shops, from the poolside, so long as they are within an access point called a `hotspot', which is now proliferating across the world. The users need to have computers with Wi-Fi-enabled PC cards. (Notebooks powered by Intel's Centrino chips have this wireless capability ingrained).

Right from the beginning, a moot question regarding Wi-Fi has been the economic viability of hotspots. The more the number of hotspots, the better for Wi-Fi and its users. But who will foot the bill for setting up one? And are consumers willing to pay? Early adopters of hotspots, the coffee chain giant Starbucks and McDonalds don't charge their customers for accessing the Net. These companies offer Wi-Fi as a means to enhance the customer experience of visiting their outlets, though they are not sure whether having a hotspot is attracting more customers.

A survey by research firm In-Stat/MDR has found that though the growth in hotspot numbers in the world has been beyond analysts' expectations - there were about 40,000 in 2003 as compared to a few hundreds in 2000 - the number of users was not very high, with the average spent being $12.10 per month. Jupiter Research too had a report which said though about 70 per cent of online consumers were aware of Wi-Fi availability, only 15 per cent actually used it, and just one per cent paid for the service directly. Such small numbers have already made many wonder whether hotspots are going the dotcom way: mushrooming all over, but no clear revenue model in sight.

Different combinations are now being worked out the in the US to address the issue of Wi-Fi economics. For instance, some service providers are clubbing their cellular, GPS and hotspot offerings. Also, service providers are joining hands with each other to offer roaming Wi-Fi services. For instance, Sprint, a US-based telecom company, has signed deals with AT&T Wireless to share its airport hotspots, and with STSN, a Wi-Fi service provider that has hundreds of hotspots in hotels. This means that a Sprint customer can access the hotspot of AT&T or STSN without having to pay separately. Experts say such deals will help companies address the key issue of incompatibility among Wi-Fi service providers.

Another area where we need morecoherence is the interoperability of Wi-Fi products. The Wi-Fi Alliance, a non-profit organisation of some 200 member companies that support the 802.11 standard, recently announced more stringent norms on interoperability of products to ensure that vendors conform to the standards and their products connect with each other. As more and more companies come out with products with varying features, the issues of interoperability become important. The Alliance has said that if a product affects the ability of other Wi-Fi certified equipment to operate as intended, its certification may be revoked or withheld.

More speed on the way

Meanwhile, Wi-Fi is set to gain some high-speed momentum in the future, in terms of network speed. Two groups, comprising some of the world's largest technology firms such as Intel, have put forward two different proposals for the 802.11n high-speed wireless standard, aimed at significantly higher network speeds. The first consortium, formed by companies such as Texas Instruments, STMicroelectronics and Broadcom, has suggested the use of the 20Mhz channel format, which is already being used. This group's proposal promises a wireless network speed of a minimum of 100 Mbps. Another group, comprising firms such as Intel, Cisco, Nokia, Nortel, Sony, Philips, Toshiba and Samsung, has promised Wi-Fi speed of 600 Mbps in their proposal.

Next month, the IEEE (Institute of Electrical and Electronics Engineers) 802.11 Task Group will meet in Berlin to discuss the numerous proposals that have been submitted to it. There are over 60 suggestions before the Task Group. However, the first draft of the 802.11n specifications is slated to be completed only by the middle of next year.

Picture by Bijoy Ghosh

vipin@thehindu.co.in

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