Wi-Fi hotspots get a second wind

A more mature market has attracted additional mobile operators, such as Qwest, AT&T and Tele2 Sweden

Wi-Fi hotspots are back in the spotlight, with more operators getting onboard. Cheaper international data roaming, better indoor coverage and the ubiquity of built-in support for Wi-Fi will help hotspots remain relevant in a mobile broadband centric world, according to operators.

Qwest has partnered with AT&T to offer its high-speed Internet subscribers free access to 17,000 hotspots, it said on May 7, and Verizon Communications is getting ready to partner with Boingo Wireless to do the same, according to a report in The Wall Street Journal.

But it's not just American operators that are showing more interest in Wi-Fi hotspots. Tele2 Sweden has signed a deal with The Cloud - whose European network covers 7,000 locations in 12 countries - to offer its customers Internet access via 700 Wi-Fi hotspots, including some in McDonalds restaurants, in the Scandinavian countries.

"We feel that the market has now become mature enough for us to launch a service; more and more of our customers have started asking if this is something we are going to offer," said Annika Kristersson, public relations manager at Tele2 Sweden.

The Tele2 service will launch in the middle of June, but the operator isn't ready to talk about pricing, according to Kristersson.

The growing interest in hotspots is backed by AT&T and Tele2's Swedish competitor TeliaSonera, which has its own network of hotspots. For the first three months of 2009, AT&T recently said it had 10.5 million Wi-Fi connections, more than triple the amount for the first quarter of 2008.

It's not just professionals using hotspots, but more consumers as well, according Ian Keene, research vice president at Gartner.

"I only have to go into my local bar where I live and see people using hotspots for all kinds of things, and none of them seem work related," he said.

TeliaSonera doesn't want to detail the traffic growth in its hotspots, but it's significant, according to Tommy Ljunggren, head of TeliaSonera's mobile network.

"Hotspots are especially good when you have a lot of people in one small place. Then its a lot more effective to WLAN and a hotspot, compared to trying to build a turbo 3G base station... but it's also very ineffective if you pick the wrong spot," said Ljunggren.

Using Wi-Fi as a complement to mobile broadband has several advantages, according to its proponents.

The main one is lower cost. Users don't risk potentially astronomical 3G roaming charges, according to Matt Cooke, senior product marketing manager at network aggregator iPass, which lets subscribers access about 100,000 hotspots covering 92 countries for a flat rate.

Other advantages include better in-building coverage and the possibility of higher speeds. But as mobile broadband speeds continue to increase - using technologies including HSPA+ (High-Speed Packet Access), LTE (Long Term Evolution) and WiMax - the speed advantage will decrease. However, in-building coverage may become even more important reason to stay with hotspots, according to Ljunggren.

"Some conference centers are in the basement, and it will be really hard to get good LTE coverage in there. Here hotspots really have a role to play," said Ljunggren.

Most of the traffic in TeliaSonera's hotspots comes from laptops, but traffic from smartphones are also starting to show, according to Ljunggren.

Wi-Fi has grown to be very popular on smartphones, according to iPass. Recent data from ABI Research show that 74 percent of people who have Wi-Fi on their mobile phone use it, and 77 percent say they will seek Wi-Fi in their next phone as well, iPass said.

Built-in support for Wi-Fi in smartphones and netbooks could also open the door for hotspots in new places, where you normally wouldn't take out your laptop, Ljunggren said.

The big challenge for smartphones is ease-of-use. Users can make hotspots easier to use by downloading a separate client, but the phone vendors could make it even easier by integrating one from the start, according to Ljunggren.

Ultimately it's about keeping the customer happy, and letting them stay connected one way or another, according to Keene. As long as Wi-Fi continues to provide advantages over mobile broadband, vendors will continue to bet on it.

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