LONDON — The public wireless LAN market will not become the Eldorado many hope for, but the number of 'hotspots' is still estimated to quadruple globally over the next three years, according to a report today from market research group Datamonitor.
The researchers say the number of 'hotspots' around the world will reach 135,000 compared with just the 31,580 expected by the end of this year. In its report, 'Public Wireless LAN: Hotspots finally heating up', Datamonitor suggests the number of users will explode from 1.53 million today to 23 million in 2006.
It puts the revenues the PWLAN services business will generate at $7bn by 2006.
The leading region currently in terms of hotspot locations is Asia Pacific, South Korea leading the pack with an estimated 1 million users by the end of 2003.
However Datamonitor expects the North America and EMEA (Europe, the Middle East and Africa) regions to catch up and surpass it in terms of overall numbers. Factors such as lowering prices, heavy marketing campaigns, greater penetration of wireless LAN-enabled laptops and perhaps most importantly serious investment from leading telecommunications operators should serve to stimulate demand.
In Europe, the number of hotspot locations in the UK and Germany are set to overtake the Nordic leaders in a matter of months. In many European countries the roll-out of PWLAN services was initially held back by regulatory restrictions on the use of the 2.4GHz spectrum. However, the situation is changing rapidly, and the researchers say the number of hotspot locations in the UK and Germany are set to overtake the Nordic leaders in a matter of months.
Sweden has led the way, rolling out the largest number of hotspots. However the larger European countries are now making huge investments and strides, through incumbent operators such as British Telecom and Swisscom.
However, Datamonitor suggests the investment that is currently being made in PWLANs in North America means this region will grow to be market leader over the course of 2004. A number of operators and consortia, such as T-Mobile, Toshiba, Boingo and Cometa Networks, have particularly ambitious roll-out plans. However, Datamonitor is not convinced that all of these plans will be achieved in the envisaged timescales.
By 2006 Datamonitor believes that the three leading regions, Asia Pacific, EMEA and North America, will each be worth over $2 billion, with the North American market the largest at approximately $2.8 billion.
However, the authors warn that revenues may not flow as quickly as some of the operators envisage. "The PWLAN market will not become the Eldorado that many originally hoped for", says the company's senior analyst Tim Glover.
"PWLANs will not constitute a mass market in the same vein as cellular communications. With the penetration of PWLAN locations increasing, service providers and premises owners must look at means of driving the usage of their services. The industry can certainly help its cause by investing heavily in WLAN marketing and identifying the right locations that will attract users to PWLAN services."
Given the low barriers to entry, many service providers have been launching PWLAN services only to find that the initial returns have been far less than expected. If demand remains weak then the reality is that many smaller service providers will be acquired or squeezed out of the market altogether, the report suggests.
