Hipness is not going to make Wi-Fi successful

A while back I wrote a column about having a home wireless network - how having one changes the ways in which you use computers and the internet in some fundamental ways.

Now I can confirm that being forced to abstain from wireless after having had access to it can slowly drive you mad. I know that seems a bit extreme, but it's true. Right in the middle of some time off recently, my wireless network went kablooey.I couldn't even get an ethernet DSL connection to work, so was back on (shudder) dial-up.

Trying to repair the problem drove my stress levels sky high. Finally, with the help of a geek Samaritan who knows far more than I and helps talk me through such occasional catastrophes, I had my Mac back on wireless this week (though I have not yet figured out why my Windows machine no longer wants to talk to my wireless base station).

Fresh from such Wi-Fi rejuvenation, I was particularly interested this week to hear a wireless sector analyst, Mr Richard Dineen of Ovum in London, give a presentation on what's happening out in the public wireless network arena. Public wireless access means WLANs - wireless local access networks - the often confusing world of public Wi-Fi hotspots, where you can get online with a Wi-Fi -enabled laptop or other device.

Public Wi-Fi in Ireland has mostly been driven by operators O2 and Esat/BT, who've established a number of public hotspots at train and ferry stations, hotels, coffee shops such as Insomnia, and several phone boxes in the North.

But operators readily admit usage of these networks is low and awareness of them among businesses and consumers in the State is minimal. According to Mr Dineen, the market today for wireless is "highly fragmented, chaotic and experimental". This brings a certain hip cachet to places that offer wireless access at the moment - "how cool", some would say - but short-term hipness isn't going to create success for a service I believe will gradually become indispensable.

Many of the big operators in the telco and mobile space arebetting the same, says Mr Dineen; he considers Wi-Fi "an important opportunity". One might wonder why - after all, there's no business model yet, as people love to point out. But Mr Dineen says that Wi-Fi is one of the cheapest ways in which to deliver bits to people. It's a highly effective transmission technology, capital costs are low and dropping, and the spectrum - the radio wavelength over which data is transferred - is free.

And while 150 million devices - mostly laptops - are Wi-Fi enabled now, more than 600 million will be (including smartphones and PDAs, personal digital assistants) in the "near future". Wi-Fi should generate $2.3 billion (€1.9 billion) in revenue for operators by 2008, he says.

I was fascinated by his breakdown of the opportunities available in different kinds of locations. First, he discussed airports. Capital expenditure for wireless networks is high - from $100,000 to $1 million, but "footfall" is high - at least 20,000 people daily in large city airports. Airport Wi-Fi users spend 15-45 minutes online and are willing to pay a premium foraccess, making them a "goldmine", says Mr Dineen. Despite the capital outlay, airports can break even with Wi-Fi installments in two years, he says.

Hotels, which you might think are very attractive Wi-Fi locations, are not as lucrative as you might guess. Capital expenditure is lower for a network - around $60,000 - but only about 200 people per night stay in a large hotel. They stay online longer - over 45 minutes - but Mr Dineen predicts a four year break-even point.

Motorway services locations were a surprise inclusion on his list, at least to me. But here, capital costs are relatively low at $10-20,000, and footfall is high, at some 7,000 people daily on large motorways in the US or UK. People go online for short sessions of 30 minutes - imagine commuters and business "road warriors" checking email - but it all adds up to a break-even point of a year.

Finally, locations such as coffee shops - which we now tend to associate with Wi-Fi - have very low capital costs, from $300-$3,000.

Customer footfall is low - maybe 300 or more people daily, and 85 per cent of those grab takeaway - but people sit during off-peak times and surf, drinking more coffee, having a sandwich. Coffee shops can be cash positive with Wi-Fi in two to three years, says Mr Dineen.

Ms Keelin Kavanagh, marketing manager for Insomnia Coffee Company, said having Wi-Fi access (supplied through Esat/BT) "gives consumers another reason to choose us". Customers log on mostly during off-peak times, and the cafes are happy to have punters on seats at those times.

Esat/BT says it intends to start an advertising campaign for its Wi-Fi hotspots shortly, so expect to hear a lot more about what going Wi-Fi can do for you in coming months.

But until Wi-Fi access costs come down - they average €10 per hour or €20 per day with monthly corporate subscriptions around €120 - Wi-Fi will remain a luxury for the few.

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