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Wireless hotspots will grow like crazy - IDC forecast

The growth of "free Internet" wireless hotspots hasn't upset the pundits at IDC, which has just surveyed the future of this market, noted a three-fold growth figure last year, and predicts continued growth - in the paid-for markets.

"In 2003 new players will continue to enter the wireless LAN hotspot market. Not only will specialized WLAN companies start deploying public services, but also, incumbent mobile operators and fixed operators are expected to combine WLAN services into their existing mobile offering," said Evelien Wiggers, senior research analyst for IDC's European Telecommunications and Networking research.

Despite the slowdown in the global economy, the demand for mobile connectivity "anytime, anywhere" "has attracted many new WLAN hotspot players," says the report. "The European hotspot market increased by 327% over the last year from 269 locations at the end of 2001 to around 1,150 locations at the end of 2002."

The growth isn't as exciting as it sounds. As the report notes, the market is still tiny. "In 2001 the deployment of WLAN hotspots in Western Europe slowly took off. Except for the Nordic region, where regulations were much more liberated, regulatory restrictions in other parts of Europe initially hampered a successful rollout of wireless public access services," Wiggers notes.

IDC's own report from September last year makes it clear that this European market is still trivial. Back then, IDC reported that "Nordic countries are advanced in public WLAN hotspot deployment with about 700 hotspots, and that number is growing rapidly."

But even then, IDC conceded, the number of public hotspots in the US was only five times larger than in the Nordics, meaning that world markets are still in very early stages.

Sweden and Finland, said IDC, "are particularly advanced in hotspots, but in Norway and Denmark the number is expected to start growing rapidly by the beginning of 2003. Emerging, high-growth verticals including healthcare, education, retail, manufacturing, and hospitality services will account for an increasing share of WLAN sales, and enterprises of all sizes will adopt WLANs. However, their requirements, ranging from security to management to pricing, will differ depending on their size, business culture, and organizational structure," said the earlier report.

Growth in Europe has now started, says the new report. When regulatory issues were changed in 2002, a whole new range of hotspots were announced. However, a three-fold growth in such a small installed base isn't going to produce a big number, and Wiggers concedes that "the Western European hotspot market is becoming increasingly fragmented and is very unclear and complex for an end user."

The market leaders are hard to find anywhere outside their native markets. "Although Telia Homerun operates 41% of all the hotspots in Europe, it was difficult to get access to its network when you were not in one of the Nordic countries," Wiggers said.

Another example of how thin it is all spread was shown in the case of Metronet, where "a subscriber has to subscribe to another network when they want to access their Internet outside Austria, even though Metronet rules the Austrian hotspot market."

Demand for mobile connectivity and flexibility has helped the wireless LAN (WLAN) market grow at a healthy rate, according to IDC. The research company forecasts a 2001–2006 compound annual growth rate of 42% for WLAN NIC unit sales in the Nordic region, with an installed base of more than 2.5 million NICs by the end of 2006.

Throughout 2002 the number of hotspots grew dramatically - in percentage terms, at least - and so did the number of operators. "Most of these operators were greenfield players focusing on their own region - very few operators offered their services internationally and roaming possibilities were rare."

The study, Where is the Action? Wireless Hotspots in Europe, 2002 (IDC #WL22J), analyzes the status of the deployment of WLAN services in public places; provides an overview of the most important players of commercially deployed hotspots; within the Western European WLAN hotspot market in 2002. An overview of the most important players is provided for European countries.

To purchase this document, contact your local IDC office, or visit www.idc.com.