Wi-Fi hotspots to boom - many providers to go bust

The number of public wireless LAN (PWLAN) hotspots will grow almost ten-fold to 135,000 by 2007 but most operators won't successfully make it that far.

There are hundreds of big and small start-ups globally specialising in providing Wi-Fi PWLAN services and according to the latest research, from Baskerville, they face an uphill struggle to rake in profits. Most notably, a number of established mobile and fixed line operators have entered the market over the past 18 months and may well win the day.

Researchers have found PWLAN strategies vary greatly and Baskerville analyst Mike Roberts predicts those that will find the going tough could be charging too much, unable to encourage prepaid users to switch to being subscribers or in poor agreements with hotspot site owners - or possibly all three.

The world's two largest hotspot providers are Korea's KT and T-Mobile in the US, showing the strength of incumbents and cellular companies. However, it is not clear how many mobile operators - most of whom have shelled out millions if not billions on 3G cellular licences - will avoid cannibalising different parts of their businesses.

Drivers for strong growth in PWLAN revenues between now and 2007 include large-scale hotspot deployments and the proliferation of compatible devices, many of which are likely to be based on Intel's Centrino processor and radio bundle.