WLANs have a hot spot for mobile arena
Networking and telecoms have begun to converge again, not least because of the rapid growth of Wireless LANs (WLANs). This is creating many potential opportunities in the mobile communications market, yet take-up is slow. Nick Booth investigates
A year ago, it seemed as if mobile operators had wasted £22bn on 3G licences that were going to be, in effect, useless. The rapid growth of hotspots through wireless LANs (WLANs) and WiMax deployments would provide an alternative network for a fraction of the investment. The next stage would be putting voice calls over these wireless IP networks. And why not? They would be a lot cheaper, if only because the WLAN providers did not need to recoup the money they had already invested.
Better still, public WLANs had the advantage of providing a better upgrade path for workers who needed internet access while out of the office. “WLANs are, in essence, a portable version of the internet and more geared towards the serious business user,” said Richard Hubble, director of converged comms specialist Tatara Systems. “3G is the mobile internet aimed at the consumer.”
As networking and telecoms began to converge once more, this time in the area of mobile communications, it provided new opportunities for anyone brave enough to pioneer this new territory. The trouble with being a pioneer is that it is dangerous. Many start-ups rushed into the Wi-Fi hotspot market, fuelled by the easily available funding, but the services failed to attract the numbers they had promised their backers. Disappointment soon set in as the business models of many early WLAN entrepreneurs proved wildly optimistic.
It was probably just a case of getting in too early. The first high-profile company to have the rug pulled from under them by backers was MobileStar in 2001. Still, that company’s bankruptcy provided an education from which others could formulate more realistic business plans.
The Cloud is a case in point. The source of its revenue - wholesale service provision - is far more reliable. As in the early days of the internet, the people making money are those building the infrastructure for others. In the case of The Cloud, they’re building WLAN infrastructures for telcos anxious to catch up with this new market. BT Openzone is its best customer, but others include mobile operators.
“Suddenly, the established telecom operators, both fixed and wireless, have overcome their reluctance to invest in the market,” said Julien Grivolas, telecoms analyst at market research company Ovum. “These days all the main telecoms operators offer access to hundreds, even thousands, of hotspots.”
They’re even consolidating to try to neutralise the threat of new entrepreneurs that want to undercut the mobile operators and offer their own, cheap versions of mobile telephony.
One comms dealer in particular, Horsham-based Teleconnection, even attempted to take on the mobile operators by launching its own voice over Wi-Fi service last summer. This would offer subscribers cheap mobile calls in the UK, provided they could find a Wi-Fi hotspot and get a voice call over it successfully. If it had worked, subscribers would have paid less than £20 a month for unlimited calls.
Teleconnection’s biggest challenge was that there were not enough subscribers to make it work, and being a comms dealer - turned mobile operator, the company probably didn’t have the marketing funds needed to build a large enough client base.
There was a market opportunity there, said Jim Povey, managing director of Teleconnection. “The real savings for businesses is on mobile calls abroad. The mobile operators are like a cartel, and the domestic price-fixing is bad enough, but the international roaming charges are outrageous. There could be significant savings for businesses with a workforce that’s mobile around Europe and the US.”
WLANs have a hot spot for mobile arena
Networking and telecoms have begun to converge again, not least because of the rapid growth of Wireless LANs (WLANs). This is creating many potential opportunities in the mobile communications market, yet take-up is slow. Nick Booth investigates
There is an obvious gap in the market that is being plugged by new competitors. Following the success of Skype, other internet telephony providers have extended the offering. Instead of offering fixed desktop-to-desktop internet telephony, Voipfone, for example, can offer a portable version of internet telephony for mobile users. Wherever you are in the world, as long as you have a headphone with a mike that can plug into a broadband connection, all you have to do is remember your account and password and you are connected, even over WLANs.
The opportunity is there because “The mobile operators have had it their own way for too long. But that isn’t the case anymore,” according to Colin Duffy, director of Voipfone.
Is there an opportunity for the channel here? It is unlikely, according to Grivolas. That gap in the market may not exist for too long. “The [telcos] are forming international co-operation agreements in order to build international roaming capabilities into their prices,” Grivolas said.
The Wireless Broadband Alliance (WBA) is a case in point. Given the power this gives them, a little price competition will not be any threat, said Grivolas. As a consequence, the large operators are progressively capturing the market.
“The telecoms service providers’ objective is to increase their Wi-Fi customer base in the next two years by smoothly adding residential customers to mobile workers, mainly through the provision of bundled services,” Grivolas added. The fixed-line telecoms operators in particular consider Wi-Fi as the first step towards mobile convergence.
That is all very well, but what opportunities does it create for the channel? O2, a mobile operator, is the one that is offering the most tangible new opportunity for the channel. It is using Avant (a reseller-turned-distributor) to try to recruit a channel of resellers in the UK.
Marc Thompson, managing director of Avant, admitted it will be tough to persuade nervous resellers into this new opportunity.
“It’s a new market, and no one knows where the ground is going to settle. No one wants to commit resources into getting into a new territory when there’s still money to be made from their existing business,” he said.
WLANs have a hot spot for mobile arena
Networking and telecoms have begun to converge again, not least because of the rapid growth of Wireless LANs (WLANs). This is creating many potential opportunities in the mobile communications market, yet take-up is slow. Nick Booth investigates
But there will be opportunities, Thompson insisted, because companies will adopt the new ways of working remotely and communicating. If they do not plan it, their users will lead the way, just as end-user adoption of PCs forced many an IT department to rethink their IT strategy. The users are going to buy into public WLANs anyway, so companies might as well plan for it. This period of flux, as a company’s communications strategy is neither here nor there, is where all the money can be made.
“Getting connected will be the easy part. Everything that O2 and Vodafone seem to talk about these days is WLAN. It’s going to happen, all-right. But companies will soon realise that, if they’re not careful, the price of getting all their workers connected is stampeding out of control,” Thompson said.
This is where the resellers come in. As well as doing all the connectivity work, they will be able to rationalise costs for clients by getting them integrated bundles of communication minutes and by securing their networks.
Both services are, in their own way, about getting the client a set of predictable fixed costs. Nevertheless, it is hard to persuade resellers there is money to be made at the moment.
“That’s why we’re doing a lot of hand-holding for the channel. We’ll do everything to help the sales process and make the contracts work,” Thompson said. “We’ll do the pre-sales proposals, set up the billing and analysis systems, basically anything that will help the reseller get started. And once they feel confident, they can take up the reigns themselves.”
Another vendor that needs partners to sell portable internet solutions is Wireless Consulting. It is selling Meeting Spot hardware to hotels, exhibition organisers, hospitals, airports and, indeed, anyone who wants to offer a group of transient users temporary wireless access to the internet.
Any company that has broadband can stick a box in and offer a series of wireless access points. They can offer it as a free service, or charge for it,” said Panisouk Norinder, international sales director at Wireless Consulting.
Every installation has the capability to offer 24 different access points, each of which is fairly fluid. For an initial investment of £275 for the hardware, this is definitely pitched at the SME market. Norinder is scouting the UK to find resellers and distributors.
These will be great solutions for clients that want secure and controlled access to the internet, said Rory Fidler, a director at Magenta Solutions, which distributes wireless products to resellers. “Schools could have, for example, a walled garden, where the students get access only to the sites that staff want them to see.”
But is there any money in it? Yes, claimed hotspot provider Iyonder, which reports public wireless revenues are doubling quarter on quarter.
The take-up is especially good in the hotel sector. Up until now, about one-third of the Wi-Fi users in UK hotels have been foreign visitors, as the UK has been slow to adopt the technology. But this is definitely changing. “The percentage of US users in the UK has dropped from 35 per cent to 30 per cent, while the per centage of British users has increased to 55 from 35 per cent,” said Lloyd Rushton Jones, marketing manager at Iyonder. Prepaid vouchers are the most popular method of access, according to Rushton Jones.
This is where the UK industry could be shooting itself in the foot, according to Grivolas. Enthusiasm for Wi-Fi services has been dampened by high pricing, he added. Even though the main target in the hotel sector might be the wealthy business traveller, service providers still seem to be pricing themselves out of contention.
“In Hong Kong you can get a one-day pre-paid Wi-Fi access card for about $2.35. In Europe, it’s possible you may have to pay $40 for the same service. The billing strategies have to change in order for it to become more attractive,” Grivolas said.