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.”
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