Seldom has a piece of technical jargon such as the word 'hotspot' so judiciously summed up the possibilities (and lack of them) of the concept it describes.
By simultaneously implying bags of confidence (supremely desirable location), with undertones of doubt (uncomfortable position), hotspot describes the public wireless local area network (Lan) market to a T.
The basic idea seems so simple. Peripatetic business people, students or consumers can settle themselves in a quiet corner of the hotel/cafe/campus/airport, whip out their laptop or PDA, establish a wireless broadband internet connection using Wi-Fi, and get almost instant access to their email, company data or the internet.
The time certainly seems right for the hotspot concept. Business people spend increasing amounts of time out of the office and yet rely more and more heavily on email and electronic access to ever-changing data, making remote connectivity a critical requirement.
"As people are now 'connected' they're looking for bridges to maintain this connectivity," says Nadahl Shocair, UK chief executive of communications reseller DeTeWe.
"Wi-Fi is one of those bridges that delivers connectivity anywhere there is service. On the street people will use GSM, in a coffee bar/rest area/airport, they'll use a Wi-Fi hotspot, and in the office they'll use a wireless Lan. To me, this is a 'when' not an 'if'."
Simultaneously, Wi-Fi is gaining rapid acceptance in business premises, educational institutions and tech-savvy homes. Add two and two, says the hotspot industry, and look what you get.
"About half of companies say they will deploy a wireless Lan service for internal users," says a representative of hotspot vendor Toshiba.
"This means we can rely on a high number of corporations that possess the right technology to make the hotspot business model a success. As more end-users adopt wireless Lan for business or private use, more hotspots will be set up."
With a claimed range of 100 yards or so and speeds in excess of 500Kbps using Digital Subscriber Line or satellite, hotspot technology has the power to provide roaming surfers with effective access to email and the web.
Increasing numbers of laptops and PDAs (plus a few 3G phones) have Wi-Fi built in or as an option; adaptor cards are on the market for under £50; and commercial-quality access points can be had for less than £500, so the capital outlay is not great for either users or location owners.
Hotspots catching on
Anecdotally, interest in hotspots appears to be growing. Alan Wright, wireless technical consultant at network reseller ALLnet, says: "Recent enquiries from our customers have suggested that several thousand hotspots are scheduled to be implemented in the next 12 to 18 months.
"The scale and requirements of these range from a single access point in a coffee shop or similar to several-storey offices with up to 200 users."
Some analysts also forecast significant growth. Juniper Research predicts a 21-fold increase in the number of hotspots in western Europe by 2008.
Datamonitor estimates a worldwide tally of 135,000 hotspots, worth $7bn by 2006, up from just 31,500 today. And IDC predicts there may be nearly 25 million hotspot users worldwide by 2008.
Britain is a leader in the field, for the moment. "The UK is Europe's largest hotspot market, and will have about 6,000 hotspots by the end of 2003," says Tony Crabtree, principal analyst at Juniper Research.
"By then the UK will be the world's third-largest hotspot market, behind the US and South Korea, although 2004 will see countries such as Germany catch up and overtake us."
The bulk of today's hotspots are in restaurants, cafes, hotels and shops, with a sprinkling in airports, railway stations, conference centres, corporate offices and residential areas. But the opportunities are nothing if not diverse.
"The idea is to have hotspots where business people go and not just where they stay," says Chris Brown, UK managing director at hotspot vendor Swisscom Eurospot.
"A business person goes to golf clubs, fitness centres, conference facilities, even retail outlets, and the idea is to focus on how we make them as productive as possible, no matter where they are."
It's small wonder that hotspots have become a hot market. "There's been an influx of offerings from service providers over the past year," says wireless specialist Leif-Olof Wallin at analyst Meta Group.
"The promise of embedded Wi-Fi in every laptop, coupled with the demand for broadband speed, has sparked a virtual 'landgrab', with providers hoping to capture the most desirable locations."
Toshiba and BT Openzone have launched packaged 'hotspots in a box' that sell through the channel for a few hundred pounds, and mobile phone companies such as Orange, O2 and Vodafone are trialling or readying hotspot services to complement their GSM and 3G coverage.
Also, T-Mobile recently announced a deal with Texaco service stations. At Swisscom Eurospot, hotspot users whose laptops lack Wi-Fi can even rent a wireless bridge device to connect through.
Toshiba's SurfHere product, distributed by Computer 2000, sells to the reseller for £199, and to the location owner (the reseller's customer) for £249 plus installation.
It connects to broadband cable, Asymmetric Digital Subscriber Line or ISDN, and takes care of authentication, billing and so on, so the location owner should not need technical expertise.
Users buy a 24-hour pass for £5 in the form of a prepaid coupon that can be bought from any location owner (these coupons are also sold via the channel).
New reseller revenue streams
Soon users will have the option of subscriptions and on-the-spot credit card payments, of which the reseller will receive an unspecified cut, thereby obtaining a recurring revenue stream.
BT's Openzone in a Box sells for £399, with temporary usage costing £15 per day or £6 per hour. Subscription charges range from £85 per month for unlimited access, to £10 for 120 minutes in a month plus 20p per minute thereafter. Resellers can sell equipment and user subscriptions, but not temporary-access coupons.
Vendors and service providers claim that hotspots are easy to install and maintain, and offer resellers all the usual benefits of an added-value sale.
These range from incremental business in the form of installation and service revenues, to the undying gratitude of their location-owner customers, which will be raking it in from selling one-day vouchers, getting a slice of subscription revenues, and enticing customers into their establishments.
"The opportunity for resellers is in the vast middle market, which are not big enough for the large service providers to target but which still want to join the hotspot feeding frenzy," says Crabtree.
"Resellers will also have the opportunity to sell other added-value services: security/firewall equipment and services, servers, broadband access routers, backhaul equipment and so on.
"And they can offer location owners connections to other nationwide and international hotspot roaming networks, such as Boingo, BT Openzone or T-Mobile."
Resellers' existing business customers are likely to need some hand-holding and support as they face the problem of integrating yet another layer of complexity into their remote-access infrastructure.
"Resellers should focus their efforts on reselling hotspot access along with wired remote access - dial-up, broadband - since the targets are generally the same," says Robin Singh, general manager at comms aggregator Gric.
Analysts such as Meta agree that Wi-Fi will be procured as a bundle with other offerings including mobile and internet dial-up services.
"Resellers can really add value by looking at the overall communications needs of the customer," says Chris Jagusz, general manager chapter management at BT Indirect Channels.
"Companies considering wireless broadband subscriptions are likely to be considering or implementing flexible working packages, and they might be looking for the hardware, software and connectivity tools for this. Similarly, hotspot sales to site owners could be part of a total comms solution."
But not all resellers seem to be up to the job. Wright says he is frequently called in to clear up the mess other resellers have left behind.
"More often than not the problem relates to the number of hotspots the reseller has installed, in that there are too many for the space, meaning frequencies interfere with each other," he says.
Many resellers will ask themselves whether they want to get involved at all at this early stage of the market.
"My view is that the Wi-Fi reseller market is still nascent and it's a risk for resellers to make too much investment in hotspots until the return on investment becomes clearer," says Shocair. "The channel's being offered revenues from installation and a share of any resulting revenues.
"But with vendor, outlet, distributor and reseller in the chain, if I were the reseller I'd be concerned about how big my slice of the pie would be, especially as the reseller is making a commitment to install and maintain the hotspot."
The early landgrab for hot hotspots may leave little room for the channel.
"The current mission of most hotspot vendors is to build out their networks and grow the number of hotspots, whether by partnership agreements or acquisition of other vendors," says Singh.
"In order to quickly generate traffic, the majority of the 'sales' of Wi-Fi access are between the major players themselves and aggregators such as Gric. Few of the major players have channel programmes developed yet."
Analysts including Forrester and IDC are talking ominously of dotcom bubbles and gold-rush mentalities, wasted investment and unproven business models. The key issue will be to persuade people that hotspots are worth using.
With only a few thousand hotspots available so far, coverage is necessarily patchy, and even where hotspots exist they are not always well advertised.
Lynda Colman, wireless and e-security business development director at networking vendor Avaya, says: "Awareness of hotspot locations is currently an issue, and although some services are clearly marked when you arrive at a location, there's no simple website available to help users locate hotspots before a trip."
Cost is another limiting factor, adds Colman. "£6 per hour is fairly expensive for users who want occasional access. £10 per month is realistic if you regularly visit locations with hotspots," she says.
Operators such as Swisscom Eurospot expect prices to drop, much as mobile phone prices have done.
The paucity of national and international roaming agreements is also a concern, according to analysts.
But perhaps the main stumbling block is security - not so much the actual holes in Wi-Fi, which can be plugged by anyone who knows what they are doing, but the threat perceived by the uninitiated.
"WEP [Wired Equivalent Privacy] is not far off useless," says Ian Kilpatrick, chairman of security distributor Wick Hill.
"It is rarely enabled since it's easier to set up and manage the laptop etc with it switched off. WPA [Wi-Fi Protected Access] is similar.
"It's not the default so it is likely to be implemented only by a minority. Yet this situation is extremely easy to defend against.
"You just have to make sure all incoming and outgoing wireless activity goes over an encrypted virtual private network. It's cheap, easy, effective and secure.
"There are significant opportunities now for resellers to sell security to clients whose staff want to use, or are going to use, hotspots."
Firewalls and antivirus software are also de rigeur, say security experts. The survival of hotspots will be secured only by success, so it is important to allay security and other concerns if the market is not to cool down.
"Critical mass really is important, rather like fax machines 15 years ago or video conferencing suites 10 years ago," says David Freedman, IT sector head at sales and management training specialist Huthwaite International.
"If people find that access to hotspots is plentiful and affordable, they'll become part of the normal business process. But if they remain a niche it's difficult to see a supportable business model for them."
The channel will have a role to play in this, promoting the hotspot concept to location owners as much as to end-users. But many resellers may prefer to see how things pan out before investing much time and money in such an uncertain market.
Also in this series:
How to Sell: Wireless - Part 1 - Joining the wireless set
ALLnet (0118) 921 6000
Avaya (0800) 698 3619
BTIC (0800) 085 0264
DeTeWe (01442) 345 600
Gric Communications (01753) 728 600
Huthwaite International (01709) 710081
Juniper Research (01256) 345 612
Swisscom Eurospot (01202) 734 300
Toshiba (0870) 444 8943
Wick Hill (01483) 227 600
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