For years, mobile phone network operators generally took two views of wireless LANs: either they were deeply apathetic, or they saw the technology as a potential competitor to 3G. Recently, that seems to have changed.
Both T-Mobile and O2, for example, used the recent launches of their 3G services to also launch wireless LAN (Wifi) hotspot coverage.
T-Mobile has already established an extensive network of public Wifi hotspots, primarily through its tie-up with the Starbucks coffee shop chain. O2, when it announced its 3G launch plans in October, linked that initiative to a wireless LAN deal with operators The Cloud and BT Openzone that will give subscribers access to 6,000 hotspots.
O2 users can control connections to both wireless LANs and 3G or GPRS networks through integrated software on their laptops. “We recognise that 3G is not the complete answer, so using other radio technologies is important to us,” explains Hugh Griffiths, data services manager at O2.
This represents a shift from the arguments advanced by the mobile network operators during the frenzied bidding war for next-generation licences that 3G – and only 3G – represented the future for data communications on the move.
The reality is that the mobile network operators have struggled to ensure sufficient coverage using their UMTS (universal mobile telecommunications system) networks alone. And T-Mobile and O2, the operators keenest on Wifi, arguably have the smallest 3G footprints.
“O2 does appear somewhat downbeat about delivery of 3G,” says Jeremy Green, an analyst at IT market watcher Ovum. “Its 3G strategy is very much only to roll out where there is a proven need, based on GPRS usage.”
The operator’s targets for 3G coverage are indeed modest. O2 plans to have 3G on offer in 30% of the UK by Christmas, moving up to 50% coverage by mid-2005. This compares with Orange’s stated coverage, at launch, of 66% of the UK population.
But all the UK 3G networks, with the exception of Hutchison’s 3, now seem to view Wifi as a relatively quick and cheap way to add coverage. Vodafone has entered the hotspot market. And Orange, already the largest hotspot operator in France, is looking at ways to provide Wifi access to its subscribers in the UK too.
For 3G mobile subscribers, Wifi hotspots do offer a number of advantages. These include significantly higher bandwidth, with most Wifi hotspots based on the 802.11b standard operating at a speed of between 4Mbps (megabits per second) and 5Mbps, against a maximum speed of 384Kbps (kilobits per second) for 3G.
Wireless LAN signals are optimised for coverage in buildings, and it is relatively cheap for hotspot operators to boost coverage by adding repeaters; for example, to cover public areas in a hotel or large spaces such as conference centres and airports.
For network operators, moving some data traffic on to Wifi also makes sense. Wifi hotspots use commodity, fixed-line IP infrastructure to connect to the Internet, rather than expensive UMTS cell sites. “Bandwidth is cheaper [for Wifi],” says Green of Ovum. “They’d rather get people off the cellular network and on to a hotspot when they can.”
The business model for Wifi hotspots also appears to be attractive. Plug-and-play hotspot kits are now available for under £400 from BT Openzone. And hotspot operators typically charge by time rather than by data volumes, with BT Openzone charging £10 for 24 hours, or £6 for 60 minutes’ usage.
For a hotspot running over a DSL-based link to the Internet, an operator is unlikely to incur bandwidth-related charges. And in hotspot locations such as cafes and airports, Wifi users are unlikely to transfer gigabytes of data, even though they may well use more data than they would over GPRS or 3G. For a mobile network operator sharing a hotspot with a Wifi provider, moreover, its share of Wifi usage fees is almost entirely profit.
But for public wireless LAN to form part of enterprise mobile data strategies, more needs to be done to make Wifi and 3G work together. A recent survey of 650 corporate data users, carried out by industry researcher IDC, found that just 11.3% of large enterprises were “very interested” in using public wireless LAN.
Poor ease of use and a lack of seamless billing are both barriers. O2’s integrated software is an important first step in that direction, but the operator still requires users to take out two subscriptions, one for Wifi (at £30 a month for unlimited use) and one for 3G. A simpler approach is T-Mobile’s integrated 3G and Wifi plan. But at £70 a month, charges must fall if enterprises are to adopt it in volume.