Debunking the hot spot hype

Industry analysts forecast spectacular growth for public wireless LANs, also known as Wi-Fi hot spots. Some proponents even uggest Wi-Fi hot spots spell doom for mobile phone operators' 3G wireless technologies. There are so many things wrong with this thinking I hardly know where to start.

Industry analysts forecast spectacular growth for public wireless LANs, also known as Wi-Fi hot spots. Some proponents go even further, suggesting Wi-Fi hot spots spell doom for mobile phone operators' third-generation wireless technologies.

There are so many things wrong with this thinking I hardly know where to start. There is a niche market for Wi-Fi hot spots in airports, hotels and convention centers. But for a host of sociological, technological and business-model reasons, Wi-Fi hot spots are not a viable substitute for 3G mobile phone networks.

When Wi-Fi advocates assure users they will never be more than a 5-minute drive from the nearest hot spot, it's like telling them to throw away their mobile phones and go back to using pay phones. They forget the greatest benefit of wireless is freedom of movement.

Mobile phone operators enjoy several key advantages. Wi-Fi hot spots primarily serve notebook PC-toting business travellers and techies. 3G mobile phone networks also serve mobile handsets, which are about 10 times as numerous. Mobile phone operators simply can overlay wireless data capability on their existing networks, offering customers package deals with one monthly invoice.

Hot spot proponents counter that Wi-Fi offers higher data rates, will soon be a standard feature on most notebook PCs, and is already popular in offices and homes, and on campuses. All of this is true. But it still doesn't add up to a substitute for 3G mobile phone networks.

With today's WLAN technology, more than 700 Wi-Fi hot spots would be required to cover the same area as one mobile phone base station. Assume a nationwide mobile phone network consists of 10,000 base stations. It would take 7 million Wi-Fi hot spots to provide the same coverage. The equipment costs might be comparable, but the back-haul costs for 7 million Wi-Fi hot spots would be astronomical.

Wi-Fi aficionados raise two objections to this analysis. First, they insist it is not necessary to duplicate mobile phone coverage. I agree: People don't lug notebook PCs everywhere. But it would be a mistake to conclude that there aren't high-speed applications for mobile phones (music and video on demand will be huge) or that there are never high-speed notebook PC applications outside predictable locations.

Second, they claim technology enhancements - often involving so-called smart antennas - will multiply the range of Wi-Fi hot spots. But you can't get something for nothing. Longer range requires more expensive equipment, antenna towers and greater traffic capacity. As hot spots approach mobile phone ranges, mobile phone technologies become the better fit.

There are many other issues. Wi-Fi operates in unlicensed spectrum and is vulnerable to interference. Users can roam to other hot spots, but they often need to log on manually and even submit credit card payment when they do. And few (if any) Wi-Fi hot-spot operators have figured out how to make money.

Yes, there is a very nice niche market for Wi-Fi hot spots in airports, business-class hotels and convention centres. But as a substitute for 3G wireless, Wi-Fi doesn't stand a chance.

Brodsky is president of Datacomm Research in Chesterfield, Missouri.

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