Although wireless hotspots have received considerable media attention, there were just over 1,000 hotspots throughout Western Europe at the end of 2002. However, according to a new report from IDC, this situation is about to change. IDC expects the number of Western European wireless hotspots to grow to more than 32,500 locations in 2007, generating total revenue of 1300 million.
“Although it is relatively easy to set up a hotspot service, it is not easy to generate a certain level of traffic that will provide enough revenue from single locations to be successful in the early stage of the hotspot market,” said Evelien Wiggers, senior research analyst, European Telecommunications and Networking services.
“Without roaming possibilities to other locations it’s hard to sell subscriptions and create a customer base.” As a result, IDC believes most of the specialised wireless internet service providers (WISPs ) are likely to be acquired or integrated in networks of larger players over time. This is particularly the case of those players that entered the market early and got hold of prime locations.
Further Key findings:
· By 2005 the average revenue per location is expected to almost double, from just over 28,000 in 2002 to almost 56,000 in 2004.
· Starting from 2005 the average number of hotspots in smaller locations like shops and cafés will be higher and revenue generated in these types of hotspots will be smaller than in large business hotels and airports.
· This factor, coupled with declining subscription prices will mean that the average revenue per hotspot will decrease in 2005.
· During 2003 most hotspot users could be described as occasional users. As soon as access prices fall and hotspot services become ubiquitous, a growing part of the occasional users will become prepaid users or subscribers.
· Initially the number of prepaid users will be higher than the number of subscribers. However, as the average time online increases, more users will opt for a subscription. From 2006 onwards, the number of subscribers will surpass the number of prepaid users. The number of users will initially be low, but towards the end of the forecast period in 2007 the total number of users will exceed 7.8 million.
“While it is relatively cheap to set up a hotspot, one should take into account that deploying a hotspot business is not a license to print money,” warned Wiggers. “There are many obstacles and uncertainties that should be taken into account. Most business models are not proven yet and some location owners might even consider offering the wireless service for free to attract customers.”
2003-05-16
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