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Study: Wi-Fi Hotspots Stay Hot in 2008

Wi-Fi hotspots are continuing their torrid growth in 2008. According to ABI Research's WI-FI Hotspots Forecasts, by the end of this year global hotspots will grow by 40% over 2007. The greatest growth and the largest number of hotspots continue to be found in Europe. While the UK has long led in European Wi-Fi hotspots, there is also marked growth in France, Germany, and Russia.

Most remarkable about the hotspot market, says vice president and research director Stan Schatt, are the dynamics of a fast-changing business model. "Starbucks' decision to go to a virtually free Wi-Fi hotspot model is having a profound impact. Hotspot owners are beginning to see Wi-Fi as a cost of doing business and an operational expense, rather than as a profit center." Schatt expects major retailers to move towards a free service model in phases. "The first phase is likely to be a free or almost free service for good customers, those who have signed up for loyalty cards."

One reason hotspot owners are willing to move towards such a business model, according to Schatt, is the realization that, "Charging for service is counter-productive in the long run because the real money will be in value-add content downloads." In the near future hotspots are likely to encourage users to pay to download the latest music and TV shows. Airport clubs are likely to offer hotspot users the chance to download movies for their upcoming trips. Starbucks has already begun selling music CDs in its stores. The next logical step will be to move to selling music downloads.

The proliferation of devices that support Wi-Fi also makes charging for such services more complex for hotspot owners. If a person is on a 3G connection on a dual-band phone and then moves into a Wi-Fi hotspot, how does the Wi-Fi billing take place? How many separate accounts must a customer who has both a dual-band phone and a Wi-Fi enabled laptop have in order to use a Wi-Fi network? Garnering money for downloads is a much more straightforward matter. [ABI Research]

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