18 July 2008

Wi-Fi Hotspots Continue Rapid Growth

Wi-Fi hotspots are continuing to grow rapidly this year, and are forecast to record a 40% global growth over 2007, according to research.

The greatest growth and the largest number of Wi-Fi hotspots continue to be centred in Europe, according to market research company ABI Research. 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,” explained Stan Schatt, vice president and research director of ABI Research. “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 said he expects more 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,” he explained.
 
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, according to Schatt. Starbucks has already begun selling music CDs in its stores. The next logical step will be to move to selling music downloads.