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Wi-Fi spreads its wings

Wireless usage goes up while cost goes down

According to a report released by Pyramid Research, the next five years will show a dramatic increase in global Wi-Fi usage, climbing up to over 700 million users.

The research firm predicts that Wi-Fi usage will grow from approximately 40 million users worldwide in 2003 to 707 million by 2008, which will spell cost savings for consumers.

According to the report, written by analyst John Yunker, an equally rapid price erosion will also take place over the next five years. Today, the average monthly revenue from one Wi-Fi user is US$30 (£25) but will drop to less than US$4 (£2.50) by 2008.

"Carriers are looking at Wi-Fi as a way to drive customers, to add revenue, definitely, to increase ARPU (average revenue per user) with existing subscribers and retain them, but also acquire new subscribers to their core services," Yunker said.

"The goal isn't so much to get a whole new segment of Wi-Fi subscribers, as it is to drive subscribers to their core services. And that is really driving down pricing as a result."

He added that one surprise derived from the report was the fact that telecom executives — thought to have been threatened by Wi-Fi, as the unlicensed service is not something operators have a monopoly on and can't be tightly controlled like other services — actually embracing the technology.

"Overwhelmingly, no matter what region of the world you looked at, (telecom executives) view Wi-Fi as a positive development for the industry. And even when we zeroed in on operators specifically, 90 per cent of them viewed Wi-Fi as good for the industry," Yunker said.

He added that he was also surprised to see that the telecom industry as a whole is adopting Wi-Fi internally as well as offering it as a service.

"The region we are seeing the greatest enterprise adoption of Wi-Fi right now is North America. Half of the companies surveyed in North America currently use it."

Yunker predicts that, for the most part, telecom companies will add Wi-Fi to a bundled package and cited Verizon Wireless in Manhattan, a company that decided not to charge for the Wi-Fi service, as an example.

"They view it as a loyaty tool, a service they can use ether to acquire customers or retain them. So, we are definitely going to see more and more of that," he added.

Wi-Fi is a very good thing for the telecom industry, providing it capitalizes on it, Yunker said, adding that because Wi-Fi isn't something that the operators can tightly control, consumers are the ones that are going to win in the long run.

Analysts at Gartner research predict 9.3 million people will use hotspot this year alone.

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Pyramid Research


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