Vendors Aim Behind The Hotspot for Wi-Fi Profits
Feb 11, 2003 (Broadband Business Report/PBI Media via COMTEX) -- Evolving Wi-Fi
from small-scale LANs to a nationwide commercial broadband technology isn't
going to be an easy job. There's a big difference between one access point in a
spare bedroom, or ten in an office area, and several hundred or thousand
hotspots strewn across hotels and airports over an entire country.
The industry is still groping at the concept of nationwide Wi-Fi, lured on as
much by the fact that Wi-Fi is actually successful as by anything else. However
a few shared assumptions are starting to emerge as to who will play in this new
field and how they will build a service offering. For equipment vendors, these
assumptions are leading to a pretty consistent collection of business
strategies.
Assumption 1: Where is the revenue going to come from? Primarily business
travelers. There will be enough free Wi-Fi to meet the needs of casual surfers.
Assumption 2: Who's going to run this show? Established carriers. Given the
small market, user price sensitivity, and the number of hotspots to be deployed,
operators will have to leverage existing assets for nearly everything from
backhaul to billing and authentication if they want to make any money.
Assumption 3: Where's the money to be made for vendors? From gluing the hotspots
into that existing carrier infrastructure, and providing the kind of service
differentiation that will get those business travelers to pay for Wi-Fi instead
of just using the free stuff.
As a result of this thinking, hardware vendors are lining up to sell carriers
back-end integration solutions designed to tie Wi-Fi hotspots into their
existing networks and back-office processes. This strategy runs the gamut, from
giants like Nortel Networks [NYSE: NT] to smaller players in the large carrier
market like Juniper Networks [Nasdaq: JNPR] to startups like California- based
Pronto Networks.
Note the common word there. It's no accident that commercial Wi-Fi strategies
are focusing on the network side. Nortel's Senior Manager of Strategy for
Wireless Networks, Bruce Gustafson, sums it up nicely. "In the access point
business, prices have dropped to rock bottom and there's not a lot of margin for
anybody. And the standards are rigorous enough that there's not a lot of room
for innovation."
Nortel's strategy relies on its partnership with Symbol Technologies [NYSE: SBL]
for the actual access points. Nortel's interest is in tying Wi-Fi into carriers'
existing 2G and 3G systems. "Wireless LAN is just another broadband wireless
access technology to us," Gustafson says. "We make sure the hooks are in our
network to be able to plug that in at the edge and take advantage of all the
services that we're running deep in the network, ideally in such a way that the
user doesn't look like 100 different users, and you don't have to deal with 100
different logons as you move from place to place."
Applying inner-network service differentiation to Wi-Fi networks is crucial for
providers because not only are the access points something of a commodity, but
so is what they do. As long as Wi-Fi is the same fast wireless web browsing
service regardless of who runs the access point, carriers will be unable to
differentiate themselves from each other, or for that matter from free Wi-Fi.
That's key to understanding the vendor play. For example, Juniper's combination
of its E-series edge router platform and its SDX-300 Service Deployment System
as a solution for public Wi-Fi. One goal is to shift intelligence from the
hotspot level up to a more centralized level -- E-series routers instead of
dedicated CPU-based gateways at each hotspot in the network. But an equally
important goal is developing new services and harmonizing existing ones across
the new Wi-Fi platform. That's why Juniper also rolled out what it calls MINT,
the Model for Integrated Network Transformation. This is a model for building
services on a core IP network and then delivering them across different access
methods.
Juniper Dir. Of Product Marketing Mike Capuano cites examples like temporarily
upgrading to a "gaming quality" connection with higher upload speeds and lower
latency in order to participate in an online tournament, or buying a few minutes
of very high speed to download a large file in a hurry.
In general, the goal is to go beyond commodity bit transport, to avoid leaving
money on the table by offering one service priced to the lowest common
denominator. With rich packet processing, says Capuano, "you can rate limit the
recreational user and you can provide guaranteed bandwidth to the business user.
The service provider is leveraging the solution to meet the needs of the user
and the user's expectations."
Of course this vision is a far cry from the kind of thing Wi-Fi is being used
for today, or the directions other players want to take it. It's basically an
attempt to retrofit Wi-Fi onto a commercial carrier model since, unlike
carriers' own wireless data efforts, Wi-Fi has taken root in the market.
Carriers don't need to seed the ground with devices since they're already there.
But at the same time, Nortel's Gustafson sees Wi-Fi filling a necessary niche.
"Wireless LAN has its specific focus," he says. "It's high-bandwidth, it's
nomadic, it's focused clusters of individuals. The wide area has its focus,
which is real time synchronous applications, always-on ubiquitous coverage,
communication focused. I think those two worlds will coexist for the foreseeable
future."
And gluing them together under the umbrella of carrier infrastructure and back
office systems is where vendors see their own future.
>>Bruce Gustafson, Nortel, 905/863-0000; Mike Capuano, Juniper, 408/936- 6174<<
Key Planned Large-Scale Wi-Fi Deployments
United States:
* T-Mobile: Propietary nationwide network
* Cometa Networks: Wholesale nationwide network
* Footloose Networks: Wholesale nationwide network
* Affordable : Wi-Fi upgrade of Z-Mail Internet kiosks
United Kingdom
* BT - Nationwide "OpenZone" deployment
Canada:
* Bell Canada - Pilot in Toronto & Montreal
Australia:
* iPrimus - 500-hotspot network planned for Sydney
[Copyright 2003 PBI Media, LLC. All rights reserved.]
Broadband Business Report, Vol. 13, No. 3 [Copyright 2003 PBI Media, LLC. All
rights reserved.]
Copyright 2003 PBI Media, LLC. All rights reserved.
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