Will Wi-Fi hot spots survive WiMax and 3G?

Faster mobile access will lead to more options

Mobile WiMax promises to be fast, cheap and, if Sprint Nextel keeps its word, available across the US by 2009. 3G service, while slower than mobile WiMax, is already widely available. Both technologies are designed to cover wide areas.

By contrast, public Wi-Fi hot spots require you to go to them. That begs the question: Can Wi-Fi hot spots in public places such as coffee shops and airports survive the onslaught of ubiquitous wireless access? And if they do survive, how will they change?

There is a wide divergence of opinion on this point.

"Once the price gets low enough for wireless broadband, why use a Wi-Fi hot spot?" asked Tole Hart, an analyst at Gartner.

"There's still a good future for hot spots," said Jack Gold, principal of J. Gold Associates. "For one thing, 98% of notebooks have Wi-Fi built in."

Hart didn't predict that hot spots will go away, and Gold didn't say that they will dominate mobile access in the future. Rather, while they -- and other analysts and industry figures -- may differ on the details, they do agree on two key points. First, hot spots will be different in the future than they are now. Second, how we access the Internet while mobile, and what we access, will soon start to change.

The realities

In the short term, public Wi-Fi hot spots will continue to be a common way to connect, the experts agree.

"3G is still expensive, and WiMax clearly will take some time," said Peter Jarich, an analyst at Current Analysis Inc.

In particular, he noted, 3G (third-generation) access is priced higher than most consumers want to pay. Typically, operators charge $60 a month with a two-year contract, although lower-priced but more limited plans are available.

In addition, the future of mobile WiMax in the US remains murky, since Sprint and Clearwire, which own the lion's share of WiMax-ready wireless spectrum, recently ended their agreement to jointly offer the service. Sprint is also under pressure from shareholders and Wall Street to scale back its WiMax plans in light of its struggling cellular business.

Until such issues are settled, there's no reason that hot-spot operators should worry, the analysts agreed.

Future changes

Ultimately, however, mobile WiMax will be available, even if a vendor other than Sprint deploys it. The Federal Communications Commission has said that Sprint will lose the spectrum if it doesn't use it, so it could become available to other operators at some point. Plus, other carriers have said they will roll out wireless broadband technology comparable to WiMax, although such deployments aren't expected for at least three years.

So fast, ubiquitous wireless access falls into the "when," not the "if" category. And when it does occur, expect changes in four areas, the analysts said.

Lower prices, more venues. If Sprint or another WiMax vendor provides faster service at lower prices than 3G, expect the cellular operators to respond with lower prices. That, in turn, will lead to lower prices for hot-spot access.

For instance, T-Mobile currently charges about US$10 for a day of access at hot spots in Starbucks and its other venues. Monthly charges from T-Mobile and other providers such as Boingo Wireless and Wayport range from US$20 to US$40 a month.

"Once WiMax kicks in, [hot-spot vendors] will need to get their prices down quite a bit," Gold said. "Plus, it will have to be more available. Today, it's only at places like airports, convention centers, hotels and the like."

More bundles. A second way the other cellular carriers will fight back is to offer aggressive bundles that combine 3G, Wi-Fi hot spots and cellular voice service.

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