Wireless Internet (Wi-Fi)

The EU aims to promote the Information Society
by developing multiple broadband access platforms, and the
Wireless Local Area Networks (WLANs, also known as Wireless
Fidelity, or Wi-Fi) appear to provide plausible solutions that
are relatively cheaper and faster than Third Generation (3G)
mobile technologies.

The EU's telecommunications market is
the second largest in the world, after the US. In 2002,
the value of the EU market for telecommunications
services was 2.1 billion euro, with the annual growth
rate calculated at 5 per cent.

One of the few bright spots in an
otherwise lagging technology market is the promise of a
fast-evolving service that offers high-speed Internet
connections without the tether of a cable or phone line.
Alongside the telecom service providers' huge investments
into Third Generation (3G) wireless network developments,
the emerging cheap, short-range but super-fast "Wireless
Fidelity" or Wi-Fi networks appear to increasingly steal
the limelight.

Wi-Fi is a local area high-speed
broadband wireless technology that allows users within
the range, or hotspot, network access at up to 11
Megabits per second. The range of the hotspot, depending
on issues such as line of sight, is anywhere between
30-180 meters. In order to access the service, the user
requires a wireless-enabled laptop. Usually, access will
be on a subscription basis, or via a prepaid scratch card
or credit card account, although some services offer free
access. The number of hotspots is increasing around the
world by leaps and bounds.

The most prevalent Wi-Fi technology
today is known as 802.11b. Slower than the 802.11a
standard, it uses the 2.4-gigahertz frequency, which is
mostly unregulated. 802.11a operates in the 5-gigahertz
spectrum.

By 2007, over 20 million people are
expected to use Wireless Local Area Networks (WLANs)
utilising Wi-Fi technology worldwide. In 2001, global
sales of WLAN technology were worth nearly 1 billion
euro. By 2005, this figure is predicted to increase to
4.5 billion euro.  

Ongoing 3G handset delivery problems
and consumer perceptions about mobile network operators
ability to seamlessly migrate from 2G to 3G have directly
impacted on 3Gs reputation, and have thus boosted WLANs
prospects.

3G presents an ever-looming challenge
to Wi-Fi services. Although at lower speeds, 3G - once
matured - will offer seamless roaming and near-global
coverage. However, the two technologies do not as a rule
have to be archrivals: 3G's potential global roaming
services might be complemented by Wi-Fi's cheaper and
faster hotspots.

In line with the EUs policy to promote
the Information Society by developing multiple broadband
access platforms, the
Commission

strongly supports the identification of frequency bands
for wireless access systems at global level. Currently,
most EU Member States restrict outdoor WLAN use fearing
it can interfere with radar, aircraft navigation systems
and earth-sensing satellites. Under recent international
agreements, which offer expanded frequency options for
WLAN operators, countries are asked to ensure that most
WLANs operate indoors. EU officials have said they were
happy with the agreement.

The EU has been urging Member States
to avoid imposing sector-specific conditions on WLAN
services. Instead, the deployment of such networks should
be subject to simple and general authorisations only. The
EU highlights the principle of technological neutrality
and insists on the security and confidentiality of public
communications networks and services.

According to the technology market
research firm
Gartner

, by 2007 over 31 million people will routinely connect
to the Internet via Wi-Fi in public places. The number of
Wi-Fi hotspots will grow from 20,000 worldwide this year
to 120,000 by 2007, according to Gartner.

The Wi-Fi market is facing natural
limits, argues the technology consultancy
Forrester

. Wi-Fi offers services for computer users on the move,
but a mere 10 per cent of Europeans currently own a
laptop, and the numbers rise only slowly. Meanwhile,
hotspot coverage will likely remain patchy for years to
come, roaming will be difficult, and billing systems are
bound to remain incompatible.

Hotspot users are at best "occasional
users", and since this market is exceptionally young and
rife with uncertainty, analysts warn that only a few
hotspots will have enough traffic to generate significant
revenue. With today's WLAN technology, more than 700
Wi-Fi hotspots would be required to cover the same area
as one mobile phone base station. The British consultancy

Cordless

predicts that in a Wi-Fi-enabled UK just 15-20 hotspot
operators will snap 40 per cent of all Wi-Fi revenue.

According to
Pyramid Research

, the next five years will see global Wi-Fi usage grow at
a record pace, reaching 707 million users in 2008.
"However, the rapid growth in Wi-Fi users will be coupled
with equally rapid price erosion," Pyramid said. "Average
revenue per user will drop from 30 dollars per month this
year to 3 dollars per month in 2008."

There are countless questions about
the longer-term viability of Wireless LANs, but their
immediate future looks bright. This despite the fact that
current mobile operators will continue to seek to
maximise their returns from existing infrastructures and
will likely not move rapidly to install new wireless
services and applications.  

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