WiFi Basics: The fast dawn of hot spots
In the past two years, hundreds of new companies have begun setting up Wi-Fi access points (called "hot spots") in cafes, hotels, airports, book stores and other public spaces. These “hot spot operators” or “HSOs” install Wi-Fi access points and then turn around and sell high speed wireless Internet access for a fee.
HSOs include Wayport, STSN, Surf and Sip, StayOnline, Pronto, NetNearU, Deep Blue, Fatport, Air Portal, Ikano, Picopoint, TheCloud and Azure, to name just a few. In the last year, major wireless carriers have thrown their hat in the ring, including T-Mobile (which is building hot spots in Starbucks cafes, Borders book stores, Kinko’s stores and airline clubs), AT&T Wireless, British Telecom, Swisscom, Telecom Italia and Sprint PCS.
Hot spot operators enjoy a low barrier to entry: as little as a few hundred dollars for equipment and $50-$100 per month for a DSL line. Larger hot spots require additional equipment, antennas, and faster connections such as T1 lines. Still, the cost of establishing a hot spot is far lower than setting up a cellular node – Wi-Fi uses unlicensed spectrum vs. licensed spectrum that can cost billions of dollars, and the equipment necessary to set up a hot spot costs hundreds of dollars versus hundreds of thousands or millions in cellular. The contrast is startling.
Forces outside the industry are rapidly arming users with Wi-Fi radios. People are already getting Wi-Fi in their laptops and PDAs for use in the office or home. One day soon, the majority of connected consumers will have one or more Wi-Fi devices, which is all the equipment they need to connect to Wi-Fi hot spots. This is a completely new concept in the wireless industry, which to date has had to subsidize the cost of each phone or other device that connects to a network. Such costs don’t exist in the Wi-Fi hot spot business.
Further, Wi-Fi is fast, 11 million bits per second (11Mb) and up, or over 100 times faster than a modem connection. Wi-Fi is significantly faster than the “2.5G” wireless services provided by cellular carriers, which typically deliver throughput between 40k and 60k. The actual speed experienced by hot spot users is determined by the hot spot’s connection to the Internet, which can range from low-end DSL (384k) to one or more T1s (1.5Mb and up), but this still promises much faster speed than any other available technology.
When you factor in the low cost to set up and run Wi-Fi hot spots, the rapid spread of inexpensive Wi-Fi cards and devices and Wi-Fi's use of totally free spectrum, it becomes clear that Wi-Fi delivers a price per bit that no other wireless technology can touch.
With Wi-Fi’s low barrier to entry and mass appeal, hundreds of thousands of Wi-Fi hot spots will saturate heavily trafficked areas in the next few years.
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