BT to offer WLAN, corporate mobile services
By Anne Young, Total Telecom
10 April 2002
U.K. incumbent plans mobile services for corporates and network of WLAN hotspots, subject to regulatory changes.
BT Group unveiled its mobile strategy Wednesday as the U.K. incumbent sought to convince the market that it will be a major player in the wireless field despite the demerger of its mobile unit (now mmO2) in 2001.
BT Retail said it planned to roll out public wireless LAN (WLAN) services in the U.K. from June this year, providing fast wireless Internet access in "hotspots" such as airports, coffee houses and similar venues that attract mobile laptop users "on the pause."
The company also said it would provide mobile voice and data services to its U.K. corporate customers from June. BT plans to buy the necessary airtime from mmO2 under an existing three-year deal and will sell the services under its own brand. The carrier stressed that services will be targeted only at business customers, while residential services are "out of our plans for now," said Pierre Danon, CEO of BT Retail.
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The WLAN service will also initially be targeted at corporate users, providing Internet access at speeds of up to 500 kilobits per second (Kbps) to a user within a 100-meter radius of a hotspot. The company intends to address the issue of security by providing VPN tunnels to corporate intranets. There are also plans to introduce other types of billing models, such as pre-paid vouchers for infrequent users. Further details will be announced in June.
Danon estimated that the capital expenditure for the WLAN network will be less than £10 million (US$14.4 million) over the forthcoming 12 months.
Revenue targets
According to Danon, the new mobile services (WLAN and corporate mobile combined) are expected to generate turnover of around £180 million ($258.5 million) per year by 2004/2005, possibly rising to £500 million ($718 million) a year in five years.
Of the £180 million, he said £30 million ($43.2 million) would come from WLAN services and £150 million ($215.5 million) from the BT Mobility Services for corporates. BT is also targeting a 12-15% share of the U.K. business mobility market by 2006/2007 and a margin in the same year of 10%.
The company added that it has a good starting point as it already controls 20% of the business handset market thanks to its existing relationship with mmO2.
The company has signed up vendors Cisco and Motorola to provide the equipment for the WLAN network buildout. Red-M will provide Bluetooth equipment to be used in conjunction with the 802.11b WLAN kit, although Bluetooth will not be available at launch. BT also plans to introduce the speedier 802.11a WLAN technology at a later stage.
The BT WLAN network would be the U.K.'s first public WLAN network. According to David Hughes, director, BT Mobility, the company will launch with 20 hotspots, and hopes to have 400 after the first year and 4,000 in three years.
Hughes said BT is in advanced talks with several site owners, and was able to name two - Costa Coffee and Welcome Break, which operates motorway service stations.
Regulatory hurdle?
However, one potential obstacle to the public WLAN rollout is the fact that the current regulatory environment in the U.K. does not permit the provision of public telecoms services on the frequencies used for WLAN services. They use the 2.4-gigahertz and 5-GHz bands, which are "license-exempt" frequencies in the U.K. This means they can be used by low-power applications that do not require a license, such as wireless alarms or key fobs for cars.
In order to be able to provide commercial telecommunications services on license-exempt frequencies the regulations need to be changed, which will entail a parliamentary process and ministerial approval.
Danon said, "We are as confident as we can be" that the regulatory changes will be made by the time of BT's launch.
The Radiocommunications Agency, which is responsible for the management of non-military radio spectrum in the U.K., has been carrying out a consultation on the matter after receiving requests from companies such as BT.
A spokesman for the agency, which is working on the issue alongside the Department of Trade and Industry (DTI) and telecoms regulator Oftel, said the consultation closed in February and elicited 54 responses, which are published on the RA's Web site.
The agency is now going through the responses and hopes to push the issue through as soon as possible, said the spokesman. He said that the responses have generally been positive, although it is not yet possible to predict the outcome.
He was unable to comment on whether the issue would be resolved by June, but admitted it was possible. "We know there is demand for it," he added. "We're trying to rush this forward as fast as we can."
The idea is to keep the spectrum license-exempt, rather than introducing some form of regulation, he said.
But despite this potential hurdle, BT's WLAN strategy seems to have met with a generally positive response.
WLAN is now seen very much as a complement, not a competitor, to next-generation mobile services such as 3G, as it will provide faster and, as BT claims, far cheaper Internet access in congested areas.
"It's all part of the same thing," commented Martin Heath, head of communications at KPMG Consulting. "It's not technology that people buy, it's services."
Sensible plan – consultant
Heath regards BT's WLAN plan as "very sensible," although he stressed that there are some outstanding issues to be addressed, such as security. He thinks the way forward is to provide mobile VPNs, since the main market for such services will be heavyweight corporates - such as KPMG itself.
He also said that the sooner BT can offer a seamless network, providing a handoff from a GPRS network to a WLAN hotspot, the better, as "that's what people want."
Heath added that one problem BT may face is that it is generally considered to be quite easy to set up an 802.11b network, so potentially anyone with a customer relationship could provide its own hotspot services. But he agreed that determining a business model is where BT could have the advantage.
On the whole Heath believes BT's mobile plan is indicative of its aim to become more of a service provider than a network operator. "BT has recognized that networking and service provision are separate businesses and is reorganizing itself along those lines ... This is a very powerful statement," added Heath.
And what of the belief held by some that BT is doing a U-turn by developing a mobile strategy after getting rid of its mobile network last year? "It might have been an afterthought, but it was a good one," said Heath.
In Danon's view, "You don't need the infrastructure to be a strong mobile service provider." |
