Wi-Fi threat to 3G 'is overstated'

Europe's Wi-Fi hot spots will generate more than £1bn a year by 2007, but they won't kill off third-generation mobile services, according to an analyst report

Claims that Wi-Fi hot spots will kill the market for 3G services are over the top, according to analysts.

In a new publication, research organisation The Yankee Group says there are still a number of problems need to be resolved before public access wireless local area networks (WLANs) become a commercial reality. Even when such problems are resolved, The Yankee Group expects public access WLANs to exist in harmony with 3G, not in competition with it.

Although WLAN technology is relatively mature, the same cannot be said of the public access WLAN service environment, according to Declan Lonergan, director of European wireless research and consulting at The Yankee Group.

"Some fundamental challenges remain to be resolved before we can start to see significant growth in user numbers. The key technical obstacles relate to service roaming, security and billing. Perhaps more fundamentally, however, are the challenges emanating from the uncertainty surrounding public access WLAN service models, and the service provider business case," said Lonergan.

BT is confident that public access WLANs will soon be commercially viable, and has just begun a trial of a number of Wi-Fi hot spots. These hot spots, which will be set up in hotels, coffee houses and exhibition centres, will give high-speed wireless access to PDA and laptop users who have subscribed to the BT Openzone service.

Despite this warning that public access WLANs have some significant challenges to resolve, Yankee is confident that the technology has a commercial future in Europe. By 2007, it predicts that European public access WLANs will be generating annual revenues of £1.18bn.

Some analysts have forecast that once consumers are offered high-speed wireless Web surfing in shops, hotels and train stations they will be less keen on also owning a 3G mobile phone. Lonergan doesn't agree with this view, though. He believes that mobile operators should see WLANs as an opportunity, not a threat.

"The differences that exist in the core value propositions offered by these two technologies should lead to the introduction of complementary, rather than competing, services," said Lonergan. "For this reason, we would encourage Europe's mobile operators to grasp the PWLAN opportunity immediately, and to leverage their formidable position of strength in mobile services and customer ownership, to secure a dominant role in the provision of PWLAN services."

If it moves, we cover it. See ZDNet UK's Mobile Technology News Section for the latest news, reviews and price checks on mobile phones, PDAs, notebook computers and anything else you can take away.

Have your say instantly, and see what others have said. Go to the ZDNet news forum.

Let the editors know what you think in the Mailroom.