Weekly Wrap: The Beginning of the End For Paid Wi-Fi?
By Carlo Longino, Fri May 21 09:15:00 GMT 2004

Cometa's big-name backers couldn't save it from going under, PalmSource causes some confusion, network equipment sales drop, and more...

Wi-fi wholesaler Cometa made a big splash at the end of 2002 when they entered the market with backing from Intel, IBM, AT&T and others. But the company's investors' deep pockets couldn't save it as Cometa suddenly went out of business this week, unable to get enough funding to continue on its overly ambitious goal of building out 20,000 hotspots in its first two years. Cometa had only installed 250 hotspots, not nearly enough to support its wholesale business model, and casting further doubt on the viability of paid Wi-Fi as a whole, even as Wi-Fi and wired Net access spreads through the lodging industry, and promises to move through the transportation industry as railroads and airlines realize its competitive value.

Commercial hotspots are coming under increasing pressure from community-based spots, which are offering not just free access, but additional services to their users. One community group, NYCwireless, announced a contest this week looking for community applications to install on 8 free hotspots in Lower Manhattan, hoping to add some unique neighborhood services to differentiate even further from paid networks. These groups aren't concerned with generating revenues, they're looking at how free Wi-Fi can benefit users beyond lightening their wallets.

Analysts Gartner released figures this week showing network equipment sales in 2003 dropped 12 percent from the previous year. Ericsson remained the market leader, followed by Nokia, Siemens, Motorola and Nortel. Siemens gained ground in WCDMA sales, where it controls nearly a quarter of the market. 64 percent of last year's orders were for GSM equipment, 14 percent for CDMA and 14 percent WCDMA.

PalmSource CEO David Nagel threw us for a loop this week when he told a RIM-sponsored symposium that "Those who prefer data-centric devices should buy a BlackBerry. Those who prefer a phone-based solution should opt for Palm." It's a bit confusing considering Palm's application library (not to mention its sales) make it the most data-centric of the bunch, never mind other smartphone OS' cleaner and more experienced phone integrations.

We've seen plenty of reports in the past month explaining how MMS isn't quite catching on, and that was reinforced by a Jupiter Research report this week, which added that content, not messaging, will drive adoption. Jupiter analysts say MMS won't find success as an evolution of SMS, but rather as a content delivery platform. Many of the issues that hamper MMS messsaging use -- pricing, usability, interoperability -- aren't as important in content delivery, making it much more viable.

Two legacy telephone companies made mobile moves this week, re-entering the wireless fray after spinning off mobile units a few years ago. AT&T announced plans to resurrect the AT&T Wireless brand as an MVNO on Sprint's network after the Cingular buyout goes through, so it can offer bundled mobile service to its landline users. Across the pond, BT made official its Bluephone service by inking a deal with Vodafone this week. Bluephone uses a mobile handset on Vodafone's network, then connects to a BT landline or Net connection via Bluetooth when inside a home or office to transmit calls. Both these announcements come as landlines and mobiles continue to blend: Canadian carrier Fido said this week it would expand. its City Fido landline-replacement service, which gives users unlimited local calls for a flat rate.

Hutchison Whampoa hit back at critics this week, revealing it had attracted nearly 700,000 new 3G customers in the last two months. Analysts slammed Hutch earlier in the month, saying it was doubtful the company could live past 2006. While the subscriber adds are strong, doubts remain over the company's prospects as its acquisition costs remain high, and data usage low.

Intel said this week it was shifting gears in its mobile processor strategy, admitting the company was too late with its 2.5G products. The company's engineers have been sent back to the drawing board to start work on 3G chips, but not even these will assure Intel of success in the mobile market, as it's got to win some major customers first.

Intel's not the only company shifting strategy, NTT DoCoMo's new president spoke this week, announcing a realignment of two of its divisions into a new unit to develop new revenue-generating services in a bid to halt its slide in revenues and profits. Masao Nakamura said his priorities as president would be to boost FOMA subscriber numbers and increase customer satisfaction as well as create new products.

Interest in locating employees over their mobile phones seems to be growing: a UK service, Verilocation, takes cellular handoff information to estimate a phone's location, letting a user track 5 phones for GBP 5 per month. When a user requests to track a phone, a notification is sent to the handset, asking for consent, limiting invasions of privacy, though it's sure to cause concern for those employees with a less than trusting boss as well as the generally paranoid.

Elsewhere on the site this week, Peggy Salz looks at how some operators are battling the usability of advanced handsets to drive data revenues, Justin Hall fills us in on the mobile news from the E3 video game show, and David Pescovitz drives home how mobile technology is making commuting easier.