When Wireless Business Models Collide
By Mike Masnick, Fri Apr 01 23:30:00 GMT 2005

In Japan, where cellular mobile broadband access is much more common, some say Wi-Fi isn't needed at hotels. Meanwhile, a study suggests Wi-Fi in hotels is going to be huge. Who's right?


Predicting the future is, obviously, a difficult thing. However, when future predictions seem to be based on simple extrapolation off of a small base of data, you can get some odd results -- especially when additional factors are more or less ignored. That might be the case with two separate, but contradictory predictions today about Wi-Fi in hotels. There's a first-hand report from someone visiting Japan and noticing that there was no Wi-Fi or Ethernet in any of the hotels he stayed at -- and attributes that to the widespread usage of 3G mobile data services from mobile operators in that country. From that, the writer concludes that hotel Wi-Fi in the US may decline once faster 3G services are more widely available. Then, there's a study claiming that hotels are aggressively installing Wi-Fi, and the number of hotels with Wi-Fi should increase six-fold within the next three years. While both predictions make some interesting points, both of have some problems, as well.

The first one, obviously, is mostly anecdotal and is based on a very small sample size. There are plenty of hotels in Japan that do offer both Wi-Fi and Ethernet broadband Internet access. Also, it completely ignores the business model questions. As it stands right now, it's cost prohibitive to sign up for the few 3G offerings that are available around the world, while many Wi-Fi offerings in hotels are offered for free. It also doesn't take into account questions about user equipment deployment. With Wi-Fi being such a ubiquitous standard these days, almost all travelers already have it included in their laptops. Finally, while operators in Japan have done an excellent job offering service to users, mobile operators elsewhere don't have such wonderful reputations, and there's every likelihood that they will screw up the implementation or the business model.

Of course, the study saying Wi-Fi is going to be huge in hotels seems to ignore the other side of the equation as well. It doesn't take into account the fact that there will be some outside competition from other forms of mobile broadband technology, whether it's 3G offerings or some other kind of wide area wireless technologies.

Part of the problem, unfortunately, is that Wi-Fi is being too easily equated with "hotspots." Hotspots are one type of Wi-Fi offering, but do not define Wi-Fi by itself. The increasing availability of other wide area wireless technologies that have "good enough" speeds, along with true mobility and ubiquity seems to be enough to take business away from hotspots. Companies whose business models involve just making money off of hotspots were already facing some trouble from competition from free Wi-Fi, and other wireless broadband technologies are only going to make that challenge harder.

However, that doesn't mean the death of Wi-Fi -- it's just that Wi-Fi will serve a different purpose. Hotels can still benefit in offering Wi-Fi, if they recognize that it allows for much more than just a wireless link to the Internet for users. Some hotels are already realizing this, and recognizing that Wi-Fi can be used as a platform on which they can offer many useful services and applications for hotel guests. That's a situation where the hotels have realized that Wi-Fi has certain advantages that they can leverage.

In the end, neither prediction is likely to be exactly right or wrong. Elements of both will persist -- however, for either to really thrive it's going to be about execution. Mobile operators launching wide area wireless broadband offerings need to look at ways to make the business models work for extended usage and hotels and others looking to make use of Wi-Fi have to look beyond the basic access to see what types of incremental services they can offer to leverage the Wi-Fi connection and make it useful.