The coming partnerships in hotspots

The hotspot revolution is not just about having more places to access the Internet. It will create a new wave of commerce involving customers, issuers and acquirers, explains Milind Kamat

THE Roaming facility has made mobile phone services much more useful. Using the same instrument and the same phone number and without having to change any settings on the phone, you can make and receive calls virtually anywhere in the world. This is a boon to the global executive. But let us not forget that along with his mobile phone, this global executive also has another undetachable companion—his notebook, which he would like to use wherever he goes.

Of course, he can always switch on his notebook and use applications and data on his hard disk. But what this global executive really wants is global connectivity for his notebook—i.e Internet access. Normally, he would do this by plugging a telephone line into his notebook. But that is the simpler part. He also needs a local Internet access account for which he would go into a cyber café or a business centre where Internet connectivity is available.

But our globe-trotting executive cannot limit his business to cyber cafés and business centres alone. Apart from offices, he has to go to clubs, restaurants, institutes, project sites, etc. He also spends a lot of time waiting in airport lounges and on the highway. His mobile phone works well in all these places, but he doesn’t have much luck with Internet access.

Enter roaming hotspots

A hotspot is a physical area where a wireless LAN has been established and through which the Internet can be accessed very easily. This is the result of the growing momentum of a wireless standard called 802.11 (also known as Wi-Fi), coupled with free availability of frequency spectrum and most interestingly, the declining cost and increasing usage of mobile devices like PDAs and notebooks.

Roaming and hotspots

Currently, each hotspot is owned and operated by a particular operator, and if you wish to use that hotspot, you have to register with that operator. Hotspots are in operation in a wide variety of locations in India, such as Barista coffee shops, Taj Hotels, Indian School of Business campus, etc. To use your notebook or PDA in each of these locations, you have to first register with the local Wi-Fi operator. But what you need is trouble-free Internet access at each hotspot.

To make that possible, the owners of different hotspots need to come together and share the databases of their registered users. Another way is that the owner of a database, such as a bank or a telecom company, can tie up with a large number of hotspot operators to service their clients. And thus comes the concept of roaming; trouble-free service across geographies without having to register every time.

Similarities between hotspots & roaming

The ease with which a user accesses the Internet or specific services is the one of the important similarities. A user does not change any existing settings on the access device and feels as if he is accessing ‘his own’ network. Apart from this, service-oriented pre-paid or post-paid billing can be provided. Similar to mobile phone roaming, the access network is independent of access device used.

Differences between hotspots & roaming

There’s a crucial difference between a hotspot and roaming. Depending on your business type, which one you focus on is important. If your company deploys only hotspots then your focus should be driving traffic to your specific sites. Here customers are attracted to specificsites or popular and public sites are turned into hotspots. A hotspot is site specific, whereas roaming is area specific. Roaming between various hotspots is not considered to be an inherent feature. But roaming between a chain or a group of hotspots is possible. Once the commercial models are worked out and a sufficient customer base is built, providing access through any hotspot across the world would be a reality.

For a fixed wireless ISP providing area wide service, roaming is most important. Roaming binds the customer with the ISP and also maximises business potential. This ISP is then termed as WISP. The WISP can offer nationwide roaming services to local business clients that DSL competitors can’t touch. This is a big competitive advantage.

Hotspot as co-operative business

For roaming the business case is strong and simple. DSL and cable competition can’t do it. It can help providers acquire valuable top dollar subscription clients. Plus they can make money when their customers roam.

For hotspots, the business case is based on new customers. Simply building one hotspot is insufficient. The venue must of value to customers if they are to pay for the service. Or the WISP and venue must both believe traffic can be driven to the site. There are two ways to do this. Traffic is brought to the venue by a hotspot roaming aggregator or traffic is generated from local signups. So, for either hotspots or roaming an aggregator partner is essential.

Conclusion

Hotspots are not merely going to revolutionise Internet access. They will create two new business opportunities that did not exist before. One is for issuers who will issue hotspot connectivity programs with different facilities and rates. The other is for acquirers who will actually have rights to the physical area and either operate the hotspot themselves or license it to a third party. Both issuing and acquiring offer tremendous business opportunities. Companies with strong virtual presence, such as Yahoo!, Airtel, Nokia and Sony could become leading global issuers. Companies with a strong physical presence, such as Taj Hotels, McDonalds, Barista, Indian Oil (petrol stations), State Bank of India, Indian Railways, etc., could become leading acquirers. And together they will make life easy for consumers of Internet access.

Milind Kamat is country manager, India and SAARC at SMC Networks. He can be contacted at milind.kamat@smc-asia.com