Hooking Up Hotspots Provide Carriers 
with New Revenue Opportunities

    The continued growth of hotspots over the next several years will make hotspot backhaul (the last mile connection that carries data traffic from the public wireless LAN to the Internet) a significant revenue opportunity, specifically for WAN providers, reports In-Stat/MDR. The high-tech market research firm estimates that worldwide revenues from backhaul services will grow from $70.5 million in 2002 to well over half a billion by 2007 while the number of connections needed to support these hotspots will grow just over 10 fold during the same time frame.

    "While all of the attention has been on wireless cards, coffee shops, and how to combine them to generate revenues, the backhaul already presents a revenue stream coming out of the hotspot market," says Daryl Schoolar, a Senior Analyst with In-Stat/MDR. "Hotspots or public WLAN Internet access, regardless of shape, size, or business model, need a backhaul connection to carry data traffic to the Internet. For WAN providers, hotspots represent another market opportunity for selling Internet access. Along with backhaul service revenues, selling backhaul can open up other value-add service opportunities for WAN providers, such as provisioning of IP VPN, Voice over IP, hotspot billing and WLAN monitoring in addition to other opportunities in network equipment sales and installation."

    In-Stat/MDR has also found that:

    *  Backhaul vendors need to be mindful that all hotspot opportunities
       aren't equal.  The primary activity of the venue will greatly impact
       the WAN providers ability to sell value-add services.  For example an
       airport's data traffic has greater sensitivity than a restaurants', so
       an airport is less likely to use a common connection to carry both
       their data traffic and that from public users.

    *  The most common backhaul connection used is Dedicated Internet Access
       (DIA), also known as fractional or full T-1s.  While DIA isn't
       generally limited by geographic availability, it is limited by its high
       cost.  Because of DIA's cost of service some hotspots providers will
       look to other backhaul solutions.  Other available backhaul connections
       are DSL, cable modems, and Fixed Wireless Broadband (FWB).  Of the
       alternative backhaul methods, DSL is the most common.  Cable modems and
       FWB lag DSL in servicing the hotspot market due to limited deployment
       and issues over shared bandwidth.

    *  One of the big challenges facing hotspot operators is the balance
       between backhaul performance and price, and how to make it profitable.
       This is especially true for fee-based hotspots that are justifying the
       cost of the backhaul purely on hotspot service fees.

    The report, "Hooking up at the Hot Spot - Backhaul Opportunities in Wireless Public Access" (#IN030628TX), examines service provider opportunities for selling backhaul solutions to hotspots, and value-add services that go along with backhaul, as well as real life examples of hotspot backhaul deployments. This report also provides five-year, worldwide forecasts for number of backhaul connections and associated service revenues. The report price is $2,995 U.S. Dollars.

By Robert Hoskins

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