Demand for Wi-Fi

| 1 Comment

Got a great e-mail from Kevin about the Muni Wi-Fi post below. Tons of interesting questions and issues, and I owe him a decent reply. Part of the note, however, was a question about data concerning the demand for wi-fi services. Having spent a few minutes online looking, I've yet to find anything decent that doesn't cost over cool grand (though, there are some really interesting reports out there -- if anyone cares to forward something on, I'd be obliged, but I'm not encouraging breaking distribution or licensing agreements).

This Yahoo news item reports some interesting facts from a report (that I've attempted to request -- no response yet) done by TeleAnalytics.

-- In June 2004, there were more than 25,804 broadband-provisioned hotels in the 28 countries researched, with more than 91% having one or more Wi-Fi Access Points. -- More than 15,662 of these hotels were in the US, and they are responsible this year for 44% of the total, worldwide Wi-Fi business plus consumer segment revenue. -- In June 2004, Marriott International, Inc. was leading, with more than 314,000 rooms in US broadband-provisioned hotels. Holiday Inn was second with 288,000 rooms. -- Hotel Wi-Fi Usage growth was found to depend heavily on Wi-Fi coverage. Between March 2003 and March 2004, US usage growth for most market subsegments was, percentage wise, in the three digits range. -- The airports Wi-Fi segment was a late bloomer, but today usage growth is phenomenal. The current growth rates, sometimes over 350% in a six-month period, are clearly nonsustainable. But, with current usage at a fraction of one percent of enplaned passengers, the untapped potential is significant. -- Consumer hotspots usage shows none of the uniformity of the hotel Wi- Fi service adoption. In the observation window (March 2003 to March 2004), there were scores of consumer hotspots with less than 7 sessions a week, but few had as many as 300 a month. -- Usage growth in the consumer segment was non-uniform as well, and few market subsegments managed even a 50% year-to-year increase.

It's just an excerpt. The one big thing I took from this limited view is that demand for wi-fi is still concentrated on the traveling business user. The exceptionally high variance in usage of consumer hotspots (7 a week to 300 a month) shows, at the very least, a highly uneven demand for wireless services throughout cities. That, of course, may help to explain why companies aren't clamoring to wire up massive tracts of land simply in the speculative hopes that people will suddenly run out to buy wireless cards and sign up for service.

(If they did, in fact, do so, would internet service companies end up with an "abundance problem" akin to what Chris Anderson talks about at The Long Tail? And for that matter, would the "economics of abundance" issues be a case to examine Say's v. Keynes' views of gluts? Anyway...)

I won't link to the stories, but rather just to the Google search results for "demand for wifi", if you'd like a sense of the writings on the subject. By and large it's technology companies simply reporting, without much to back it up, that the demand for wireless is "skyrockting", or some other positive-sounding adjective. I'm perfectly happy believing that the demand for wireless is increasing. If that's the case, though, the companies will certainly follow to provide service. If it's not, however, beyond the obvious places like airports and hotels serving business travelers, then perhaps the proponents of wireless everywhere are overestimating the benefits of rolling out such a system?

1 Comment

A better area to study is a city like Austin, where the Austin Wireless City project has deployed 82 free hotspots (a count from their website) in private businesses like cafes and auto repair shops, and city locations like libraries and parks.

The businesses offering wifi don't see it as a profit center. They see it as an amenity that will draw customers to their location, like airconditioning on a hot day. The businesses pay for the bandwidth -- like they pay for the electricity for air-conditioning -- because offering this amenity attracts customers.

It would be very interesting to study the impact of free wifi on the use of wifi in Austin, and the impact on the businesses that offer the service.

Anecdotally, the cafes that I frequent are full of people with laptops doing business email, studies, software development -- a set of customers who wouldn't be at the cafe if it didn't have wifi.


Powered by Movable Type 5.02

About this Entry

This page contains a single entry by published on March 10, 2005 12:09 PM.

More on Muni Wi-Fi was the previous entry in this blog.

Open Source Tax Software is the next entry in this blog.

Find recent content on the main index or look in the archives to find all content.