Wi-Fi takes the sector by storm

The year 2003 may be remembered as the year that Wi-Fi, or Wireless Fidelity technology, burst onto the wireless scene. Its advent may well herald a new era for the information and communication technology (ICT) sector. Suddenly, inexpensive and easy-to-use subscriber equipment, often employing “free” unlicensed radio spectrum, can open the door to wireless broadband Internet access for the mass market. This new technology holds much promise for rural and remote access because of its low-cost potential.

Hotspots can be found in coffee shops or even neighbourhoods ITU 030120/Cobis

The term Wi-Fi commonly refers to the array of technical standards that can be used to create “wireless local area networks”, or WLANs. Strictly speaking, Wi-Fi is a certification that manufacturers can apply to their products once they satisfy certain interoperability criteria. Meanwhile, WLAN denotes a radio networking technology used to connect personal computers or other appliances to a local network. WLANs can be operated for private use, such as in the home, or to create short-range, public networks. Known as “hotspots,” these networks can be found in airport lounges, coffee shops or even neighbourhoods.

There are many technical standards used to create WLANs. Those that have received the most attention are the 802.11 family of wireless technical specifications developed by working groups of the United States’ Institute of Electrical and Electronics Engineers (IEEE). The most popular specification is currently 802.11b, which uses the 2.4 GHz “Industrial, Scientific and Medical” (ISM) bands (where the microwave ovens operate!). Many people employ the term Wi-Fi to refer strictly to 802.11b equipment, although the term has come to be used by the general public as synonymous with all WLAN networks and devices. In addition, some organizations prefer the term “radio LAN” or RLAN rather than WLAN or Wi-Fi¹. That would include the 802.11a standard, which operates in the 5 GHz bands. And more recently, the 802.16 standard has been approved by IEEE, enabling wireless metropolitan area networks, or WMANs (these are also referred to as “Wi-Max” networks). This article uses the term Wi-Fi generically to refer to all WLAN products, reflecting its popular usage.

¹    Likewise, HiperLAN stands for high-performance radio local area network LAN, an ETSI standard that operates at up to 54 Mbit/s in the 5 GHz RF band. ETSI has also developed HiperLAN2, which operates in the 5 GHz band with a bandwidth up to 50 Mbit/s. Similarly, HomeRF is an open specification running in the 2.4 GHz ISM band.

The potential for Wi-Fi use received a further boost from a recent ITU decision. In July 2003, the World Radiocommunication Conference decided to open up more spectrum for mobile wireless access systems (WAS), including radio local area networks (RLAN), in the 5 GHz frequency band. The lower part of the 5 GHz spectrum is predominantly to be used for indoor applications, with the first 100 MHz (5 150—5 250 MHz) restricted to indoor use. This conference also decided on the interference mitigation techniques and power limits to be imposed to the use of WAS in order to protect existing services in the whole 5 GHz WAS band².

²    For further information on ITU activities on wireless access systems, including Wi-Fi, visit www.itu.int/ITU-R/study-groups/was/index.html

Wi-Fi has captured many peoples’ imagination because it enables multiple users to share the same Internet connection — all of them without cables — allowing full portability using laptop PCs or other devices. Wi-Fi’s popularity has also been fuelled by the fact that the equipment needed to create a Wi-Fi hotspot is inexpensive — less than USD 300 per access point. Moreover, Wi-Fi also operates in the ISM spectrum, which is unlicensed in many countries. Very few regulations apply to its use, also contributing to Wi-Fi’s low cost³.

³    Economies like France, Malaysia and Hong Kong, China, for example, have authorized public WLAN use with class licences or experimental authorizations, requiring no licence fees. There are exceptions to this general trend. One country in Africa, for example, has demanded that ISPs vacate the ISM bands and South Africa issued a warning about the use of ISM bands without a licence for commercial purposes.

This magical combination has fuelled a dramatic rise in Wi-Fi use in developed countries — much of it user generated — leading some analysts to compare Wi-Fi to the sudden take-up of the Internet in the mid 1990s. The big question is whether Wi-Fi is the “killer application” the ICT sector has been seeking to fuel a sector recovery, or whether Wi-Fi will rise and fall in a flash.

Most signs point to dramatic growth of Wi-Fi in the coming years. Wi-Fi equipment sales and hotspot deployments are expected to grow exponentially. Companies throughout Asia, Europe and North America had announced plans by mid-2003 to roll out hundreds and even thousands of hotspots in the coming year. WLANs also have been rolled out on commercial air flights and rail lines. Operators of Wi-Fi hotspots are by no means limited to traditional telecommunication-related enterprises. Some community-based hotspots have been appearing, allowing residents of a neighbourhood to pool resources and share bandwidth.

A number of Internet service providers (ISP) have begun using Wi-Fi technology to cover entire cities⁴. Some analysts predicted that by 2006, there will be 800 000 European hotspots, 530 000 in the United States and 1 million in Asia. Wi-Fi revenue in Western Europe and in the United States was expected to rise to USD 5.4 billion by next year, up from USD 33 million in 2002⁵. All these revenue estimates and predictions were linked to the use of Wi-Fi for Internet access. But new telephones that can be used for VoIP (Voice over Internet Protocol) calls from a WLAN are on the horizon; this application is known as VoWi-Fi (Voice over Wi-Fi). Moreover, recent IEEE standards are now capable of supporting video streaming, which could create additional revenue opportunities. Some predictions have Wi-Fi cards built into nearly every imaginable consumer electronics device, from digital cameras to video game consoles.

⁴    Paris, the wireless wonder? International Herald Tribune (5 May 2003), reporting on a business plan to install Wi-Fi antennas outside of each Paris Metro station to create a single Wi-Fi network, turning Paris into a giant Wi-Fi hotspot. See also article on Spokane, Washington ISP creating 220 square mile hotspot in that city (www.spokanejournal.com/spokane_id=article&sub=1611).

⁵    Analysys report, Public WLAN Access in Western Europe and the USA, March 2002 (www.analysys.com)). WLAN Hardware sales too were skyrocketing, fuelled mainly by sales in North America. By contrast, Central and Latin American hardware sales represented only 3 per cent of the market, according to an Infonetics Research, Inc. report issued in May 2003 (www.infonetics.com/resources/purple.shtml?nr.wlanms.1q03.052103.shtml)).

Still, not everyone is convinced that Wi-Fi is the next big thing. At least one telecommunication operator announced that it planned to focus on 3G/IMT-2000 rather than Wi-Fi⁶. Others are concerned about security issues related to data transfers over Wi-Fi. While manufacturers appeared intent on making Wi-Fi safe, these concerns could hamper commercial up-take of applications such as e-banking over Wi-Fi.

⁶    Singapore’s M1 drops WiFi trials, focuses on 3G, Total Telecom 4 June 2003.

Another big unknown is whether consumers are willing to pay for Wi-Fi services. Initially, many Wi-Fi users were simply looking for a free ride, and websites began cropping up informing would-be Wi-Fi users where to find hotspots without being charged for access. Many operators offer free access initially as a promotion to attract business to their coffee shops or other establishments. Later, they begin charging for access once consumers show up regularly. And Wi-Fi access is not always cheap. Former monopoly telecommunication operators in Europe have been installing hotspots in airports and hotels, introducing a new service called “Wi-Fi roaming” to their mobile cellular customers. Initial Wi-Fi roaming rates, not surprisingly, have been expensive.

Will Wi-Fi complement or compete with 3G/IMT-2000 services? ITU 030131/Ericsson

The rise of Wi-Fi has generated intriguing policy questions. Will new market entrants or fast-scrambling incumbents come to dominate the new market? Will deployment proceed in a planned, organized fashion or in a more free-wheeling, user-driven pattern? The traditional operators have not been idle. Several Wi-Fi joint ventures have been initiated in 2003, uniting traditional ICT sector players and other businesses. Deutsche Telekom, for example, has pioneered hotspot relationships with coffee shops in Europe and North America. Asian operators such as China Netcom, Korea Telecom, Malaysia’s Maxis Communications Berhad, Singapore’s StarHub and Telstra of Australia created the Wireless Broadband Alliance to deploy hotspots throughout their region’s airports and hotels. Similarly, the North American joint venture Cometa brings together AT&T, IBM, Intel and other partners. As this publication went to print, it was uncertain which Wi-Fi future would prevail. Will it be the free, unplanned and decentralized network of networks or a ubiquitous wireless broadband network capitalized and controlled by major ICT companies? Perhaps the two approaches may coexist, at least for the near future.

Another issue, at least in developed countries, was whether Wi-Fi would complement or compete with 3G/IMT-2000 services (for which carriers had paid some USD 100 billion collectively in licence fees over the past three years). Some 3G pessimists predicted that Wi-Fi might simply supplant 3G. While this debate will no doubt continue to rage, investors have warned regulators to think carefully about charging high licence fees, especially for services for which the business case remains unproven⁷.

⁷    See ITU commissioned case study, Feedback to Regulators from Investors, Telecommunications in Crisis: Perspectives of the Financial Sector on Regulatory Impediments to Sustainable Investment, Debevoise and Plimpton, Robert Bruce and Rory Macmillan, 2002 (www.itu.int/ITU-D/treg/).

While the debate persists about the business case for Wi-Fi in industrialized countries, Wi-Fi technology holds much promise for countries, particularly developing nations, intent on achieving universal access to ICTs for their populations in rural areas or territories where the telephone or cable infrastructure are not deployed. For isolated rural populations, low-cost Wi-Fi installations could mean the difference between no ICT access of any kind and affordable service.