Hotspot Myths Revealed

By Ed Sutherland

July 31, 2003

Researchers say the 'build it and they will come' mentality of many hotspot providers is dead wrong-- most casual users won't. In fact, many who've tried public access don't plan to use it again.

Alongside the tooth fairy and Bigfoot, you might want to add the viable commercial hotspot to the list of imaginary items. Or so says a new report entitled "Public Hotspots: One Truth and Two Myths."

The Dallas-based market research firm Parks Associates surveyed 1,345 Internet households asking about usage patterns and preferences for hotspot pricing, locations and services. Among the findings: the hotspot audience pictured in television advertisements and the minds of marketing departments does not match up with reality.

Most (90 percent) of respondents interested in hotspots are "road warriors" traveling cross-country for work. Both the casual wireless user dropping into a Starbucks or Borders or McDonald's for a quick Wi-Fi connection and the local salesperson (known as "windshield warriors") made up only a slight percentage of those people interested in taking advantage of public hotspots.

"Road warriors and business travelers are likely to be the early adopters of hotspot services -- the industry has that one right," said Yuanzhe (Michael) Cai, research analyst with Parks Associates.

The survey also reflects previous indications showing airports and hotels are the most viable venues for successful hotspots. Unlike the cafe or fast-food restaurant, where the benefit of public Wi-Fi is seen more for the venue, hotspots located where road warriors linger should receive the most attention.

Cai says Wi-Fi service providers are too focused on rolling out new hotspots and increasing coverage.

"They do not pay attention to the needs of existing and potential customers. For example, prepaid plans are the favorite among potential users, yet the current options are very limited," said Cai.

Hotspot providers need to concentrate on increasing security and improving quality of service, according to the research firm.

This leads to the biggest myth surrounding hotspots, according to Cai. The "build it and they will come" belief is built on the assumption that the low level of use of existing hotspots is due partly to a lack of consumer awareness.

The survey of Internet users found only a dismal three percent of U.S. households have used hotspots, yet more than 92 percent of respondents have heard of, but never used, public Wi-Fi venues.

What about the people who have tried hotspots? How do they respond?

"Many people who have experienced hotspot services are not interested in using the services in the future," according to Parks Associates. Cai wouldn't elaborate on the reasons for dissatisfaction.

In a previous report, "Public Hotspots: Moving Beyond Road Warriors," Cai found only five percent of the three percent of people who have used hotspots convert into subscribers.

If there is low usage of hotspots and the use public Wi-Fi does get garners mostly bad reviews, why all the optimism from Intel and others confident of hotspot growth?

"Most of the reasons are supply drivers, not demand side," says Cai.

In other words, it's another case of the folks selling the shovels being the ones to really profit from the Wi-Fi gold rush. Intel and others see hotspots as the perfect platform to sell their laptop computers, chips and other gear necessary to operate and connect to public WLANs.

As AT&T, Sprint, and others move from hesitant pilot programs to full-blown rollouts of hotspots, the old warning of look before you leap seems all the more important.



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