Cellular picks its hot spots

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If you can't beat 'em, well ... do 'em one better.

AT&T Wireless is making Wi-Fi available to the traveling masses at Denver International Airport. Banners and signs throughout the airport announce that AT&T Wireless is bringing Wi-Fi to travelers throughout the terminals.

The effort is significant on several levels. Airports have been a popular place to set up Wi-Fi hot spots, but they've usually been created in exclusive lounges frequented by business travelers. And the move indicates how cellular companies are embracing Wi-Fi just as their own third-generation technology is poised to kick off.

The signage last fall started inviting travelers at DIA to connect to the network via AT&T Wireless anywhere within the terminals. Clear Channel Outdoor's local office created the on-site advertising. AT&T also has deals in the works for Wi-Fi service to other airports, hotels and convention centers, says Steven Hodges, VP-corporate strategy at AT&T Wireless. However, the company isn't planning to blanket the nation with a coast-to-coast mass-media campaign anytime soon, he adds.

"The most effective thing for us to do is target the advertising where it's immediately available and focus on the business traveler," he says.

Cellular companies can't afford to ignore the anticipated growth in the Wi-Fi sector, despite the estimated $6 billion they've plowed into their own third-generation, or 3G, networks to provide high-speed data transmission using wireless phones.

"Companies investing in 3G were banking on the fact that people need lots of bandwidth, but cellular providers never thought a 10-megabit option would come out of the blue with Wi-Fi," says Daniel Briere, CEO of TeleChoice, a telecommunications analysis company.

hot spots climbing

By 2006, there will be 103,841 public hot spots, tech consultancy Gartner estimates.

Cellular providers dispel concerns that faster Wi-Fi connections will cannibalize the revenue that was anticipated from 3G network services. At the same time, they're embracing Wi-Fi and are expected to market the two technologies side by side. Wi-Fi technology will be touted as a complementary product that mobile customers can use in situations where limited Internet service over a wireless phone isn't enough, says Ken Dulaney, VP-mobile computing at Gartner.

"The cell phone is meant for quick access to late-breaking events, and a laptop [computer with Wi-Fi capability] is when you want to get serious about your e-mail or work on a PowerPoint presentation," Mr. Dulaney says.

Convincing corporate customers they should rely on one company for all their mobility data and voice needs will be a challenge, says Charles Golvin, senior analyst at Forrester Research. Cellular providers will need to promote their Wi-Fi service as user-friendly and offer it as part of a package, he adds. Early ad campaigns are expected to target business travelers since they're most likely to work with Wi-Fi-enabled laptops and have an ongoing need for such services.

Like AT&T Wireless, some cellular operators providing Wi-Fi service in venues including airports and convention centers are likely to focus advertising on-site, says Mitchell Oscar, president of HocusFocus, New York, a new-media and marketing consultancy.

Those offering Wi-Fi at retail sites like cafes are likely to pursue branding of the services, perhaps even co-branding with the retailer host, he adds.

"Increased Wi-Fi traffic on [retailers'] premises will give proof that the ad campaigns are working, and you can't make those measurements with ads on TV or other places," says Mr. Oscar, formerly director of media futures at Interpublic Group of Cos.' Universal McCann.

Cellular marketers are jumping into the Wi-Fi arena with their own services or forging alliances with niche Wi-Fi specialists to give them a leg up. Deutsche Telecom's T-Mobile USA has made the biggest splash so far with its purchase last year of MobileStar Network Corp., a Wi-Fi provider that converted 500 Starbucks stores into hot spot locations. Since then, Bellevue, Wash.-based T-Mobile has hooked up a total of 1,800 Wi-Fi hot spots at Starbucks cafes, and expects to offer the service at 400 Borders Bookstores and more than 100 airport lounges of American Airlines or Delta Air Lines over the next year.

familiar starbucks sign

Almost any Starbucks site around the country is likely to sport a sign near the front door alerting the latte-sipping masses that T-Mobile is offering wireless services within.

Sprint PCS has an ownership stake in Boingo Wireless, a Wi-Fi provider, and is planning to establish hot spots in Wyndham International hotels, says a spokesman for the cellular division of Sprint Corp.

There's no guarantee that cellular giants will be the obvious Wi-Fi service providers, analysts caution. Broader distribution of Internet Protocol, or IP, phones where voice calls can be made over Wi-Fi airwaves without signing up for cellular service could pose great challenges, says TeleChoice's Mr. Briere.

"Cell providers will have a honeymoon period of one to two years before [a wide array of product options] will start to have a severe competitive impact on them in the Wi-Fi arena," he predicts.

Despite the need for name recognition in Wi-Fi among cellular companies, significant ad campaigns still aren't expected for at least a couple more years, says Forrester's Mr. Golvin. It will take at least that long for many consumers to upgrade their laptops or buy new ones that interface with Wi-Fi's radio frequencies, and for providers to offer a more reliable products, he says.

"Like any new product, there's the threat of overpromising what you can deliver," Mr. Golvin warns. "That ability to promise and deliver on quality services will be challenged because in the Wi-Fi world anything goes."

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