As the planned U.S. rollout of third generation, or 3G, mobile broadband services stalls, a different breed of wireless broadband technology is charging ahead. In coffee shops, hotels and airports around the world, “hotspots” of wireless local-area network Internet connectivity are popping up. For business travelers, they’re a way to quickly go online without scouting out a dataport or fussing over wires.

These public hotspots are based on the IEEE 802.11b wireless Ethernet standard (commonly known as Wi-Fi) that also is taking the business world by storm. They deliver Web access speeds of up to 11 megabits per second to users located within 50 to 150 meters of each radio beacon. According to Cahners In-Stat, public-area wireless LAN revenue will reach $747 million by 2005.

Wi-Fi Goes Worldwide

Mobile Internet service providers have set up over a thousand Wi-Fi hotspots, with thousands more planned this year. The leading Wi-Fi ISPs-MobileStar Network Corp. and Wayport, Inc.-target U.S. business travelers. Their hospitality-industry partners look to Wi-Fi to help lure well-heeled road warriors and keep them around longer. Daily charges range anywhere from $2 to $16.

MobileStar is leading the way with about 400 Wi-Fi locations, including hotels, conference centers and airport locations. It plans to install Wi-Fi LANs in 4,000 Starbucks shops by year-end 2002. Wayport boasts over 300 public Wi-Fi nets, located primarily in hotels.

Public Wi-Fi nets have also spread throughout Australia and Scandinavia, where major carriers offer the service. In Sweden, for example, Telia Mobile has deployed over 100 hotspots.

And a growing network of grassroots wireless LAN providers have sprung to life in San Francisco, Seattle and other cities, offering free Internet access and community-service networking.

A Serendipitous Solution

Although Wi-Fi was not intended as a mobile broadband solution, it holds several advantages over 3G. Because it operates in the unlicensed 2.4-gigaherz range, there are no expensive licenses and installation delays. Wi-Fi radio beacons, called access points, cost only $250 to $500 apiece, and the linked Internet connection is typically a $500/month T1 1.5-megabit-per-second line. Cost of a Wi-Fi PC Card for a laptop or personal digital assistant such as a Palm has dropped below $150, and major laptop vendors are integrating the technology directly.

Although public-access LANs typically share that 1.5-megabit-per-second link, that’s still competitive with the 384-kilobit-per-second connections promised by the first generation of 3G. While 3G may eventually reach two megabits per second, Wi-Fi networks can easily be upgraded to a faster linked connection to exploit the 11-megabit-per-second Wi-Fi bandwidth. And a 54-megabit-per-second version is due to arrive within two years.

So far, public-area use represents only a fraction of the fast-growing Wi-Fi business market. Wi-Fi dominates wireless networking in the business world, and now it’s overshadowing HomeRF in the home market. According to a recent study by IDC, wireless LAN equipment revenue will reach $1.5 billion by year end 2001 and $3.2 billion in 2005. Over ninety percent of that is represented by Wi-Fi.

Overcoming Challenges

Despite Wi-Fi’s momentum, public Wi-Fi service providers face considerable challenges. Until the number of hotspots reaches a critical mass and roaming agreements are in place, corporate sales forces will hesitate to ante up for monthly subscriptions.

Wi-Fi itself is struggling to overcome technical problems. The 2.4-gigaherz range is shared by Bluetooth devices, intercoms and other technologies, often causing interference. What’s more, security is weak. The standard uses old-fashioned 40-bit encryption that is easily overcome. Industry committees are working on updates that address both these issues.

Once they are solved, public use of Wi-Fi should have a bright future. In five years or so, when 3G services achieve widespread coverage in the U.S., the same metropolitan areas may already enjoy fairly continuous Wi-Fi coverage.

And Wi-Fi boosters can take heart from a lesson learned from recent tech history: never bet against Ethernet.