Giga Research has predicted that the European market for public Wlan services, after a significant boom phase, will encounter a bust phase for lack of viable business models, leading to industry consolidation.
Eventually, the sector will be dominated by a handful of large mobile operators vying for high-end business users..
Although the European hotspot market lags behind Asia and the US by between 12 and 18 months, Giga has projected that it will grow from around 1,000 hotspots in 2002 to 32,500 in 2007.
By then, however, new 3G mobile broadband networks will begin to rival Wlan service.
For public Wlan services to become viable in Europe, service providers will need to correct cumbersome logon and payment procedures, as well as security and quality of service issues and attractive pricing schemes, said Giga analyst Bernt Ostergaard.
European business users, in particular, are looking for public Wlan services which mirror offerings already widely available in GSM networks, such as roaming, integrated billing on their mobile phone bill and mediation agreements between operators and clearing houses.
Giga offered recommendations for enterprises planning to use Wlan services over the next few years.
With significant turmoil expected in the emerging European hotspot market, for instance, enterprises should avoid signing contracts longer than six months and choose pay-as-you-go services. They should wait for roaming services that offer sufficient regional coverage and integrated billing with existing mobile access services before making any long-term commitments.
Long term, enterprise will need to look closely at mobile operators. Unlike Wlan-only service providers, these operators will be in the best position to provide integrated Wlan and mobile data services, such as GPRS.
From next year, enterprises will want to check operators that can provide Wlan-GPRS integration, and in late 2006, they will need to look at those capable of providing Wlan-3G integration.
John Blau writes for IDG News Service