WiFi everywhere

All of a sudden, home networking has reached centre stage as a “crucial” next step for WiFi growth. BT certainly thinks so, with hotspot service provider BT Openzone launching a bundled WiFi and ADSL service for the home market just last month. Their reasoning is that business users who use WiFi in the office, and increasingly at hotspots in hotels, restaurants, airports, railway stations and a growing variety of other locations, also want to be able to use it at home. In other words, wherever you might want to use a laptop, WiFi needs to be there. BT then wants to position itself to provide services on top of this basic high speed access at all locations. It is interesting to note that it is BT driving this initiative through it’s Openzone hotspot service provider – not a mobile operator. Clearly there is life yet for fixed line operators in the wireless arena.

They certainly aren’t alone with this thought. Cisco Systems for instance acquired home networking sector market leader Linksys in March for $500m in stock, specifically to gain a rapid foothold in the home market which it sees as strategically important right now. In their own words, the company could have moved into the market using its own internal resources, but this would have taken too long given the current situation in the market.

Needless to say, start-ups are also in there. For example, new service provider Myzones launched itself also during last month, offering a service to make it easy for consumers to set up and manage a secure wireless home network, to share the connection with neighbours, and to access wireless anywhere when on the move.

Interestingly, this is also coming at a time when the prospect of WiFi phones is becoming real. Motorola have just launched a WiFi/GSM dual phone and Cisco recently announced its own WiFi only phone which does not connect to mobile networks at all. HP is in there too, with its recently-launched iPAQ h5400 series which includes integral WiFi (with WiFi phone capability) and Bluetooth but not GPRS. The claim is that GPRS-enabled PDAs are not selling well.   

The betting is clearly for “WiFi everywhere” as the next big thing. And the impact on GPRS and 3G is . . .?

Broadband opens the market

While there has been some delay in WiFi lift-off in Europe due to regulatory issues that needed to be addressed, the real driver for growth in the home market is the increasing availability of broadband connections. This is mainly because those homes with broadband are more likely to have more than one PC in the house. WiFi is the most convenient – and increasingly the cheapest – way for them to share access.

A pointer to this came from a study in the US last year, where some 58 percent of US broadband households – about  six million households at that time - had more than one personal computer in use, with 28 percent already using some type of home network. This has since leapt up further. In contrast, only 5 percent of dialup households had a home network at the end of 2001.

According to new research by Nielsen/NetRatings, the number of European surfers using fast broadband Internet connections at home grew by 136 percent in the 12 months that ended in April. The biggest European gains in broadband penetration in the past year came in the UK, where the figure more than tripled to 3.7 million users. However the UK, with 21.6 percent of all Internet users on broadband, actually remains second from the bottom in Europe in terms of broadband penetration. In Italy, broadband penetration is at 16.4 percent, or 1.8 million. On the other hand France, Spain and the Netherlands round out the top three with 39 percent, 37.2 percent and 36.6 percent of their Internet users, respectively, on a high-speed connection. This is perhaps a little misleading, since Germany has by far the most home broadband connections in Europe. The thing is, it also has a larger Internet user population compared with France and the others.

In comparison, the US is the world's broadband leader with 38 million, or 35 percent of Internet users, on broadband. The biggest markets in terms of penetration are in Asia, led by South Korea and Hong Kong. If current rates continue, the research concludes, there will be more than 53 million Europeans with broadband by April 2004 – just 5 million behind the US' expected figure at that time.

 . . . and what’s driving broadband?

The same research makes it quite clear. Mainly, it’s consumer demand for file sharing, pornography and music. Of these, it is the downloading of music that is likely to have the most impact on home networks – followed perhaps by salacious video clips.

Ironically, this is a good news – bad news story. The major music labels have tried hard to stamp out the rampant trade of copyright-protected songs, an activity that has surged as home surfers get faster Internet connections. Free file-sharing services such as Kazaa and Grokster have become a hit with broadband-equipped music fans who can now download large music files at high speed. The labels have tried to shut down the services because they blame them for the decline in recorded music sales, but unlike Napster there is no one operator to single out for legal proceedings.

On the other hand, for Internet service providers like T-Online, Wanadoo and BT OpenWorld, the wide scale launch of broadband access provides increasing opportunities for new services and therefore higher profit margins – just when the voice revenue of their parent incumbents is under renewed attack from the mobile operators.

Home network for what?

Right now, the primary application consumers are interested in is sharing broadband Internet access. However, because of what these broadband connections are being used for, it looks like WiFi is subsequently also set to become the primary method used to connect a home's two technology clusters: the PC and its host of networked peripherals and the Audio Visual system. If you have all that high quality music on your PC, you’ll certainly want to be able to play it on your HiFi system. And all those video clips (or even complete films) would play much more nicely on the TV screen than the PC monitor.

It looks like music is destined to become the next killer application for WiFi in the home. Other research also suggests that a close second is also expected to be Home Automation, with the newly ratified Zigbee battling it out with Bluetooth . . . or maybe even WiFi again . . . or cellular.

 © e-principles 2003

Robin Duke-Woolley