Wi-Fi industry set for 'shakeout', operator failures: analyst

Up to 50 per cent of existing Wi-Fi operators will fail within the next two years as the market undergoes a massive “shakeout”, according to an Australian telco analyst.

Just as companies in the dotcom space receded to around 60 per cent of those that entered the market during the Internet boom, wireless operators are sure to fall by the wayside as the industry matures, telco analyst Paul Budde predicted.

“Wi-Fi is a bit of a bubble,” he said. “But the industry has learnt enough from the dotcom boom not to have a repeat of what happened then.”

Budde’s comments were made during his keynote presentation at the “Wireless Broadband – a ‘disruptive’ seminar” held in Sydney on Tuesday. The conference, which included speakers from wireless broadband providers Azur Wireless, Personal Broadband Australia (formerly CKW Wireless) and Telstra subsidiary SkyNetGlobal, was organised by Budde’s company, Budde Communication Pty Ltd.

As part of his address, Budde cautioned attendees against pinning too much hope on Wi-Fi as a mainstream technology. While there are plenty of opportunities for the technology to play a role in niche markets, such as in “broadband blackspots” or areas with cabling problems, wireless was unlikely to cater to the mass market, he said.

In addition, while appealing to about 2 per cent of the world’s business users “who would pay good money for the service”, Wi-Fi would need to become applicable to the youth market in order to achieve mass market take-up, Budde said.

“We need to develop low-cost devices for kids to work across all sorts of [wireless] networks.”

Budde’s predictions sparked a debate amongst attendees as to whether wireless solutions could move past business-oriented users and penetrate the mass market.

Although several admitted applications and devices for getting the youth market to take up wireless technologies were not yet defined, most were confident Wi-Fi could replace mobile applications such as short messaging service (SMS) or multimedia messaging service (MMS) in the future.

Budde said one of the biggest problems now facing wireless operators was the saturation of the market by small wireless providers offering differing Wi-Fi technologies and services.

“It’s a Wi-Fi jungle,” he said. Access to wireless roaming for example, is too complicated, because there are so many operators and competing technologies available.

Although the focus of his presentation was wireless, Budde pointed to fixed line broadband fibre to the home (FTTH) as a “very compelling technology for the future”. By 2015, Budde predicted Australian telcos will have migrated home users across to fibre to home networks as a replacement to the fixed line network.

Hybrid Fibre Coax cables, such as those delivering Optus and Foxtel services, “have an end life” and will wind up bandwidth wastelands, he said.

“The Optus cable is a dead duck,” he said.

Budde blamed the decline of the technology in Australia on telcos operating both fixed line and cable networks.

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