Worldwide Wi-Fi Hotspot Usage

Soars, but is Model Sustainable?

SKU: IN1004769WS
Analyst: Amy Cravens
acravens@in-stat.com
+1.480.483.4451
October 2010

Executive Summary
The hotspot market continues to experience strong growth in
deployed venues and usage. As with the past several years,
growth in the hotspot market is largely being driven by wireless
and broadband providers embracing Wi-Fi as both a competitive
differentiator and enhancement to core services. How hotspots
are being used, the frequency, and the occasion for usage all
continue to transition due to a variety of factors, including:

HIGHLIGHTS

In-Stat anticipates that there

will be over XX hotspot venues
worldwide by the end of 2010.

Annual connects are expected

to surpass XX billion in 2010, a
XX% increase over 2009 and
the greatest hotspot usage
growth in several years.

Over XX% of In-Stat survey

respondents have used
hotspots at least occasionally.

Wide-scale adoption of Wi-Fi-enabled handsets and a

blending of mobile and Wi-Fi experiences

Non-laptop connects (i.e. smartphones, tablets, etc.)

approaching XX% of usage

Renewed promotion of hotspot services by leading operators

Revised payment models shifting to free and bundled access

New application potential, including mobile video and location-based services

Figure 1.

Hotspot Locations (in Thousands) and Usage Growth (Connects in Billions), 20092014

XX
Among the most potentially impactful transitions in the hotspot market is the growth in free hotspot
venues. While there has always been a free access component in the hotspot market, over the past
year, the leading branded hotspot venues, including McDonalds and Starbucks, have introduced free
access in their stores, at least in the US market. Free access is resulting in a surge of usage in the
caf/retail segment, driving customer traffic in these venues as intended. However, increased usage
may have the undesirable effect of overburdening these networks and degradation of the user
experience. In light of a market potentially dominated by free access, hotspot venues are seeking
alternative means of hotspot monetization, including advertising and e-commerce possibilities. The
hotspot market business model has been in a continual state of definition and development over the
past decade, and today is still a primary uncertainty in the future of the hotspot market.

2010 In-Stat All Rights Reserved | http://www.in-stat.com

Worldwide Wi-Fi Hotspot Usage

Soars, but is Model Sustainable?
SKU: IN1004769WS

Report Summary
Whats in the Report?

Venue and usage forecast by venue category and region

In-Stat TAP survey results on hotspot usage and perceptions

Trends in hotspot access devices with wide-scale adoption of non-laptop devices

Classification of venue types and related usage trends

Analysis of market growth opportunities and barriers

Evaluation of hotspot business models and the transition to free access

Discussion of various trends in deployment strategies such as branded, geographically isolated,

and venue-specific deployments.

2010 In-Stat All Rights Reserved | http://www.in-stat.com

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Worldwide Wi-Fi Hotspot Usage

Soars, but is Model Sustainable?
SKU: IN1004769WS

Table of Contents
Executive Summary.................................................1

Hotspot Revenues: A Model in Progress .............30

Market Assessment .................................................4

Willingness to Pay.............................................31

Growth Enablers..................................................4

Competitive Differentiation ................................32

Growth Inhibitors and Threats.............................5

Alternative Hotspot Monetization ......................33

Market Structure ......................................................7

Impact on Provider Strategy..............................35

Venue Analysis ........................................................8

Impact on Cellular Networks..................................37

Tier Classification ................................................8

3G vs. Wi-Fi ......................................................37

Free vs. For Fee................................................10

Wi-Fi vs. 4G ......................................................37

Branded.............................................................10

Forecast.................................................................38

Hotspot Network Architecture................................11

Venues ..............................................................38

Provider Segmentation and Analysis.....................12

Location Growth by Venue Type.......................39

Hotspot Provider Segmentation ........................12

Venue Growth by Region ..................................40

Network Operators ........................................13

AP Forecast ......................................................40

Provider Hotspot Services Not Well

Communicated ..............................................15

Usage ................................................................41

Branded Resellers.........................................16
Roaming Providers........................................16
Deployment Strategies ..........................................18
Geographically Isolated.....................................18
Branded.............................................................18
Venue Concentration ........................................18
Resellers ...........................................................19
Backend Management Providers ..........................20
Hotspot Usage: Intent, Frequency, and Duration .22

Usage by Venue Type ..................................42

Usage by Region ..........................................43
Usage by Device Type..................................44
Regional Analysis..............................................45
Asia/Pacific....................................................45
Europe...........................................................46
North America ...............................................46
In-Flight .............................................................47
Methodology ..........................................................50
Glossary.................................................................51

Devices: How Individuals Are Accessing

Hotspots.................................................................25

List of Tables .........................................................52

iPad Making a Big Impact on Hotspot Usage ...26

List of Figures ........................................................52

Devices Changing Hotspot Usage ....................26

Related In-Stat Reports .........................................54

Apps: How Hotspots are Being Used and How

That Impacts Service Evolution .............................28

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Worldwide Wi-Fi Hotspot Usage

Soars, but is Model Sustainable?
SKU: IN1004769WS

Methodology
This report examines the market for public Wi-Fi access in hotspots. The emphasis of this report is on
market potential, usage, business models, and competitive analysis for the hotspot market. For the
purpose of this report, hotspot venues include airports, cafs/restaurants/bars, convention centers, hotels,
retail (including gas stations), marinas, outdoor hospitality (RV parks), and public areas (parks). The
report is global in scope, with discussion and analysis specifically detailing trends in Asia/Pacific, Europe,
and North America. Guest networks in business offices are not included in the report. Municipal
deployments are discussed within the report as a related market, but are not included in forecasting.
Data collection and analysis for this report entailed primary and secondary research of companies
competing in the hotspot services, equipment, and management markets. The majority of the primary
research conducted for this report resulted from phone briefings and email correspondence with,
primarily, product managers and directors having expertise in this market. Interviewed for this report
were top network operators (iBAHN, AT&T, BT, the Cloud), roaming providers (Boingo, iPass),
operators/ISPs (AT&T, BT), backend software vendors (Aptilo, Tomizone), technology providers (Anyfi
Networks) and location-based ad providers (Less Networks, JiWire). Secondary research included
analysis of vendors product literature, review of company press releases, company profiles, review of
financial filings, whitepapers, as well as examination of underlying market dynamics.
In-Stats hotspot forecasts include venue and usage forecasts. Venue forecasts are segmented by
region and type of venue. Usage forecasts are segmented by business versus consumer, as well as by
access device. Equipment forecasts include a Wi-Fi AP forecast. Forecasts provide aggregate and
annual deployment numbers and are segmented by region and venue type. Forecasts are built by
leveraging multiple sources including, but not limited to, supply-side market research and secondary
sources. Forecasts are based on underlying forecasts and industry knowledge, particularly in regard to
access devices and the presence of Wi-Fi-enabled laptops and handheld devices in the market.

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Worldwide Wi-Fi Hotspot Usage

Soars, but is Model Sustainable?
SKU: IN1004769WS

List of Tables
Table 1.

Wi-Fi Enabled Devices by Category, 20092014 ................................................................................ 26

Table 2.

Application Usage by Access Device................................................................................................... 27

Table 3.

Average Monthly Payment for Wi-Fi by Provider Type........................................................................ 35

Table 4.

3G/Wi-Fi Comparison........................................................................................................................... 37

Table 5.

Annual and Aggregate Hotspots (in Thousands), 20092014............................................................. 38

Table 6.

Asia/Pacific Hotspot Venues (in Thousands) and Usage (Annual Connects in Millions),
20092014 ........................................................................................................................................... 45

Table 7.

Europe Hotspot Venues (in Thousands) and Usage (Annual Connects in Millions), 20092014 ....... 46

Table 8.

North American Hotspot Venues (in Thousands) and Usage (Annual Connects in Millions),
20092014 ........................................................................................................................................... 47

Return to Table of Contents

List of Figures
Figure 1.

Hotspot Locations (in Thousands) and Usage Growth (Connects in Billions), 20092014................... 1

Figure 2.

Survey Respondent Anticipated Hotspot Usage Growth ....................................................................... 5

Figure 3.

Perceived Barriers to Hotspot Usage..................................................................................................... 6

Figure 4.

Hotspot Network Structure ..................................................................................................................... 7

Figure 5.

Hotspot Tier Classification ..................................................................................................................... 8

Figure 6.

Hotspot Usage Rates By Venue Type ................................................................................................... 9

Figure 7.

Typical Hotspot Architecture ................................................................................................................ 11

Figure 8.

Hotspot Provider Access Relationships ............................................................................................... 13

Figure 9.

Hotspot Providers: Mobile Operators, Broadband Provider, or Cable Provider .................................. 15

Figure 10. Hotspot Access Intent: Business vs. Personal .................................................................................... 22

Figure 11. Frequency of Hotspot Usage ............................................................................................................... 23
Figure 12. Duration of Hotspot Session ................................................................................................................ 24
Figure 13. Type of Device Used for Hotspot Access ............................................................................................ 25

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Worldwide Wi-Fi Hotspot Usage

Soars, but is Model Sustainable?
SKU: IN1004769WS
Figure 14. Application Usage in Hotspots ............................................................................................................. 28
Figure 15. Incidence of Corporate-Sponsored Hotspot Subscriptions.................................................................. 30
Figure 16. Hotspot Usage: Free versus Fee-Based Venues ................................................................................ 31
Figure 17. Willingness to Pay for Hotspot Access ................................................................................................ 32
Figure 18. Free Wi-Fis Impact on Venue Choice ................................................................................................. 33
Figure 19. Willingness to Provide Personal Information for Hotspot Access ........................................................ 34
Figure 20. Preferred Landing Page Content ......................................................................................................... 35
Figure 21. Influence of Hotspot Service in Provider Choice: Wireless, Broadband, and Cable Providers ........... 36
Figure 22. Annual and Aggregate Hotspots (in Thousands), 20092014............................................................. 38
Figure 23. Hotspot Location Distribution by Venue Type (Venues in Thousands), 20092014 ........................... 39
Figure 24. Hotspot Location Distribution by Region (Venues in Thousands), 20092014 ................................... 40
Figure 25. Hotspot AP Shipment Forecast (in Thousands), 20092014 .............................................................. 41
Figure 26. Hotspot Venue (in Thousands) and Usage Growth (Connects in Billions), 20092014...................... 42
Figure 27. Worldwide Hotspot Usage by Venue Type (Annual Connects in Billions), 20092014....................... 43
Figure 28. Hotspot Usage by Region (Annual Connects in Billions), 20092014................................................. 44
Figure 29. Handheld vs. Laptop Connects (Annual Connects in Billions), 20092014 ........................................ 45
Figure 30. Worldwide In-Flight Broadband-Enabled Airplanes and Annual Installations (Number of Airplanes),
20092014 ........................................................................................................................................... 48
Return to Table of Contents

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Worldwide Wi-Fi Hotspot Usage

Soars, but is Model Sustainable?
SKU: IN1004769WS

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