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WiFi hot spots start to sizzle

Today's trend reminds many of the early dot-com era as small start-ups roll out new public Internet access services in response to burgeoning demand

Special to The Globe and Mail

David Smith loves the hot, spicy dishes at his nearby Cajun-style restaurant, and he is warming to his favourite eatery even more now that it's become a WiFi hot spot, serving up high-speed Internet access via a wireless network.

Big Daddy's Crab Shack and Oyster Bar in downtown Toronto is one of a rapidly growing number of businesses to jump on the one really hot trend in today's frigid technology market -- providing public Internet access zones with the wireless networking technology that has been dubbed WiFi (short for wireless fidelity).

It is a trend that reminds many of the early days of the dot-com era, as a host of small start-up companies race to roll out new services in response to a burgeoning public demand. Some technology industry insiders are so enthusiastic about the trend that they are also rolling out the old hyperbole that was buried when the dot-com bubble burst, referring to WiFi as "revolutionary" and "the next big thing."

What makes WiFi so hot is that, like the Internet itself, it is something of a grassroots technology. With a broadband connection and a capital outlay of a few hundred dollars, it is easy to set up a WiFi network to which anyone within 300 feet can log on. All the end user needs is a handheld or notebook computer equipped with a WiFi networking card or with Intel Corp.'s new Centrino mobile technology, which incorporates WiFi functions into the processor.

Someone who wants to set up a WiFi hot spot for profit also needs technology to control access, receive payments and maintain security, but with numerous service providers now offering to handle these practicalities, there is an opportunity for almost any coffee shop, restaurant, store or other business to offer high-speed wireless Internet access to its customers.

Thousands of wireless hot spots are expected to pop up in Canada, as elsewhere in the world, over the next few years. International Data Corp. of Framingham, Mass., now predicts that the worldwide total of available hot spots will grow to approximately 118,000 sites in 2005 from just over 19,000 at the end of 2002.

For Mr. Smith, as for countless other mobile professionals, it is a liberating technology. As director of professional services for the information technology consulting firm Potentia Solutions, a division of Montreal-based BGE Management Consulting Inc., he often needs immediate access to on-line data, whether he's having a working lunch alone or meeting clients at the restaurant.

Until recently, he has relied on the limited Web-browsing capabilities of a mobile phone to download information on the fly. He says this often means getting up from the table and going outside to get a good signal, then struggling with the frustrating process of creating text with a numerical telephone keypad in order to get a slow dribble of data on a tiny screen.

Now, he can access the Internet as easily and as quickly on his laptop at lunchtime as he can from his office, and his only problem is keeping the sauce from his oysters or crawfish off the keyboard of his Toshiba notebook computer.

"It looks kind of ignorant, but I've got the screen in front of me and the dish towards me and I lean over and do my work," he says.

For Big Daddy's general manager Kevin Foley, the WiFi hot spot offers an opportunity to attract more customers and encourage his clientele to linger longer over business lunches, perhaps ordering more food and drinks, while paying a fee for the wireless access.

"I feel this service will be a bonus, not only to my clients, but to myself. We are giving clients a little extra and it is something they seem to be fairly excited about," he says.

A user pays $9.99 for 24 hours of access at Big Daddy's. The service is offered with the help of Ottawa hot spot operator Boldstreet Inc. and Markham, Ont.-based Toshiba of Canada Ltd., a wholly owned subsidiary of Toshiba Corp. that is working with various computer dealers and service providers to install and operate pay-per-use WiFi zones. Location operators get 20 per cent of the revenues for the service.

It is a technology with an explosive impact on the telecommunications industry, where large corporations have been investing billions of dollars in developing so-called third-generation (3G) wireless phone networks that promise mobile access to high-speed data, but have so for proven slow to materialize. Those services that have appeared have failed to capture the imagination of consumers.

"WiFi is essentially 4G," says Sean O'Mahony, president and chief executive officer of Vancouver-based Fat Port Corp.,one of several small startups that have been leading the way in the deployment of wireless hot spots.

Mr. O'Mahony says WiFi is appealing because it gives people a way of using their laptops to access the Internet as they do on their desktop computers.

It doesn't give users ubiquitous connectivity, as a cell phone network does, but nobody would want that because you can't walk down the street or drive a car with your laptop open. But the loose network of hot spots that is now taking shape in major cities will provide users with the opportunity to stop and hop onto the Internet in numerous locations, he says.

"And the bills from mobile service providers for data are so horrendous, so why would anybody use them? This thing changes all that. It's a huge differentiator," Mr. O'Mahony adds.

"Absolutely, it's the next big thing," says Mary Ann Yule, Toshiba Canada's vice-president marketing. She says her company's goal is to get 1,000 hot spots up and running in Canada by the end of this year in restaurants, coffee shops, hotel lobbies, airports, hospitals, libraries, shopping centres and other places where people congregate.

WiFi is different from many of the offerings of the wireless telecom industry in that it is a technology that end users want and understand, according to Eric Johnson, wireless executive of IBM Global Services at Markham, Ont.-based IBM Canada Ltd.

"In some cases, we had a technology that was looking for a problem. Now the marketplace is driving the technology finally," he says.

Telecommunications companies are, he says, "still struggling with how to take advantage of this technology and with how it fits into the wireless telco's infrastructure plans."

Mr. Johnson says WiFi may prompt some wireless carriers to postpone plans for next-generation high-speed mobile networks or abandon them altogether, since many subscribers will now be able to switch from their mobile service to WiFi hot spots that will be available in places such as hotels and airports, where people typically want to work on their laptops.

But high-speed mobile networks still have an important role to play, according to Chris Langdon, director of product marketing at Telus Mobility, an arm of Edmonton-based Telus Corp. "We'll see lots of holes [in WiFi service] where people will still need to get seamless connectivity," he says.

Telus is involved in the rollout of WiFi hot spots through a $6-million investment in and partnership with Toronto-based Spotnik Mobile Inc., which is deploying wireless networks in 50 locations and is planning hundreds more, according to Mark Wolinsky, the startup's co-founder and co-chief executive officer.

Bell Canada is currently conducting a pilot program that offers consumers free WiFi access in exchange for their feedback about the service at various locations in Montreal, Toronto, Kingston and Calgary.

"We're taking our time, doing our due diligence and making sure we've got a solid product offering. It has to make sense to our business travellers and be consistent across Canada," says Shawn Winter, associate director for wireless LAN at Bell Canada, a unit of Montreal-based BCE Inc.

Mr. O'Mahony maintains that WiFi will really begin to shake up the telecommunications industry as Internet-based voice telephone technologies improve.

Soon people will be able to place high-quality voice calls to anywhere in the world from a WiFi hot spot at a fraction of the cost of a normal cell phone call.

"That's the killer application. The price of voice access is going to go down to close to zero," Mr. O'Mahony says. "In the short term, WiFi is accessible and liberating. In the long term, it's truly revolutionary in that it will change the way we use voice and data."
Coffee shop networks brew turf war

As coffee shops and restaurants begin setting up wireless networks for their customers, there is a new turf war brewing over use of the airwaves on Canada's Main Streets.

"It's a fight out there and it's heating up," says Sean O'Mahony, president and chief executive officer of Vancouver-based Fat Port Corp.,one of a number of service providers that claims to be the front-runner in a race to install WiFi (wireless fidelity) hot spots in key locations.

Unlike cell phone services, WiFi networks, which have a range of about 300 feet, do not use federally licensed airwaves, so that anyone can set up a public access WiFi hot spot on their own property or license others to do so. Since it doesn't make sense to install more than one WiFi hot spot in any one location, Fat Port and its competitors are scrambling to make deals with property owners in areas where there will likely be the biggest demand for WiFi access.

It is a race that pits small start-ups with telecommunications giants, such as Telus Corp. and Bell Canada, with the start-ups claiming the early lead.

"The key is getting out of the gate first, and start-ups are always more nimble," says Mr. O'Mahony. "We've got a very fast model of going in, selling our solutions, getting a contract signed and getting a system installed. If I manage to get the key locations, I don't mind who else jumps into the market."

For a single service provider to operate many different locations is a huge advantage, since they are catering to mobile end-users who will want to get Internet access wherever they go without paying a separate bill every time, notes Chris Langdon, director of product marketing at Telus Mobility, an arm of Edmonton-based Telus Corp. "Imagine when a client receives 50 bills because he hits 50 different hot spots, how confusing that would be."

Various providers of hot-spot services are therefore trying to work out roaming agreements that will let them bill one another for services so that subscribers will end up with a single bill, according to Murray McCaig, co-founder and co-chief executive officer of Telus's partner, Toronto-based Spotnik Mobile Inc. Only sophisticated service providers will be able to automate the billing process to incorporate roaming agreements, while also offering security, he says.

Mr. O'Mahony says his company has already signed roaming agreements with several other providers around the world and is testing a system that allows customers to transfer all WiFi charges to a single bill. "We're all far too small in this business to be fighting with one another."

But big phone companies will ultimately lead the market, predicts Shawn Winter, associate director, wireless LAN, at Bell Canada, a subsidiary of Montreal-based BCE Inc. "In any new roll-out, it is always the small players that are very quick to get to the market and try to establish themselves. But the strong will survive," he says.
Kevin Marron

© The Globe and Mail

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