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WiFi losing hi-tech arms race

Wireless warCommercial WiFi hotspots face a dim future in South Africa – at least among corporate workers on the move, a new research study reveals.

Mobility 2007, the latest edition of World Wide Worx’s annual study of mobile technology, released this week, shows that the corporate use of WiFi – small networks that allow wireless access to the Internet – has fallen back after a steady rise in the previous three years. By contrast, the use of 3G – wireless broadband provided by the mobile networks – has rocketed.

World Wide Worx had been warning for several years that commercial WiFi hotspots, especially in hotels and conference centres, were in danger of pricing themselves out of the market. And, now that a monthly subscription to a basic 3G service is cheaper than a few hours on most commercial hotspots, the chickens have come home to roost.

The corporate phase of Mobility 2007, which also includes consumer and small and medium enterprise (SME) research phases, shows the proportion of South African corporations whose staff use 3G data cards rising from 58% in 2006 to 82% in 2007. In contrast, the proportion that facilitate WiFi access by their staff has fallen from 74% to 66%.

“Technologies and old business models cannot survive in an environment where customers of the technology are informed and experienced in the use of these technologies,” says Len Pienaar, CEO of First National Bank’s Mobile & Transact Services, which backed the research.

This does not mean WiFi is obsolete: it still plays a major role in networking offices and homes, and is a powerful marketing tool for the hospitality industry – when used to attract clientèle rather than as an intended profit centre in its own right.

Another factor that is having an impact on WiFi is the promise of WiMAX – a high-speed long-distance broadband technology, which is being piloted by a number of service providers in South Africa. As many as 8% of corporations say they are trying it out, which exactly matches the proportion that is dropping WiFi.

Among small and medium enterprises (SMEs), the picture is slightly brighter, with WiFi deployment rising from 33% of respondents in 2006 to 36% in 2007. But the numbers are deceptive: the majority of these SMEs – 26% – are using WiFi to network their offices more efficiently, rather than enabling their staff to use it in wireless hotspots.

In contrast, the use of wireless broadband services by SMEs has jumped sharply, from 16% in 2006 to 31% in 2007. As with Corporates, most SMEs using 3G are doing so to remain connected when out of the office and as a back-up, rather than as a primary form of connectivity.

It only takes one or two episodes of paying R30 for 30 minutes access at a hotspot to realise that a 3G subscription costing less than R100 a month makes far more sense. Thanks to mobile technology, paid WiFi in hotel rooms is going the same way as phone calls from hotels – their exorbitant pricing can’t compete.

The findings make it clear that businesses are conscious of both cost and convenience, and will embrace those technologies that make business sense and are easy to use.

“We experienced massive e-commerce growth at the turn of the millennium due to innovation and a surge in Internet usage,” says Pienaar. “The Mobility 2007 findings illustrate that we are about to experience significant growth in the mobile market. As such, it’s really exciting to imagine the impact that mobile technologies will have on m-commerce in the South African market.”

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The Big Change is a business strategy blog and newsletter published by Arthur Goldstuck, managing director of World Wide Worx, a leading technology research organisation based in Johannesburg, South Africa.

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