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Free Wi-Fi Access Growth Limits VAS Market

The wireless hotspot market continues to experience strong growth in deployed venues and usage, driven by broadband service providers embracing Wi-Fi both as a competitive differentiator and an enhancement to their core access services.

Despite the continued growth, the underlying hotspot business model has been in a continuous state of definition and development over the past decade, and remains a primary uncertainty in the future, according to the latest market study by In-Stat.

"We are a decade into the introduction of hotspot services and the market is still working out the revenue model," says Amy Cravens, Market Analyst at In-Stat.

Initially the market was based on pay-as-you-go revenues, with providers hoping it would evolve into ongoing subscriptions and corporate accounts.

However, there has always been a free access component -- as branded hotspot venues like McDonald's and Starbucks have made free access pervasive -- it's now uncertain if this activity may lead to a customer resistance to pay for new value added services (VAS).

In-Stat's market study found the following:

- Their consumer survey identified security concerns as the top barrier to hotspot usage. Other top concerns are service availability and costs.

- Annual venue growth is expected to remain strong over the next several years, but will begin to slow in later forecast years.

- Europe will account for 40 percent of worldwide Wi-Fi venues in 2010.

- By 2012, handhelds are anticipated to account for half of hotspot connects.

- Europe and North America are the largest hotspot markets based on usage (annual connects).

- On a per location basis, airport hotspot usage dwarfs all other venues with several thousand connects per month.

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