Hot spots on the rise in Asia-Pacific

Market skepticism hasn't dampened industry fervor in Asia-Pacific for rolling out public wireless access points, known as hot spots, nor has it put the brakes on user subscriptions, according to a study by market analyst firm IDC.

From mid-2002 to mid-2003, hot spot subscriptions grew dramatically in Asia-Pacific outside Japan, said Tim Crowley, a senior analyst with IDC.

The number of subscriptions, however, is tiny compared with the number of Internet access subscribers in the region and is expected to remain so until 2008.

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Companies most gung-ho about hot spots have come from North Asia, and include Korea Telecom, China Telecom and China Netcom.

But the country that generates the highest average income from each hot spot is India, as many of its access points are located in business hotels rather than in cafes and restaurants, the report said.

The hot spot infrastructure build-out is happening, even though there is market doubt over whether players can make money from providing access, many have said.

"Despite the existence of several different business and revenue models across the region, and the absence of proven business plans, service providers are moving forward with providing public wireless LAN (local access network) services as a value-added service for subscribers," Crowley said.

Today, the majority of hot-spot providers are telecommunication companies offering the service as part of a broadband access package, IDC said. Hot spots are also owned and operated by small, specialist operators and resellers.

The average revenue per user (ARPU) for public WLAN access and the overall revenue the business generates for telecom companies will be tiny compared with Internet access revenue and will continue to remain so until 2008, IDC said.

Though the current monthly ARPU is only about $8, subscriber numbers are expected to reach 700,000 by the end of 2003 for the region, generating total revenue of almost $44 million. The subscriber market is projected to hit close to 7 million subscribers by the end of 2008, with total revenue going past $600 million.

However, in comparison with the total Internet access services market, including both dial-up and broadband, this represents only 0.03 percent of total revenue in the first half of this year, according to IDC.

To stay competitive, the analyst firm said industry alliances providing users with Wi-Fi roaming will be crucial--something already being seen with several recent announcements in Singapore.

CNETAsia staff reported from Singapore.