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Commentary: BT prods Europe toward wireless LANs

BT Group has a good opportunity in the wireless LAN market, but it will take time to develop, according to Gartner.

By Ian Keene, Neil Rickard and Nigel Deighton, Gartner analysts

BT Group has a good opportunity in the wireless LAN market, but it will take time to develop.

See news story:
BT plans wireless service despite ban

The incumbent fixed-line carrier in the United Kingdom intends to set up 400 hot spots by June 2003 and 4,000 by two years later. These will be located in busy areas such as hotels, airports, railway stations, cafes and bars. The service will initially target corporate users, and consumer access will not start before 2005. Gartner forecasts that 900,000 WLAN-enabled professional laptops in the United Kingdom will regularly use a hot spot by 2005, and a further 1.6 million occasional users will do so.

BT already has many of the skills needed for success in the public WLAN market:

• Good knowledge of cost effectively implementing a broadband backbone.

• Experience of delivering enterprise virtual private network (VPN) solutions.

• Strong branding in the United Kingdom, backed by good marketing--which most U.S. WLAN start-ups lacked.

However, the service cannot start until the U.K. government lifts the ban on commercial use of the 2.4 GHz band. BT believes this will happen in time for the service to be launched in June of this year. Assuming this happens, 400 hot spots by June 2003 looks achievable, but 4,000 by June 2005 is ambitious. Progress will likely be slowed by the need to negotiate deals with site owners. Gartner's view is that fewer than 1,000 hot spots would cover busy locations, but BT's recently announced price cuts for wholesale broadband links could make quieter sites financially viable.

BT estimates its WLAN service will generate an additional $42 million in annual revenue by the end of fiscal 2004. This seems conservative, given that Gartner expects total U.K. public WLAN revenue of $300 million by 2005.

Other than Nordic carriers that have both mobile and fixed networks, BT is the first European fixed-line incumbent to move into public wireless LANs. To date, fixed-line carriers in Europe have been slow to recognize their strengths in this rapidly expanding market.

BT's move clearly positions public wireless LANs as a service for mainstream carriers. It should act as a wake-up call for European mobile operators, many of which have mistakenly assumed they would dominate their national WLAN markets. Other major European carriers will likely launch similar initiatives.

(For a related commentary on BT reducing prices for broadband Internet access, see Gartner.com.)

Entire contents, Copyright © 2002 Gartner, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.