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Tim Culpan

Rise in pre-configured notebooks and growing demand may see wireless technology going head to head with 3G

McDonald's may have the Big Mac, and IS Coffee serves up an iced latte, but neither name springs to mind in relation to using the internet.

However, if these two chains - and dozens more - have their way, consumers soon will have their restaurants in mind when seeking a place to sit down, log on, and munch away.

The United States, and now Hong Kong, Singapore and Taiwan, have seen a plethora of outlets adding Wi-fi to the menu in the belief that it will boost sales.

The now-mature Wi-fi technology makes the task of turning any outlet into a Web-connected venue simple and relatively inexpensive.

Users need only provide their own Wi-fi-enabled device, such as a notebook or PDA, and they can get online within minutes, usually for a fee.

In Taiwan, most Wi-fi-enabled outlets also sell or rent Wi-fi PC cards that can easily slot into a notebook's PC-card slot.

Short for wireless fidelity, Wi-fi is the 'brand' name given to a wireless communications standard  amed 802.11b.

No one owns the technology per se, but it is  administered through a non-profit group called the Institute for Electrical and Electronic Engineers (IEEE), which also drafts the specifications for hundreds of other technologies including Ethernet.

Wi-fi is the most popular of a series of Wireless Local Area Network (WLAN) technologies, and uses radiowaves on the 2.4 gigahertz bandwidth to connect 802.11b-enabled devices at speeds of up to 11 megabits per second (Mbps) slower than Ethernet's 100Mbps, but much faster than dial-up or ADSL.

Significantly, Wi-fi is up to 100 times faster than 2.5G GPRS  mobile technology and 30 times faster than the yet-to-be-released 3G technologies. A recently approved upgrade to the 802.11b standard - called 802.11g - will boost speeds  to 54Mbps.

For outlets wanting to join the wireless internet boom, the cost is minimal.

The first step is to get a high-speed connection to the premises, with ADSL being the most popular choice in Taiwan at about US$30 per month. From there, a Wi-fi access point is needed and sells for as little as $120.

Connecting the access point to the ADSL modem, and a power outlet, followed by some basic configuration, suddenly puts a 'net' in front of the word 'cafe.'

For customers, the idea is fantastic. A busy businessman can check his e-mail while eating  a burger between appointments, while a lazy student can while away the afternoon sipping lattes and chatting online.

Rates in Taiwan are about NT$50 (HK$11) per hour, about double that of a net cafe, and vary from location to location. Payment is made via pre-paid cards that have a pin-code entered into a pop-up browser window once the network is detected.

However, the boon for consumers may not translate into a boon for outlets.

The rollout of Wi-fi in more than 1,000 Starbucks coffee shops in the United States last year is being looked at for hints as to the long-term viability of the business model. It is still a can of worms due to conflicting interpretation of results, and most say it is too early to tell.

In Taiwan, the standard business approach is to have a wireless  internet service provider foot the bill for the set-up and maintenance of the WLAN, while also pocketing most, if not all, of the subscription revenues.

This  helps to avoid licensing problems, since in Taiwan provision of internet network services for a fee requires a Type II telecom licence. It grants the right to resell network capacity, yet since the wireless providers have licences and are providing the service, the outlet does nothing. This is still a gray area in Taiwan law, so prospective  providers need to be wary.

In this business model the outlet gains through increased patronage and from customers who linger longer and decide to go for a second cup of coffee.

Critics argue that fast-food chains such as McDonald's are unlikely to see customers going back for a second burger, and having customers stay longer will take up seating space at peak times, negating the benefit from increased patronage.

'There's no successful revenue model established for Wi-fi,' notes Dominic Grant, a telecom analyst at ING Financial Markets in Taipei. 'But there's no successful business model established for 3G either.'

In fact, the coming launch of 3G in Taiwan is likely to put the two  head to head in  the mobile-internet market. While 3G is certainly more portable than Wi-fi, those wishing to check their e-mail away from the home or office may prefer to use something larger than a handset, and will probably opt to sit down when they do.

The recent introduction of Intel's Centrino suite of chips, which includes an 802.11b chipset, means that most  new notebooks have  Wi-fi built-in. The result is that the pool of consumers with Wi-fi-enabled devices will increase rapidly,  ending doubts about whether it can move from a niche technology to the mainstream.

'With Centrino, Wi-fi is here to stay,' said Mr Grant.

If that is the case, then the investment of a few hundred dollars for a Wi-fi hotspot that requires no licence might result in more traffic than the investment of a few hundred thousand dollars for a licensed 3G base station. For users, Wi-fi will undoubtedly be a cheaper way than 3G to check email.

'It's a split vote at the moment. There are a lot of people who say it will cannibalise the 3G market, but there are those who think it won't,' said Mr Grant.

With advances in technology, internet surfing may soon be joined by voice telephony as a use for Wi-fi.

At present, voice-over-internet protocol technology is immature and greatly inferior to standard circuit-switched technology.

However, if the bugs are ironed out, then Wi-fi hotspots could be used for making voice calls on a PDA. If that happens, then this humble, low-cost technology could really turn up the heat on 3G networks.



Cafe culture puts Wi-fi on the menu