Analyst: Wi-Fi industry set for a ‘shakeout’

Analyst: Wi-Fi industry set for a ‘shakeout’

Up to 50 per cent of existing Wi-Fi operators will fail within the next two years as the market undergoes a massive “shakeout”, according to an Australian telco analyst.

Just as companies in the dotcom space receded to about 60 per cent of those that entered the market during the Internet boom, wireless operators are sure to fall by the wayside as the industry matures, telco analyst Paul Budde predicted.

“Wi-Fi is a bit of a bubble,” he said. “But the industry has learnt enough from the dotcom boom not to have a repeat of what happened then.”

Budde’s comments were made during his keynote presentation at the Wireless Broadband — a ‘disruptive’ seminar held in Sydney earlier this month. The conference, which included speakers from wireless broadband providers Azur Wireless, Personal Broadband Australia (formerly CKW Wireless) and Telstra subsidiary SkyNetGlobal, was organised by Budde’s company, Budde Communication.

As part of his address, Budde cautioned attendees against pinning too much hope on Wi-Fi as a mainstream technology. While there were plenty of opportunities for the technology to play a role in niche markets, such as in “broadband black spots” or areas with cabling problems, wireless was unlikely to cater to the mass market, he said.

In addition, while appealing to about 2 per cent of the world’s business users “who would pay good money for the service”, Wi-Fi would need to become applicable to the youth market in order to achieve mass market take-up, Budde said.

He said one of the biggest problems now facing wireless operators was the saturation of the market by small wireless providers offering differing Wi-Fi technologies and services.

“It’s a Wi-Fi jungle,” he said. Access to wireless roaming for example, is too complicated, because there are so many operators and competing technologies available.

Although the focus of his presentation was wireless, Budde pointed to fixed line broadband fibre to the home as a “very compelling technology for the future”. By 2015, Budde predicted Australian telcos will have migrated home users across to fibre networks as a replacement to the fixed line.

Hybrid Fibre Coax cables, such as those delivering Optus and Foxtel services, had “an end life” and would wind up bandwidth wastelands.

“The Optus cable is a dead duck,” he said.

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