Rapid development of information-technology (IT) applications and the need for a faster and more convenient data-transfer platform has led to the development of a wireless access to the Internet. Wireless technologies are winning more users every year, especially among roving business executives who have to be in constant contact with their offices and/or abreast of world affairs, irrespective of their geographical locations.

Experts have attributed the surge in the number of users of these applications to the requirements of today’s rapidly changing and fast-paced electronic world where high-speed access to the Internet and other networks via wireless applications is fast becoming the norm.

In the last year and a half there has been a rapid development of wireless data transferring networks, albeit with a relatively small capacity. Such networks, in turn, serve as catalysts for introducing Wireless Local Area Network (WLAN), or broadband technologies of wireless access that are expected to attract over 5 billion Internet users worldwide in the non-too-distant future.

These technologies are actively being introduced to the consumer market, including the corporate sector, which experienced unprecedented sales growth of devices and equipment in the fourth quarter of 2003.

Such positive dynamics are supported by a widespread development of Wireless Fidelity (WiFi) networks in the world, a trend that did not bypass Russia — one positive sign that post-Soviet Russia has finally become a de-facto part of the global business community.

Specifics of Russia’s wireless market

Today, the wireless network market consists of three parts — Wireless Metropolitan Area Network (Wireless MAN) or Broadband Wireless Access (BWA), WLAN and Wireless Personal Area Network (WPAN).

One of the characteristic features of the Russian market is the current ratio of WLAN to Wireless Access. In money terms, it is 10 percent to 90 percent. At the same time, it is important to note the significant growth in the segment of WLAN, which was almost absent in Russia in 2003. The current growth has a lot to do with a much easier procedure — approved two years ago — which has made it a lot easier to get frequency permission in the range of 2.4 GHz for intra-office networks. Consequently, this has led to a certain balancing of outside office — “street” — and inside office networks. This, however, does not mean that WLAN applications will be a substitute for other markets, such as the structural cable-systems market. Rather, WLAN and other markets are expected to complement one another in the telecom industry, especially in cases when wire technologies are impossible or difficult to use.

According to Stanislav Rybalko, the executive responsible for wireless technologies at CompTek, the size of Russia’s WLAN equipment-market can roughly be estimated at $2.5 – 3 million per year. At the same time, profits from Wireless Access equipment are five times higher, not less than $12-15 million per year. “These data help to break ground for accepting experts’ forecasts, which foresee growth of 2-3 times on the Russian Wireless Access market in the upcoming years.” Such growth is feasible, thanks largely to the availability of new frequencies in the 5 GHz range — and the establishment of new networks within them.

Russia’s IT market attractive to foreigners

The Russian BWA market is becoming attractive for Western vendors as well who are trying to explore it. However, the uncertainty in the government has proved to be an equally negative factor for the Russian Broadband Wireless Access market. Gradually, hot spots are becoming more and more popular. For example, last year CompTek completed 20-30 large Global Web access projects. These were mostly implemented in five-star hotels.

There are enough examples of hot spot development in Russia to argue that the market has started to function. In April, after a six-month testing period, PeterStar implemented a hot spot in the St. Petersburg Pulkovo airport. The Northwestern branch of MegaFon has opened a hot spot for its subscribers in St-Petersburg. Earlier, at the end of 2003, VimpelCom implemented a similar hot spot, and now, the company has two hot spots in Moscow. Mobile TeleSystems is testing a hot spot in Pribaltiiskaya Hotel in St. Petersburg.

This direction of hot spot development has also become a point of interest to other large Russian operators. Thus, at the Svyaz-ExpoComm 2004, a telecom showcase which took place earlier this year in Moscow, Comstar United Telesystems announced plans to build several hot spots in several hotels, restaurants, railway stations, airports, conference and business centers. Already, one of these hot spots is functioning at the Pekin Hotel in Moscow.

Global trends

The In-Stat/MDR Agency reports that the market of wireless data transfer has suffered for a long time from slow speed, uneven geographical coverage and high prices. According to the polls, almost 20 percent of U.S. and Europeans are already using mobile data-transfer services, and another 37 percent are planning to use these services in the next 6-12 months. And, according to a research conducted by Pew Internet and American Life, about 17 percent, or about 1,204 U.S. adults out of 2,204 randomly sampled in the study said they have wireless access to the Internet. Even excluding cellular access such as GPRS, 3G-technologies users, this number is rather significant.

Rapid development of wireless-data-transfer technologies has laid down the foundation for introducing WLAN applications. In the future, WLAN-related services are projected to penetrate the market further than today, with the degree of such penetration expected to depend on such factors as the possibility to split family’s access to the Internet, service costs and area coverage. «Broadband wireless access technologies will help attract 5 billion more users,” noted Sean Maloney, executive vice president and general manager of Intel Communications Group at the Annual Symposium of the Wireless Communications Association (WCA) in California. “Specifically, 802.16 technology, which is often associated with WiMax, offers an alternative wireless solution, ‘the last mile,’ for broadband Internet hookup in offices and homes.”

At the same time, there is still some optimism for the networks built on the 802.11 standard — these networks are also known as WiFi, although it is a bit of a misnomer. This optimism is based on equipment sales. According to the published report of the Synergy Research Group, the gross profits from equipment sales increased by 55 percent to $751.9 million in the fourth quarter of 2003, while annual profits reached $2.5 billion, posting a 40 percent increase.

The market development has also led to an increase in the consumer sector, where sales figures grew in the fourth quarter of 2003 by 74 percent to $517.6 million and 66 percent for the whole of 2003 to $1.6 billion. The corporate segment significantly increased as well — by about 26 percent to $234.3 million in the fourth quarter of 2003 and by almost 9 percent for the whole year to $869.7 million.

According to the Pyramid Company’s report, based on the expected traffic volume of WiFi users of paid and free hot spots, the volume of data transferred via WiFi is expected to supercede the one transferred via cellular 2.5G, or GPRS and 3G by 2007, and by 2008, the number of WiFi-technology users in the world is projected to top 707 million. The volume of traffic via the third-generation networks such as EDGE, CDMA 1x, CDMA EV-DO and UMTS standards were taken into account in these projections and estimations. At that, most people are expected to use CDMA 1x standard mobile phones. The ratio of the number of WiFi networks users and third-generation, cellular-communications users is shown in the graph below.

WiFi gadgets to alleviate traffic in traditional applications

Experts believe that active WiFi development will allow operators of these networks to “take away” the heaviest traffic of data transfers from 3G-networks in areas of potential crowding of mobile and personal computer users.

Experts’ forecast of increase in hot spots in Western Europe confirms the significant growth of WiFi networks in 2004, which corresponds to the period of active introduction of UMTS commercial networks.

Meanwhile, experts have also noted that it is possible to avoid competition by creating alliances between UMTS and WiFi operators. Alternatively, UMTS operators can introduce WiFi technologies in addition to their cellular networks. The value of such approach is confirmed by decisions of a number of companies. For example, Lucent Technologies has developed user radio-cards and network platforms that allow for “seamless” roaming between UMTS and WiFi networks. Thus, it is possible to consider WiFi network development as one of the promising directions of cellular communication operators on the federal and regional levels.

In total, according to J’son & Partners’ data, by 2003 the number of hot spots — defined as public places with Internet wireless access — in the world had reached 43,000, and at the expected growth rate of 225 percent, the number is expected to reach 140,000 by end-2004. In the first quarter of 2004, there were a total of 110,500 public access areas in the world, about 70 percent of which were located in Europe and Asia..

The original Russian version of this article was first published on Cnews.ru Website