The WiFi revolution

WIRELESS FIDELITY (WiFi), a technology for high-speed Internet browsing using a radio frequency band, has changed the facets of networking, business and lifestyle. And with the technology still nascent, it still holds a lot of promise.
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Broadband boom
The Internet World Statistics (IWS) reports that there were 14 million Internet users in the country as of end last year. Here, approximately 15% of the Philippine population of 85 million is communicating, obtaining information, doing business, or simply surfing through the worldwide web.

In comparison to other countries in Asia, this statistic appears modest, with the penetration in South Korea at 76.1% and Japan’s at 73.8%. Even so, the Philippines ranks 10th in Asia, close to Taiwan and Malaysia, in terms of Internet connectivity.

Out of an estimated 14 million Internet users in the country, only about 7% have a subscription. Despite the relatively low broadband subscriber rate in the country, the latest figure on the total number of subscribers in 2008 looks promising. There are a total of 903,746 subscribers as of June 2008, according to Rep. Joseph Santiago of Catanduanes, former chief of the National Telecommunications Commission (NTC).

This figure greatly exceeds and is almost twice the 2010 forecast of some 475,000 users by the technology research firm International Data Corporation (IDC). This may be taken as a positive sign for the industry, as the potential demand for broadband services may actually be higher than what has been expected.

In a special report, IDC predicts that after the broadband boom, wireless broadband services will be the next area of competition among Internet service providers. Indeed, the proliferation of USB modems such as Smart Bro and Globe Visibility, and WiFi hotspots not just in the metro but all over the country, point to a vibrant industry and to the people’s increasing need to stay connected anytime, anywhere.

WiFi benefits
The WiFi boom can be attributed to the superiority of wireless networking over dial-up Internet subscriptions. For one, wireless networks provide local mobility, while dial-up connections are fixed. WiFi wireless technology has a range of 300 feet from the base station and can support data transfers of up to 11Mbps, or five times the speed of 3G, another wireless innovation, which transfers data at a rate of only about 2Mbps.

The advantages go beyond such tangible attributes. Following the trend, establishments such as coffee shops, malls, hotels, restaurants, fast food chains, and other businesses now offer WiFi connections to lure in customers. But while some locations offer WiFi for a minimum purchase of their services and while some offer it for free to patrons, the objective is the same: the WiFi service makes the establishment more attractive to existing and potential customers—a rather effective strategy to fill up dull business hours. Indeed, more than the additional revenue it brings, perhaps the real benefit in investing in WiFi is in customer retention and acquisition.

Providers
Some top players among wireless technology providers are PLDT, Smart Communications, Globe Telecom, and Sun Cellular. Each differs in the type of wireless connection offered, such as WiFi, 3G, GPRS, EDGE and HSDPA, all offered at varying rates. PLDT is reportedly the market leader for these services, grabbing up to 84% of the total number of broadband subscribers.

Among the first WiFi providers in the country are ePLDT with its BLiNK service and GlobeQuest for WiZ (Wireless Internet Zone). Both companies initially targeted mobile professionals and aimed to create a market for high speed Internet by strategically establishing ‘hotspots or WiFi zones. Presently, PLDT is also targeting other market segments like the D and E market, to push for more massive broadband use.

Meanwhile, due to the increased wireless usage, the 6th Mindanao Information and Communications Technology Congress in 2007 opened a talk about making Davao City a free WiFi zone like Singapore. Such a move will provide more opportunities for investment in the city.

WiFi providers, however, fear that the option is unsustainable. When discussing the sustainability of free WiFi, a general emphasis is made on how Internet usage is abused and how the need for higher bandwidth may increase exponentially. A free WiFi zone may require infrastructure changes or expansions, but service providers may not always be able to increase their capacity.

WiMax Philippines
The future of WiFi is in the latest WiMax (Worldwide Interoperability for Microwave Access) technology, with Intel Corp. as one of the proponents. WiFi sacrifices range at up to 30 meters only for a higher bandwidth, but WiMax has a reach of 50 kilometers at virtually the same speed. As opposed to WiFi mobility in a town dotted with many access points or base stations, the WiMax allows for a more seamless wireless mobility within a 50 kilometer radius.

Globe announced a WiMax launching in the last quarter of last year, while Egde-Core, a broadband solution provider, is also currently pushing for its development. Countries currently using WiMax are Australia, Malaysia, Singapore, South Korea, Thailand and Vietnam.

The Institute for Development and Econometric Analysis, Inc. (IDEA) is an economic think-tank based in the University of the Philippines - Diliman. For inquiries on IDEA, please contact Eduard Robleza at edjrobleza@idea.org.ph.

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BY APRIL DYAN R. FURIA, Junior Researcher, and JULIUS SANTOS, Senior Research Associate
Source：BusinessWorld

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