WLAN: NTT VP Doesn't Expect 'Large Revenue'
addNTT Communications doesn’t expect to generate large revenue from WLAN itself, says senior executive vice president Shuji Tomita. Instead, the company will bundle hotspot access via high-speed WLAN base stations with landline connectivity and value-added services including roaming, security, and IPv6. The company’s software will also offer secure communications into the Internet itself and into corporate intranets using IP-based VPN (virtual private network) technologies via a security server that is co-located with the corporate client’s network. They’re also busy boosting their 250-base-station network to 1,000. Phew!
Comments from Wireless Watch Japan Editor-in-Chief Daniel Scuka:
NTT Communications Corp. (NTT Com), a major domestic and international telecommunications service provider presently building a wireless LAN (WLAN) network in Tokyo, does not expect to generate much revenue from operation of the IEEE 802.11(b)-based WLAN system itself. Instead, the company appears to be focusing on an integrated strategy that bundles hotspot access via WLAN base stations with other modes of access including land-line, and that also includes the provision of value-added services in addition to basic connectivity to the Internet.
Speaking at the GLOCOM Platform Forum in Tokyo on November 21, NTT Com senior executive vice president Shuji Tomita said, “We do not expect relatively large revenue [from WLAN hotspot service alone], but NTT Communications is also providing ADSL wireline access, and the combination of wireline and wireless is very important. We would like to provide portability of access through the wireless and wireline network. Eventually, we would like to provide roaming access through partners.”
Tomita also said, “We now cover around 250 service locations, including airports, restaurants, hotels, and cafes, and we plan to expand to cover 1,000 [spots] by the end of next year.” NTT Com currently provides hotspot services on a wholesale basis to major ISPs in Japan, and also to OCN, which is NTT Com’s ISP business. Tomita said that NTT Com charges a flat rate of only 1,600 yen [per month], and that, “Our hotspot service is distinct [as it] is expandable to the 802.11(a) [standard]. This provides a much higher access speed than 802.11(b), probably 30 to 40 Mbps.” “We now cover around 250 service locations, including airports, restaurants, hotels, and cafes, and we plan to expand to cover 1,000 [spots] by the end of next year.”
He explained that companies wishing to provide successful hotspot services must contend with three major issues. The first is the trade-off between attaining broad coverage and the investment that such large infrastructure requires. The second is easy accessibility versus good security, and the third is providing value-added services versus simple access to the Internet.
According to Tomita, Wireless Internet service providers (generally known as WISPs) don’t have much flexibility in terms of infrastructure investment, since they are being forced to offer services at very low prices due to fierce competition with both other WISPs and with other modes of access, such as licensed wireless networks like i-mode. This means, perhaps, that only larger companies – that can afford to run WLAN networks at a loss until critical mass and profitability is attained – can survive.
“In order to reduce investment, we are promoting roaming services with other WLAN service providers to enlarge our coverage. We have already started a trial roaming service with several providers,” said Tomita. He also points to the provision of customer location- or community-specific contents, services, and advertising as another way to earn early revenue. The NTT Com WLAN network makes use of customer position information “to facilitate this kind of service offering.” The company also plans to integrate WLAN services with licensed-spectrum PHS and 2G/3G mobile data services via “hybrid devices.”
NTT Com will also provide special software to corporate and consumer clients to enable roaming and secure access. For business users, the company is developing WEP (wired equivalent security) and SSL (secure sockets layer) software that will allow secure PC-to-wireless access point and PC-to-Internet gateway communications.
Taken together, these services will be marketed under the “SafetyPass” brand name, which will also bundle payment, settlement, and authentication features.
WISPs don’t have much flexibility in terms of infrastructure investment, since they are being forced to offer services at very low prices due to fierce competition with both other WISPs and with other modes of access.
Tomita also said that IPv6 (IP version 6) technologies will be key for NTT Com’s service. “In Japan, IPv6 is a really hot issue. We will aggressively apply this technology to WLAN.” Tomita said that IPv6 offers a much larger address space than the current IPv4 system, allowing users to assign a unique global IP address to every terminal. This will permit both client-server and peer-to-peer communications. “Roaming will henceforth be done using IP address, rather than the current telephone numbering scheme,” he said, adding, “In the future, there will be no need to use a telephone number, but you will have to remember the IP address.” The company, though NTT Verio, is already providing IPv6 hosting services.
Other companies in the NTT Group, including NTT DoCoMo, NTT East, and NTT West, are also offering WLAN wireless access services under the hotspot model.
It appears that NTT Com’s implementation of commercial WLAN services is much more sophisticated than merely offering wireless WLAN connectivity on a fee-for-access basis. In this regards, the company may have an advantage over other providers that do not offer a similar bundle. This approach also appears to differ from WLAN hotspot strategies of providers overseas, where simple provision of WLAN-based Internet access is thought to be sufficient.
Ironically, while positioned primarily as a business service, NTT Com’s WLAN service may benefit from being identified with the word ‘hotspot’ itself. “The term ‘hotspot’ is a registered trademark of NTT Communications in Japan, even though it has become a very popular generic term for local LAN services,” says Tomita.