This slowdown in hotspot deployments is the result of several factors, including low adoption rates and uncertainty over Chinese government plans, now shelved, to introduce a national standard for WLANs that was not compatible with 802.11, Crowley said.
China Netcom isn't the only fixed-line operator that has struggled with Wi-Fi hotspots, but at least the company has had a unified strategy for rolling out wireless Internet services. Rival operator China Telecommunications Corp. (China Telecom) has relied on local subsidiaries to roll out hotspots and doesn't track exactly how many hotspots the company offers in China, Truscott said.
The China Telecom hotspots that have been established are spread throughout southern China, with the greatest concentration located in Shanghai.
In Shanghai, the local China Telecom unit, Shanghai Telecommunications Co. Ltd. (Shanghai Telecom), has done a relatively good job of rolling out wireless Internet services, setting up a total of 339 hotspots in the city, up from 129 in September 2003, Truscott said. The service offering received a boost from an early promotion that offered free hotspot access for Shanghai Telecom's ADSL (asynchronous digital subscriber line) users.
For 20 renminbi per month, Shanghai Telecom would rent a Wi-Fi router and access card to ADSL customers who could then access the Internet for free from the company's wireless hotspots. That promotion has since ended and the rollout of additional hotspots in Shanghai -- which has more hotspots than any other Chinese city -- has slowed, Truscott said.
"They've seen some good growth but they haven't seen any migration from the home users to hotspot users," Crowley said, noting that hotspots are used mostly by business users.
"That market is not as big as you would think it would be," Crowley said.
If fixed-line operators haven't been able to build a successful business around Wi-Fi hotspots, China Mobile Communications Corp., the country's largest mobile operator, has demonstrated that it can be done.
While other operators have slowed rollouts of Wi-Fi hotspots, China Mobile has added 518 hotspots nationwide over the past nine months, bringing its total to 1,431 hotspots, Truscott said, noting the operator has been more aggressive than expected in rolling out Internet hotspots.
The key to the success of China Mobile's hotspot business is its payment system, Truscott said. Users that want to access the Internet from one of China Mobile's hotspots simply enter their China Mobile telephone number. The operator then sends an SMS (Short Message Service) message with a password to the user's cell phone. The cost of accessing the hotspot is billed to the user's phone account, Truscott said.