Hamstrung by a lack of money generated by wireless LAN “hotspot” use, operators are turning to other ways to make money, a Scottsdale, Arizona-based high-tech market research firm is reporting today.

 

Officials at In-Stat (News - Alert) are reporting that operators aren’t making as much money from charging for Internet access from hotspots as the number of people using the access points would suggest.

 

“Operators have started bundling hotspot access with other services, such as fixed and mobile broadband,” said Daryl Schooler, an In-Stat analyst. “This way, consumers can access hotspots without paying a separate fee, and operators can generate some access revenue by bundling the cost of the service into a bigger service package that consumers are willing to purchase.”

 

Schooler contributed to In-Stat’s new report, “2008 Global Hotspot Market—A Time of Change and Growth.”

 

In-Stat says the report, which can be purchased, covers the worldwide market for wireless hotspots.

 

“It provides end-user data on how and where the service is used and users’ willingness to pay for hotspot services,” the firm says. “Supply-side analysis on how operators are changing their business strategies and global forecasts for hotspot venues and access revenues are included.”

 

Generally speaking, a wireless LAN, or local area network, links two or more computers or devices without using wires to give users the mobility to move around within a broad coverage area and still be connected to the network.

 

Experts say the technology, one popular version of which is Wireless Fidelity, or “WiFi,” may present some security problems.

 

On a wired network, any adversary would first have to overcome the physical limitation of tapping into the actual wires, but this is not an issue with a wireless system, experts say. To combat the problem, wireless networks users usually use various encryption technologies available such as Wi-Fi Protected Access. Some of the older encryption methods, such as WEP, are known to have weaknesses that a dedicated hacker can compromise, they say.

 

Today, experts on Internet hacking are worried not just about WiFi but about Web use on mobile devices – a technology that some experts see as the wave of the future.

 

Hacking into computers has produced an entire industry of spyware and anti-virus, protective software today. The industry grew with the proliferation of desktop and laptop computers.

 

Now, experts say, the rapid spread of cell phones and smart phones is presenting a new, serious threat that could compromise users’ privacy and the security of passwords for e-mail and even bank accounts.

 

“Right now, we’re at a real interesting point, and kind of a troubling point if you think about it,” Daniel V. Hoffman, a mobile security expert who works as chief technical officer at SMobile Systems, told TMCNet during an interview. “Everybody has some kind of device, what we’re holding now is more powerful than laptops were seven, eight years ago. There are not a tremendous amount of threats that are publicly known. We haven’t been a big event, like the ‘I love you’ or ‘Melissa’ virus, that everyone talks about. The reason for that is that these hackers don’t want to be loud.

 

SMobile is a Columbus, Ohio-based company that develops security solutions for all mobile device platforms.

 

Hoffman (News - Alert) says the company’s software products are unique in that they serve smaller businesses, whose workers may keep privileged information and carry out critical, private communications through devices such as smart phones.

 

An effective solution for SMBs looking for mobile security must encompass anti-virus, personal firewall and encryption features, Hoffman said. That’s a rare combination on today’s market, he said – even the hugely popular, much-hyped Apple (News - Alert) iPhone 2.0 lacks that level of security, Hoffman said. He added that SMobile is developing the mobile security for the new 3G iPhone – as well as for Google’s widely anticipated Android (News - Alert) mobile platform – and that those products likely will be available later this year.

 

Meanwhile, In-Stat’s survey finds that more and more people are using hotspots for personal reasons.

 

“Survey respondents are showing an increased reluctance to pay for hotspot access,” the firm says. “Nearly 50 percent of respondents said they would only use a free hotspot.”

 

Access revenues will start to decline due to increased competition and users’ reluctance to pay, the firm reports.