Why do consumers favour WiFi hotspots?

With network operators shying away from unlimited mobile broadband data plans, consumers are migrating to WiFi networks as a cost-effective measure.

"As operators like BSNL moving away from unlimited mobile broadband data plans, I switched to WiFi hotspots (public locations where service operator provides secured WiFi access) to connect multiple devices and use the bandwidth for downloads," says Varun Sahay, a New Delhi-based BPO employee, who subscribed to an Aircel connection for the same.

Every time Sahay visits Ansal Plaza in South Delhi, he can logon to Aircel WiFi hotspots using his mobile phone. For as little as Rs 15, Sahay can download data up to 50 MB via Aircel's WiFi connection and the charges are adjusted against his postpaid bill.

"It's cheaper, on-demand and I don't have to buy any additional card or connection," he says.

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Service providers like Aircel have enabled its users to access wireless internet speeds of up to 1mbps across 50,000 Aircel WiFi zones, for a minimum fee. Aircel's Fair Usage Limit (FUL, the pre-fixed data download limit) varies from 50 MB on hourly plans to 3 GB for monthly plans.

Mobile operators are investing heavily in their 3G-networks and upgrading to faster 4G-networks but capacity problems remain. To solve them, WiFi has become an important technology for offloading traffic.

When Hemal Oza from Mumbai bought an Apple iPhone 4 recently, he realised that an uninterrupted and fast internet connection was a necessity.

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"I knew watching high-definition videos would be one of the main things I would do with my device."

But the mobile bill for 3G data in the very first month of endless surfing was a shocker. Promptly, he switched to a WiFi connection at home for downloading high definition videos, applications and online games.

He now restricts his 3G internet usage for surfing while on the move.

While both 3G and WiFi offer wireless internet connection, the difference is that a 3G connection will need an active SIM card whereas WiFi does not need a SIM.

You instead need a WiFi network, login details and a WiFi-enabled device. Besides convenience, the increase in multiple devices at home is driving the growth in the WiFi market.

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Deloitte's Sandip Biswas says WiFi connections are growing at 45 per cent annually. "As consumers turn towards WiFi connection, we will see affordable WiFi data plans being introduced."

According to Tikona's Digital, a leading WiFi provider, five per cent of existing broadband users have a WiFi connection.

Heramb Ranade, chief operating officer of Tikona says: "We are seeing a lot of traction from the tablet PCs users who are eager to switch to WiFi because it is much cheaper than using a 3G connection. One can get the same speeds at much cheaper rates."

Tikona, which has WiFi data plans starting at Rs 49 for home users, is planning to launch a data plan targeted specifically for tablet PC users.

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"Enterprises, large and small, already rely on WiFi to provide a flexible, mobile work environment. Public locations now advertise free WiFi access to entice consumers. All this has helped the consumer to try WiFi connections," reasons Biswas.

According to Deloitte, smartphone users consume an incredible amount of data and when they can't get access to the internet over cellular networks, they quickly turn to WiFi to fill the gaps.

The WiFi family is growing, adding higher speeds and better connectivity. Initially, mobile operators relied predominantly on third-party WiFi providers, but it seems that a growing number of mobile operators are taking matters into their own hands by building their own WiFi networks.

For those telecom providers that still haven't jumped on the WiFi bandwagon should ready themselves for a backlash. Growing number of users like Sahay and Oza are not the ones to take data-capping lying down.

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Tata Indicom, Aircel and Vodafone have been most vocal about their WiFi services. Vodafone that announced the launch of its mobile WiFi device Vodafone R201 can connect five users at the same time to Vodafone's 3G network and this WiFi terminal is priced at Rs 5,500.

Internet service provider O-Zone Network and telecom equipment maker Alcatel Lucent are developing WiFi hotspots across the country.

The partnership aims to launch 20,000 WiFi hotspots, created by O-Zone, by the end of 2012 where people can access WiFi internet services.

Experts argue that it is not just tablet PCs and smartphones that will drive the usage of WiFi.

"A number of working couples who work late hours would like to keep an eye on their home or children through cameras connected to home WiFi network. This way they can watch the coverage from anywhere," Ranade claims.