In South Africa, the Independent Communications Authority of SA (Icasa) has called for public comments on the provision of wireless internet access. Comments are due by Monday, to help define Wi-Fi and its legal connotations, including whether it should be licensed.

If Icasa is heavy-handed, hotspots may fail to ignite at all, because regulations could stifle the technology before it can prove its value, warn members of Savant, the SA Vanguard for Information Technology.

"SA has the skills, infrastructure and resources to establish hotspots and has done so already. To consider enforcing regulation upon what is essentially an unrealised market is an exercise in futility," says Adrian Schofield, a Savant member and president of the Information Industry SA.

The benefits of easy internet access should be allowed to materialise before time and money go into the question of licensing.

"There are issues that may well require some regulation such as signal strength, signal containment and internet security, but there is growing evidence that regulation of communications reduces a nation’s ability to derive the benefits of technology," says Schofield. "The last thing we need is a licensing fee for technology that has yet to prove capable of generating a sustainable revenue."

The internet is an important tool for social and economic development, and excessive regulation could seriously hamper its rate of adoption, agrees Alan Hirsch, the chief director of economic policy in the presidency. The authorities should be mindful of that when constructing a regulatory framework for Wi-Fi, he says.

Hotspots have generated so much interest that they are at the peak of the "hype cycle," Gartner analysts have warned. The idea that they will revolutionise internet access and significantly increase business productivity in the near future is pure industry hype.

As hotspots fail to meet those unrealistic expectations they will be given the cold shoulder, until they have time to mature into a sustainable way to access the internet and slowly begin to boost productivity.

Worldwide, the number of hotspot users is tipped to reach 9,3-million this year, up from the present 2,5-million.

Although that number sounds impressive, about 90% have tried the service just once or twice, often free of charge, says Ian Keene, a vice-president in Gartner’s telecommunications.

Their frugal spending is unlikely to support growing numbers of hotspots in the future. And that creates a vicious circle, because until there are sufficient hotspots to make the service widely available, users cannot rely on them and will consequently not spend money on those that do exist.

"Until critical mass is reached, users will not be able to rely on public hotspots for access when they need it and will encounter pricing systems that they are unwilling to pay," says Keene.

Coffee shops and restaurants currently host about 70% of all public hotspots, while airports and hotels are also offering the service.

Often the cost of installing a network is not justified by charging for its use, but from the belief that it will attract more customers who will spend on other services as they work. Hotels are bearing installation fees in the hope of attracting more business guests.

To make the idea sustainable, service providers must create enough wireless zones to assure users that WiFi will be available when they need it, and must also devise a feasible way of making money. "We have not yet seen a sure-fire model for turning user numbers into cash," said Keene.

So despite their rapid proliferation, many hotspots will fail as they will not generate enough business. Consequently, the numbers will peak in 2005 but will then decline until 2008, he says.

Business Day