According to a study of over 10,000 people owning portable notebook computer and personal digital assistants (PDAs), Japanese consumers are becoming aware of wireless LAN services but are looking for cost-effective ways to access them. The survey found 63% of all respondents familiar with the term “wireless LAN,” with 60% willing to pay for a high-speed wireless LAN package if priced below YEN 2,000 per month (approx. USD 16). Even greater awareness and interest was found among business users, 96% of whom were familiar with WLAN.

The WLAN market survey is part of a new study titled “The Japan Wireless LAN White Paper 2002 – 2003,” produced by Tokyo-based research firm Mobile Media Japan. The study is based on an examination of over 40 wireless LAN projects and services underway across Japan. The consumer survey was conducted in collaboration with Japanese marketing firm Kikakuya, Inc.

Wireless LAN products and services are a rapidly developing area in Japan, which has the world’s most advanced wireless data market. Since 1999, over 50 million Japanese consumers have signed up for mobile Internet services and are now spending an estimated YEN 300 billion (USD 2.4 billion) annually on wireless data. The demand for higher-speed wireless access has also so far attracted 1.3 million customers to third-generation (3G) services since they were launched in late 2002 by KDDI and NTT DoCoMo. With 5 million more users now signed up for broadband internet, service providers are poised to launch a new channel of wireless access via WLAN.

According to the Mobile Media Japan report, consumer-based commercial hot spot services in particular will face serious challenges. “These companies now have to win an uphill campaign to identify their customers and overcome user concerns about coverage, cost, and possibly security. Few if any hot-spot only services will survive the coming shakeout,” says MMJ analyst Scott Murff. “There is clear demand, and users are telling us they are ready for WLAN, but that they are not yet seeing the kinds of services they want.”

Mobile Media Japan says the Japanese market is nurturing a number of business cases that validate commercial applications of wireless LAN. In particular, the report identifies promising products that target non-competing segments and also compliment current wireless offerings in Japan. These include WLAN services offered via existing ISPs, fixed-cost wireless IP phone, WLAN security, and home-networking capability.

Insight

This report from MMJ confirms that, in Japan at least, there is significant demand for WLAN as part of an integrated wide area / hotspots service. Consumers with personal and business web accounts, a cable broadband subscription and mobile phone service are unlikely to want to sign-up with yet another provider to get WLAN.

This provides an opportunity for quick-thinking network operators to steal a march on competitors by integrating a simple WLAN hotspot service with their existing wide area offering. T-Mobile is doing this in the US and Japanese operators are running trials too. The prize of high-spending business users and affluent consumers will go to the first operator to take advantage of their unique ability to offer an integrated billing and authentication process for WLAN and wide area packet-data.