WHAT'S NEXT FOR NEXTEL: WI-FI

Nextel Communications last week talked up its push into the enterprise Wi-Fi market by premiering its new WiFi HotSpot service and teaming with wireless ISPs Boingo Wireless and Wayport. Nextel hopes to leverage its weight among corporate users by delivering high-speed wireless access to hotels, airports, convention centers and other common stops on the business traveler's itinerary.

For a flat $39.99 monthly fee, WiFi HotSpot subscribers will receive unlimited broadband Internet access at more than 7000 hot spot locations across North America. Per Nextel's deal with Wayport, service also includes wired Ethernet access in more than 150,000 hotel guest rooms. For $54.99 per month, customers may also sign up for the carrier's Wireless PC Access package, which offers access to Nextel's data network if and where Wi-Fi is unavailable via Nextel's Connection Manager software client.

Given the large number of enterprise voice subscribers in its customer portfolio, Nextel believes many of the same subscribers will now adopt its wireless data service as well, especially when they can bundle both voice and data on the same bill. “We saw a need for business travelers to have Wi-Fi service that was truly functional according to their needs,” said a spokesman for Nextel's products and services division. “We're constantly evaluating our customers' needs, and we heard from them that this is a service they would use.”

Nextel enters a Wi-Fi market populated by rival mobile carriers touting wireless Internet services at roughly the same $40 monthly price, although wireline carriers like SBC Communications make their Wi-Fi services available for as little as $19.95 per month (see chart). The Nextel spokesman shrugged off the suggestion that Nextel's WiFi HotSpot service may be overpriced: “We think our service is competitive because of its unique offerings like accessibility between hot spots, PC cards and hotel rooms,” he said.

John Yunker, president and chief analyst with Byte Level Research, disagrees. “The pricing is completely unrealistic for the consumer market, although Nextel might find some naive business consumers who don't ask a lot of questions,” Yunker said. “Forty dollars a month would have been more realistic a year ago, but it's not now.”

There is also the question of whether Nextel's emergence in the Wi-Fi business is too late in relation to its rivals' service launches, but according to Yunker, there's still room for more comers, especially with Wi-Fi convergence still on the horizon. “Nextel's not too late — for one thing, there aren't many [Wi-Fi-enabled] devices,” he said. “Consumers want it, but carrier resistance is an issue. Carriers are still trying to figure out how not to lose money with Wi-Fi — it scares them because it's coming, and they still have to figure out how to support customers.”

Yunker said it's critical that wireless carriers stop merely reselling Wi-Fi service deployed by service providers like Wayport and Boingo and begin deploying their own networks. “Nextel can resell to its heart's content, but sooner or later, carriers have to start deploying,” he said. “If all carriers want to do is bundle, there is some opportunity there. But Wi-Fi is coming, and they can't fight it.”