Apr 23, 2009 4:32 PM,

AT&T WiFi hotspot use skyrockets in Q1

By Kevin Fitchard

Free access for DSL, 3G data customers send connections past 10 million

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AT&T's WiFi hotspot network saw a huge spike in usage in the first quarter, driven by AT&T's growing base of fixed and mobile broadband customers as well as its increased use at 7000 Starbucks coffee shop locations around the country.

AT&T reported authenticating 10.5 million WiFi connections across its 20,000 US hotspot network in the first quarter of 2009. Those connections are more than triple the 3.5 million connections in the first quarter of 2008 and more than half of the total for all of 2008. Driving the surge were 16.7 million AT&T broadband subscribers, which AT&T extended free WiFi use to last year. Any customer with an AT&T DSL or U-Verse connection or a 3G LaptopConnect connection gets unfettered access to the hotspot network as do mobile customers with WiFi-enabled smartphones, such as the iPhone. AT&T said it added 471,000 of those broadband customers last quarter.

AT&T acquired its hotspot management company, Wayport, in December, adding an additional 3000 hotpots in hotels, car rental agencies and book stores as well as roaming access to 60,000 hotspots internationally. AT&T, however, is including Wayport's numbers in its full-year data, and given that it took over management of Starbucks hotspots last February, almost all of its WiFi connection growth is organic.

The wireless-wireless operator has been emphasizing WiFi as a key component to its broadband and mobile business strategies. AT&T uses WiFi to differentiate its DSL service from competitors, giving customers remote access, and to differentiate its mobile broadband customers by giving them a faster connection in high-traffic areas. WiFi also gives AT&T some operational savings, allowing it take traffic off of congested 3G networks.

AT&T Mobility Chief Executive Officer Ralph de la Vega has been increasingly talking up the role WiFi will pay in future services. In a recent interview, de la Vega said that as more mobile devices have WiFi embedded, AT&T can look to offload a good deal of mobile traffic onto home, work and public WiFi networks, sparing 3G and future 4G capacity for truly mobile scenarios.