O2 to launch free Wi-Fi hotspot network

Mobile operator O2 plans to launch a 15,000-strong nationwide network of free Wi-Fi hotspots located in public places such as coffee shops, and open to customers and non-customers alike.

The scheme, known as O2 Wi-Fi, will begin by replacing the mobile operator's existing 450 O2 Cloud hotspots, the company said in its announcement on Wednesday. It has promised that by 2013, it will at least double the number of existing premium hotspots offered by BT OpenZone and The Cloud. That total stands at 7,500, according to O2.

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The operator said that the key differentiator of O2 Wi-Fi from other hotspot providers is that it will be "genuinely free", whether users are O2 customers or not.

"O2 Wi-Fi will address the many shortcomings in the way most Wi-Fi hotspots work — you won't need to buy a coffee to use it, and it won't matter what SIM card is in your phone," Ronan Dunne, O2 UK's chief executive, wrote in a blog post.

The hotspots, located in places such as retail outlets and outdoor areas, will provide up to 24Mbps broadband connections with a fair use policy of 10GB per user per month across the network of hotspots, an O2 spokeswoman told ZDNet UK.

Both O2 and non-O2 customers will be able to register for the O2 Wi-Fi service by providing their mobile phone number. They will then receive a confirmation short-code SMS for verification purposes. This is a one-off process, after which customers will be able to automatically connect to a hotspot when in range.

With the move, O2 enters the Wi-Fi hotspot market and goes into direct competition with BT OpenZone and The Cloud, both of which were previously used by the mobile operator to provide free Wi-Fi access to customers on certain tariffs.

Another rival is BT's Fon network of access points, which runs off the shared residential connections of BT home internet customers. However, Fon's download speeds are capped at 512Kbps — something O2 made reference to in its announcement.

"All [O2 Wi-Fi] hotspots will be premium public hotspots, as opposed to using residential connections with limited bandwidth," the operator said.

In its announcement, O2 noted that only 20 percent of people with access to free public Wi-Fi on O2 tariffs actively use it, even though most devices are enabled for Wi-Fi.

Network congestion

Sylvain Fabre, research director of the carrier network infrastructure group at Gartner, said that the service should help ease congestion on O2's 3G network.

"[The scheme] will have uses and value in limited areas, typically in densely populated places with very busy networks that are capacity congested," Fabre told ZDNet UK.

O2 Wi-Fi will address the many shortcomings in the way most Wi-Fi hotspots work — you won't need to buy a coffee to use it, and it won't matter what SIM card is in your phone.

– Ronan Dunne, O2

However, Fabre warned that mass use of hotspots may bring other complications to light for the operator.

"There's authentication issues, issues with managing the IP address as you roam from 3G onto the Wi-Fi. There's also traffic shaping, traffic management, deep-packet inspection, quality-of-service type-things that are normally run in the core when you run a regular network, but they may not be automatic if you run over Wi-Fi and then onto the wider network," he said.

O2 said that it has worked hard to ensure the security of the hotspots, but it still encourages people to be careful when connecting to unfamiliar networks with unfamiliar SSIDs.

The locations of the hotspots will be tied to partnerships with vendors. O2 plans to attract more venues by allowing them to engage directly with users — for example, a customer might receive an 'offer of the day' voucher when logging on to the network.

The free O2 Wi-Fi hotspots will not be funded by advertising, according to the company's spokeswoman. She added that there is no set criteria for how partners will interact with users, but suggested these could take the form of "a welcome text message when a user enters a venue [or] a game pushed through a data app".