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Even though 802.11b-based Wireless LAN (WLAN) has been in India for at least three years now, it was only in 2002–03 that things started looking up in a noticable manner.

The de-licensing of the 2.4 GHz frequency band—in which 802.11b operates—for indoor use by the government was certainly one of the drivers of positive development. Earlier, costs of buying spectrum apart, licensing also involved other headaches. Getting a license was a long drawn and often a painful process. Organizations deploying WLAN had to take the permission of not only the Wireless Planning and Co-ordination (WPC) wing of Department of Telecommunications but also that of the home ministry. An organization needed to approach WPC for frequency allocation, every time a new user was added to the WLAN network. Still worse, user organizations had to maintain an inventory movement register of WLAN equipment.

The growing awareness and acceptability of the benefits offered by the wireless technology, coupled with a big drop in the WLAN equipment prices also made several corporates and educational institutions deploy it for both indoor and outdoor use.

Market Size
Although still few in number, many organizations began using WLAN as an extension to wired LAN in FY 2002–03.

Voice&Data estimates that the market for wireless LAN products in FY 2002–03 was around Rs 12 crore. This primarily includes access points and PCMCIA cards. Repeaters for boosting signals and outdoor antennas have not been included in it.

Cisco was clearly the leading WLAN infrastructure vendor in the country, commanding around 62 percent market share.

D-link, which entered the WLAN market only in 2002, came a distant second with a 25 percent market share. Other vendors and the gray market occupied the rest of the space. While Cisco, Ericsson and Proxim play in the high-end segment of the market, D-link and SMC offered low-cost products.

Deployment Costs
Prices of access points and PCMCIA cards have dropped by more than 50 percent in the last one-year period. While the access point cost around Rs 40,000 in November 2002 (down from Rs 1 lakh a year ago), a PCMCIA card cost around Rs 10,000 (down from Rs 17,000 a year ago). Access point costs further fell to around Rs 20,000 and those of PCMCIA cards to around Rs 4,000. All this has considerably brought down the per user cost of WLAN deployment.

Market Segments
It is still too early to define market segments in the WLAN space as the market is in its infancy with most people largely experimenting with the technology. However, the past year saw an emergence of three clear segments. These include the educational institutes, enterprises (primarily software companies), and the hospitality sector. As early adopters, these three segments can be termed as the drivers of WLAN adoption in the country. The past year also saw the emergence of a fad to build wireless hotspots in the country with some restaurant chains taking the initiative.

Factors for Slow Growth
Even though WLAN deployments are now expected to grow at a faster pace, bandwidth limitations and security concerns may still slow down the growth. Throughput is limited to 5.5 Mbps on a shared basis on 802.11b, though theoretically it can go up to 11 Mbps. Despite progress on the security front, very few vendors offer a secure system. Most of the vendors have been just selling boxes with only rudimentary security features.

The fear of interference from other networks that makes the WLAN network unstable has also withheld many deployment decisions. A significant factor slowing down purchase decisions has been the uncertainty created by the emergence of other WLAN standards a la 802.11a and 802.11g offering better throughput and security. Many buyers have been adopting a wait and watch policy and waiting for the standards to stabilize. Constantly falling prices have also led many people to wait.

Outlook
Even as the technology becomes more powerful, the cost of deploying it is like to keep dropping. And as the technology stabilizes and offers higher throughputs and enhanced security, more and more users are likely to see the benefit of deploying WLAN as a means of enabling mobility. That is a foregone conclusion.

From its currently small base, the Indian WLAN equipment market is likely to grow at a significant rate in FY 2003–04. Apart from the networking market leader Cisco (which had 22 partners specializing in wireless in FY 2002–03), several other vendors are also looking at wireless as a high-growth area. The market is likely to see more action in 2003–04 with Proxim, one of the global leaders in the WLAN space, making an entry. It is much likely to eat into Cisco’s share. This could happen because the Proxim WLAN equipment is likely to cost less than Cisco’s despite offering equivalent quality and security features.

However, India—unlike the US, Western Europe, and the Asian countries like Singapore and Hong Kong—is unlikely to see any significant springing up of WLAN hot spots. This is largely because India has an insignificant laptop penetration. Also, the availability of hotspots is one thing, and using them to access the Internet is another. As such, hot spots that have come up or are likely to come up in the next one to two years are likely to remain more fad and less utility.

Ravi Shekhar Pandey