Wireless local loop (WLL) and hotspot infrastructure is set to explode in Australia, according to Australian telecommunications analyst firm Telsyte.

Shara Evans, Telsyte managing director, said Telstra was poised to become the dominant force in the hotspot market with its plan to install hotspots on cellular infrastructure (the infrastructure that supports Telstra's various networks such as GSM or CDMA). This move is expected to add more than 1,000 locations to Telstra's existing sites. This will also give the telco giant more than double the current number of its nearest competitor, Azure Wireless.

Evan believes that although Telstra's move will present a competitive threat to the ten other hotspot infrastructure owners, the high cost of the hotspot access will mean that WLL services are under less pressure.

"Telstra's hotspot service, for example, has a charge of AU$5 for the first 15 minutes and 20c per minute thereafter, meaning users pay AU$12 per hour for their connection," she said.

Evans said that WLL services in Australia -- either using WiFi as the access medium or the iBurst or Unwired networks -- are pricing themselves to compete with ADSL services. She said that the service providers' current prices, plan speeds, and download limits are reflecting those of the ADSL market.

"Our research shows that WLL services are now price-competitive with ADSL services on a plan-for-plan basis," she said.

Evans said an ADSL user on a 512 Kbps/128 Kbps, 3 GB per month plan would pay around AU$89 per month, while the same user on a WLL service would pay AU$64 per month.

"In that context, the Unwired plans announced this week, which offer 512 Kbps/128 Kbps with 12 GB for AU$90 per month, are highly competitive with prices throughout the industry," Evans said.

However, Evans is warning heavy users that prices at the 20 GB and 30 GB per month might exceed AU$4,000 per month for some services.

"If you think you're going to be a heavy user of a wireless service, make sure the plan you choose supports your usage patterns," Evans said.

Telsyte has also found that Australia's 25 WLL infrastructure owners are favouring regional locations for their service launches, with New South Wales and Queensland leading the way.

"Research for our forthcoming Wireless Industry Profile 2005 shows a huge growth in the number of services launched in the last year, and most of these are favouring point-to-point WiFi services," Evans said.

Evans said infrastructure owners who are putting up infrastructure for the first time are opting for regional areas.

"Regional service providers have clearly voted for WiFi as the way to reach beyond the limits of the Telstra ADSL network. Counting both infrastructure owners and resellers, there are around 60 WiFi-based WLL services in Australia, many of them in regional areas," she said.

"One of the drivers is that some of the organisations may be funded wholly or partly by local communities and local business people who determine that there is a good market for wireless broadband in their community and is not being serviced by others," Evans said.

She added that many of the areas starting to be served by wireless service providers either did not have any other broadband options or had a very limited range of services to choose from.

"Smaller community-based infrastructures are based on the community's need for a broadband service and there is an opportunity to provide services cost effectively using wireless technology. There is a demand in regional areas that is not otherwise met so the community is saying 'no one else seems to be doing it so let's do it ourselves", Evans said.

She believes that community-based and local business-based service providers will have a "very good chance" as future players in their markets.

"As other providers come into the area, they would certainly face more competition. But the strong links in regional communities will give them staying power," Evans said.

As for ADSL versus wireless broadband, Evans said that so far there is no indication of "one technology eating the other". However, she said service providers must be vigilant in watching the pricing and type of speed being offered in the market especially with the expected entry of WiMax in Australia.

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