Smart phones are making Wi-Fi hotspots hot again

Lisa Helminiak, who uses her iPhone as a computer as much as to talk, has declared her independence from the slow cell phone network. Instead of using AT&T's network, she's using her phone's Wi-Fi capability to connect to the Internet via speedier Wi-Fi hotspots.

"AT&T's 3G cell network is kind of plodding," said Helminiak, a partner in Minneapolis software company Azul 7. "When I get on Wi-Fi, it's definitely faster." That makes it more practical for her to view online maps and download iPhone apps, programs written specifically for the phones.

Helminiak is one of millions of smart phone users whose phones have both cellular and Wi-Fi capability. These dual-connection smart phone users are accelerating the growth in the number of Wi-Fi hotspots, which are wireless Internet access zones a few hundred feet across.

While there are a few big Wi-Fi hotspots, most are much smaller: at the airport, hotels, restaurants, coffee shops and corporate offices.

A recent report by research firm In-Stat of Scottsdale, Ariz., predicts the use of hotspots will be up 47 percent worldwide this year, driven largely by smart phone use.

The reason is speed. Cell phone networks typically can download data at a million bits per second -- or less -- over long distances. Wi-Fi hotspots use faster, short-range wireless links that are backed up by speedy wired Internet connections.

As a result, hotspots are typically several times faster than cellular, say iPhone users in the Minneapolis area. (Cellular companies say faster cell networks are on the way in the next couple of years.)

The cell phone companies aren't alarmed by the Wi-Fi trend, because it makes their phones more attractive and reduces congestion on the cell phone networks. (AT&T discourages iPhone users from downloading more than 10 megabytes at once via the cellular network.) AT&T was so convinced of the trend's importance that it acquired for-pay Wi-Fi hotspot provider Wayport in 2008.

"The cellular companies are a major driver of Wi-Fi growth," said Frank Dickson, research vice president for mobile Internet at In-Stat. "So we expect that more cell phones will have Wi-Fi."

This year 128 million cell phones with Wi-Fi were shipped worldwide, and in 2010 that will increase to 184 million, Dickson said. In response, the number of Wi-Fi hotspots worldwide is expected to grow 21 percent over the next year to 245,000, he said.

"Wi-Fi has gone from being in first-tier locations such as airports and first-class hotels, to second-tier places such as convention centers to third-tier locations that are less densely populated, such as small coffee shops, retail stores and malls," Dickson said.

Other smart phone users agree that hotspots are the way to go. Jamal Carlson of Minneapolis is always on the lookout for a Wi-Fi hotspot so he can connect his iPhone to the Internet at high speed.

"A lot of times you can't download songs on the spot unless you have a Wi-Fi connection," said Carlson, a supervisor in the treasurer's department at Fairview Health Services, a network of hospitals and clinics.

The spread of free Wi-Fi at restaurants, coffee shops and other retail locations also has spurred interest.

"If I can get free Wi-Fi, I grab it," said Hastings iPhone user Anthony Alongi, director for the dislocated worker program at the Minnesota Department of Employment and Economic Development, "because a Wi-Fi connection is superior to the cellular network in most instances."

While it's hard to prove cell phones are the reason, Wi-Fi use is up significantly at Caribou Coffee, which offers free access in its chain of coffee shops. There was a 15 percent increase in the number of times people logged in to Caribou Wi-Fi from June 2008 through November 2009 said Alfredo Martel, senior vice president of marketing for the Brooklyn Center-based chain.

Where people seek out Wi-Fi varies. Alongi uses it when it's free. Helminiak goes for secure networks.

Thad Gulden of Eden Prairie, Minn., who has an iPhone, says he uses Wi-Fi hotspots when he wants a better-quality video experience.

"The Internet browsing experience isn't very noticeably quicker on Wi-Fi, but YouTube videos load markedly faster," he said.