The former Spanish monopolist, through its Wireless unit, Iobox, has in fact announced the creation of a new service, within the next 12 months, inside the “Vier Jahreszeiten”, a prestigious Munich hotel which will enable users to surf the web four times faster than the service offered by Umts through their laptop or handheld Gps device. Mr. Max Grauert, one of the managers of a German subsidiary of Iobox, says,” We are well aware of the fact that WLAN [Wireless Local Area Network] technologies compete with Umts however, we prefer clients to utilize our services instead of the services of our competitors”.

Telefonica’s initiative is the first sign of recognition given by a large telephone operator to a technology, the 802.11b standard of Wireless Ethernet, (Wi-Fi), which, from its creation in November 1999, has been openly given credit to by large IT companies, by hardware producers or by a number of supporters of the open-source movement. Apple was the first company to launch a notebook with a port and a radio antenna for the 802.11b standard, (the Airport with a 45 meter range). Apple was then quickly followed by Toshiba, Dell, IBM, Compaq and in the near future Handspring, which has decided to integrate the Wi-Fi technology in its next generation of handheld Gps receivers, (at the expense of Bluetooth).

The simplicity of this technology, together with its low costs has convinced a giant like Microsoft to test the 802.11b standard, (which is already found in the new Windows XP), in a combined project with the Starbucks coffee shop chain. Indeed this project, will provide high-speed Internet access everywhere through a short-range radio antenna system. Indeed, this idea has been rapidly applied all over the States by companies such as MobileStar and Wayport in airports, sport stadiums and hotels. Furthermore, it has also inspired non commercial initiatives, like the proposal by Britain’s Consume.net: a movement which assures free Internet access at an 11 Mbit/s speed to all users, in a London suburb with radio antennas, who have a Wi-Fi card.

Faced with the high investments required so far for third generation mobile communications, and a 650 billion dollar debt, (100 billion dollars utilized to secure frequency spectrum in Europe), have led Merrill Lynch analysts to a fundamental conclusion in a recent report, (The 3G Squeeze, 23 May). The conclusion is that it is necessary to seek the killer application of next-generation Wireless Internet in the 802.11b standard. Making Internet, more portable than mobile, thanks to ever simpler, more secure technologies (based on the LAN Ethernet standard) which are already today faster than Umts in addition to being considerably cheaper and as a result offering greater revenue opportunities for operators. This has proved all too tempting for Telefonica (with a forecasted debt of over 10 billion Euros for the end of 2001). It cannot be ruled out that other operators will not soon follow its lead, especially those with even greater debt burden such as France Telecom, Deutsche Telekom and British Telecom.