Telus Corp. of Vancouver has acquired the portion of Toronto-based wireless hotspot operator Spotnik Mobile Inc. that it did not already own. The deal is fresh evidence that major

telecommunications carriers see Wi-Fi as an important complement to third-generation cellular networks, and may indicate a growing dominance of the hotspot business by mobile carriers.

Spotnik, with operations concentrated in Ontario, will be integrated into Telus Mobility, which has hotspots of its own in other parts of the country, Telus Mobility spokesman Mark Langton said.

Michael Rozender, president of Rozender Consultants International in Oakville, Ont., said the acquisition was consistent with Telus’s approach of growth by acquisition. “That’s what they did when they bought ClearNet,” he said. And he said the move is further evidence Canada’s major mobile carriers are interested in Wi-Fi.

Telus rival Bell Canada operates a number of hotspots under the AccessZone brand. In March, Telus, Bell, Rogers Wireless Communications Inc. and Microcell Solutions Inc. announced plans to create a common brand identifier for Wi-Fi hotspots in Canada and support roaming among their hotspots. Rogers and Microcell are not yet active in the hotspot business, Rozender noted, but “the important thing is that all the carriers today are recognizing that Wi-Fi and perhaps WiMax in the future is going to be a key offering.”

“Wi-Fi is becoming increasingly a carrier-driven business,” said Langton.

Rozender said it is possible Rogers, and Microcell if Telus does not succeed with its current takeover bid for the Montreal company, will choose to enter the hotspot market with acquisitions of their own. Vancouver-based Fatport Corp. and Ottawa-based Boldstreet Inc. would be likely targets, he added.

The move to true third-generation cellular networks offering broadband data rates has been slower than expected, and some believe hotspot growth has been stronger because of this. “Wi-Fi’s popularity was I think a by-product of the wireless industry over-promising and under-delivering 3G,” said Jeffrey Kagan, a telecommunications industry commentator in Atlanta. “If they rolled out 3G earlier, I don’t think Wi-Fi would have been this big, pervasive technology.”

Rozender said carriers now view hotspots as a complement to their 3G plans. “I think the smart money right now says bet on both ponies,” he said.

Telus Ventures invested $6 million in the startup Spotnik in 2002, acquiring equity in the company. That stake was “a significant portion, I wouldn’t say the majority,” Langton said. Telus would not comment further on the cost of the acquisition or the amount of equity it already had in Spotnik.

Murray McCaig, co-chief executive of Spotnik, referred inquiries to Telus, saying “Telus wants to keep a pretty tight lid on this.”

Rozender suggested Spotnik needed a further cash infusion and Telus management concluded that if their company was to put more money in, it might as well own Spotnik outright.

Langton said Telus Mobility plans to integrate Spotnik into its operations, keeping the Telus Mobility brand for its hotspot business. Between them the companies have several hundred hotspots today, he said. “I think that puts us in the lead in terms of number of hotspots.”

There should be jobs for most if not all Spotnik employees at Telus Mobility or the corporate parent, Langton said. “This was a small company and it employed a fair number of consultants,” he said. “We’re a growth business.”

Comment: info@itbusiness.ca

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