Wi-Fi To Hurt 3G Profits, Study Says

Increased competition from different types of wireless access will mean that wireless operators won't profit from deploying 3G networks as much as they had expected, according to a study released Wednesday by market research firm Strategy Analytics.

In particular, Wi-Fi hotspots, which are being aggressively priced and sometimes are offered free, will put a significant hit on 3G profits, the study says. The study said that as much as $12 in profits that cellular operators expected could be lost because of this trend.

"It is not only a question of lower cost alternatives for high-speed wireless access, but of more intense price competition for an expanding number of operators," Harvey Cohen, Strategy Analytics' president, said in a statement. "Operators, including Verizon, Cingular/AT&T, and Sprint/Nextel will make more than $100 billion in investments into advanced wireless capabilities over the next four years, but the returns may not be as high as initially expected due to the growing intensity of competitive forces."

On the positive side, lower prices will stimulate demand, although probably not enough to please wireless operators, Cohen said.