Mobile Hotspots Hit the $500M Big-Time

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Mobile hotspots, devices that share a mobile broadband connection with other devices, will generate $500 million in revenue this year, according to a report by In-stat. The revenue is a combination of the sale of devices that can serve as hotspots and the fees that networks charge for the service. Mobile hotspots have grown in popularity since the appearance of the Verizon (s vz) MiFi, and as smartphones have integrated the ability to share connectivity, the carriers have been raking in the monthly fees.

Mobile hotspots were initially confined to standalone devices like the MiFi and the Sprint (s s) Overdrive, which were designed to share 3G (HSPA, EVDO) and 4G (WiMAX) connections respectively. Carriers realized that a barrier to consumer adoption of hotspot technology, and the fees they enabled, were the cost and inconvenience of carrying a separate device for the capability. Smartphones began appearing with mobile hotspot integration, and adoption ratcheted up quickly.

Carriers charge up to $30 per month for smartphone mobile hotspot service, and up to $60 per month for standalone devices. This fee is on top of all other carrier fees associated with the devices, and is a windfall for carriers. As faster networks roll out this year and next, mobile hotspot service could be fast enough to start infringing on home connection options. This could see revenue skyrocket, as customers realize they can take their fast broadband with them everywhere.

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The barriers have ALWAYS been the restrictive caps carriers have imposed along with the exorbitant prices. Fortunately, Virgin Mobile changed that landscape with it’s prepaid model.

There’s no way you’re going to take advantage of the capabilities of a mobile hotspot if it’s costing you $70/month, you’re stuck in a 2-year contract, and can only use a pathetic 5GB each month.

That said, I’m looking forward to Clearwire’s 4G service lighting up my city soon. $99 for the Clear Spot 4G makes it cheaper than the MiFi, and only a couple bucks more per month than what I pay now for 3G.

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