Satellite service providers are moving into the booming market for wireless communications by offering satellite links for Wi-Fi (short for wireless fidelity) hot spots.

The market potential is substantial as Wi-Fi hot spots continue to pop up in coffee shops, office buildings and other public and private venues around the world. Indeed, both satellite and terrestrial providers are competing to offer the service.

“Just as satellite backhaul has helped expand the reach of mobile telephone networks, it can also expand Wi-Fi access,” said Andrea Maleter, technical director of the Bethesda, Md.-based market research firm Futron Corp. “Rural markets in developed countries, such as France, as well as those in less developed areas in Africa, are being brought across the digital divide because of such access. A particularly interesting satellite application emerging in the U.S. is to connect temporary Wi-Fi hot spots used for natural disaster relief and sporting events,” she said.

For example, SiriCOMM, a Joplin, Mo.-based broadband wireless software and network provider has found that satellite networking can work better than terrestrial lines to connect wide area Wi-Fi hot spot networks, said Hank Hoffman, the company’s president..

Hoffman said installing a nationwide network with terrestrial lines involves complexities that can include the use of multiple vendors, long lead times, and multiple points of contact for repairs.

SiriCOMM’s first strategic partner and value-added reseller is Pilot Travel Centers, which is providing an Internet portal for truckers with Wi-Fi hot spots at more than 250 truck stops. In addition, SiriCOMM also offers software solutions and a satellite network capable of transmitting data at up to 48 megabits per second.

When drivers or any other subscribers are in a hot spot, they have access to a proprietary network that can transmit application data, access the Internet and intranets, as well as send and receive e-mail. To enhance cost-effectiveness of its system, SiriCOMM designed its network around hot spot access locations that will be located strategically across the country.

“Wi-Fi hot spots provide an excellent avenue for satellite systems to provide broadband access even with traditional-distribution satellites,” said D.K. Sachdev, president of the Vienna, Va.-based consulting firm SpaceTel Consultancy. “If the hot spot is hosted at a location where DSL [Digital Subscriber Line] or T-1 access is already available, satellite access may not prevail in all cases. However, there are many locations just outside urban downtowns and business districts where Wi-Fi hot spots integrated with either traditional [Very Small Aperture Terminals] or satellite broadband terminals can be an attractive and often the only option.”

Satellites are best at serving niche markets, said LiChing Sung, the wireless industry analyst at the National Telecommunication Cooperative Association. As a Wi-Fi backhaul, satellite only is competitive in areas outside of urban centers, especially in sparsely populated rural areas, she explained.

Satellites should be competitive if the T-1 is used only for the hot spot, Sachdev said. Often the T-1 is shared between several users, he added.

“The Wi-Fi hotspot would only pay its share if it is one of many users of the T-1 line at a given hot spot location,” he said .

Satellites generally are more expensive to use as a provider of broadband services than terrestrial technologies. As a result, satellite technology typically would lose due to higher pricing when competing directly against DSL or fiber-optic cable in urban areas, said Leslie Klein, president of C-Com Systems, of Ottawa . The best role for satellites has been to provide broadband service to rural markets, where it does not face competition from terrestrial providers.

For example, the Direcway service operated by Hughes Network Systems is providing Internet access to 250,000 consumers and small businesses in nearly 26,000 zip codes that are underserved by cable and DSL, said Mike Cook, senior vice president at Hughes Network. Unlike cable and DSL, Direcway is not hamstrung by geography, he added.