Strong consumer demand for internet access via wireless hotspots is set to cannibalise the projected growth of third-generation (3G) services, analysts warned yesterday.

In its report, The Market for WiFi HotSpots: Consumer Behaviors and Relationship with 3G, telecoms consultant ForceNine Consulting predicted: "Diffusion of WiFi hotspots may cannibalise the growth of 3G cellular services, while creating new service opportunities for [mobile] carriers"

ForceNine said demand for wireless access is highly price-sensitive. And while demand for the technology was found to be quite strong for consumers of all ages, it was skewing towards males and business travellers.

"The telecoms industry has been in a tailspin over the last 24 months, and WiFi is seen as a bright spot to many service providers and technology investors looking for new avenues for revenue generation, both in the near and long term," said Andrew Roscoe, partner with ForceNine Consulting.

"While WiFi holds a great deal of promise, it is also one of the most misunderstood segments of the broadband wireless market."