The number of businesses investing in wi-fi hotspots . . .technology offering internet access to customers toting wireless-enabled laptops, PDAs, or handheld game consoles . . . has grown sharply over the last two years.

Research firm IReach estimates that by the end of this year there will be more than 1,000 wi-fi hotspots in Ireland, up from less than 700 last year.

The much-hyped technology is finally starting to take hold here and chief hotspot operators Eircom, BT and Bitbuzz have been rolling out the technology at a rapid clip.

Businesses ranging from coffee shop chains Itsabagel and Kylemore, to hoteliers such as Bewleys Hotels, now offer wireless internet access to customers as a matter of course. In common with many of their peers, those companies also offer wi-fi for free.

"A lot of our clients are leaning towards offering it for free. We need to be flexible and facilitate that, " said Shane Deasy, managing director of Bitbuzz. Bitbuzz manages over 100 hotspots around the country and counts the Clarence Hotel, Kylemore and the Irish Rugby Football Union among its customers.

Bitbuzz installs the technology and charges service fees, to manage the network, and usage fees. The hotspot users receive scratch cards with user IDs and passwords on them entitling them to surf the net for 20 minutes per voucher. The cards retail at 3 for 20 minutes but Bitbuzz supplies them to clients at a wholesale price.

Deasy said the decision on whether to sell the cards or give them away is up to its clients. Many choose to take the small hit on each card in the expectation that the free wi-fi will attract more business. Depending on the level of usage, a typical cafe could support a free hotspot for less than 200 a month.

Usage is on the up. Bitbuzz generates an average of five log-ins per hotspot each day, compared to 3.5 log-ins per hotspot this time last year.

Europe's largest hotspot operator, Swisscom Eurospot, generates three log-ins per hotspot across its network.

Itsabagel founder Domini Kemp, a recent convert to wifi, said the Dublin-based chain sees free internet as a customer service. "We felt it was a nice thing to give back to customers, " she said.

Kemp said usage of the service has been relatively slow over the first six months but said wi-fi was something Itsabagel could see as a big attraction in the near future.

"I think we'll be delighted in two years that we've done it, " she said.

Oisin Byrne of IReach said surveys it had conducted with wi-fi users supported Kemp's optimism. While wi-fi was initially used by professionals trying to do business on the fly-in locations such as airport lounges and hotel rooms, the number of leisure users is growing, he said.

The issue for wi-fi providers, though, is whether customers are willing to pay for the service. IReach's 2005 survey suggested less than one in five users, 16% of those surveyed, would be willing to pay to access a wi-fi hotspot.

Generating a return from wi-fi may hinge on additional services the providers can hook on to it. Byrne pointed to IFon, a Spanish wi-fi provider, which offers free wi-fi but takes revenue from advertising and music download services offered through its portal, the first site customers see when they log in through one of its hotspots.

Byrne said that the slow uptake in broadband internet services in Ireland could be a worrying portent for wifi providers like BitBuzz. "If they're not really willing to pay for it at home then they're not going to pay for it when they're out and about. It's going to be very hard for wifi providers to make money, " he said.