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« Apartment Building Offers Free But Not Permitted Wi-Fi to Residents | Main | Wi-Pics Connects Digital Cameras to Wi-Fi Networks »

May 19, 2004

Which Hotspot Networks Still Stand?

With the slow rundown of Cometa's clock starting today, which companies remain standing?: I do have a little ego, and my article in Feb. 2001 in The New York Times was the first comprehensive piece written in a major publication about the nascent Wi-Fi hotspot industry. Several companies were striving to raise funds into the mouth of the dotcom collapse, which claimed bloated business plans or too early attempts to capitalize on a technology that only a small number of laptop users had access to.

While researching the story in Dec. 2000, I spoke to the chief marketing officer of the Aerzone division of Softnet. Three days after I spoke to him, Softnet pulled the plug because they couldn't raise the funds to perform the build out that they'd contracted with airlines and airports to handle.

The firms I interviewed for the article were Wayport, Surf and Sip, Global Digital Media, AirWave, SkyLink (not quoted), and MobileStar. Let's start in reverse order. What's clear from examining each of these firms is that execution and timing mattered as much in 2001 as they do today: controlling costs and building out a robust network in the right place can only go so far: users who pay are still required.

MobileStar: While initially well funded, MobileStar had extremely high run rates. I's technical standards were top notch, but expensive, and expenses ran far ahead of any potential revenue. They went bankrupt late in 2001 and had their assets purchased by T-Mobile HotSpot. The company reportedly went through as much as $90 million in investment income while producing no more than a couple million in revenue. T-Mobile has continued to use its brand name and high-level partnerships to run what is generally considered to be an excellent network that's overprice for day use, but not far out of scale on their unlimited monthly plans with one-year commitment.

Sky.Link Internet Plus: A promising Canadian firm with hotel and airports service, the company disappeared abruptly a few months after my article came out. It resurfaced briefly with fewer locations before taking a final plunge. Its history and disappearance are a mystery.

AirWave: AirWave was a small San Francisco Bay Area set of hotspots in restaurants and coffeeshops that decided that the software they'd written to manage access points was a better product than the hotspot business. In 2002, they exited hotspots, spinning off their locations to WiFi Metro, which had the same investors as hereUare. (WiFi Metro and hereUare were sold to Ikano, which operates a truly bizarre set of locations as Hotspotzz, including KOA campgrounds, a few Subway restaurants in Washington state, and hotels in Montreal. Hotspotzz also has the most egregious press release announcements in the industry.) AirWave is apparently thriving selling access point management software that allows heterogenous installations of gear from many manufacturers to be managed centrally through a single piece of software. (Sputnik, like AirWave, dropped out of hotspots long ago and moved into developing a software and firmware platform for managing access points across a network.)

Global Digital Media: With a strong and nimble presence, GDM had Wi-Fi kiosks and service in Philadelphia and Boston airports, and a contract in hand to use CNN's airport news service coax cable to bring in more service to dozens of additional airports. They seemed poised to become a dominant airport provider. Then, they disappeared without a trace in mid-2001, probably unable to raise additional funds.

Surf and Sip: Scrappy Rick Ehrlinspiel seemed like a go-getter when I met him in Dec. 2000, and he's still scrappy, though tired, after four years of traveling the world and building out several hundred Surf and Sip locations in places as varied as his home base of San Francisco and as far-flung as the Czech Republic and Poland. Rick has consistently maintained that the privately held firm turns locations profitable within months, and has the cash to continue self-funding its rollout. Rick has aggressively offered bilateral fee-free roaming deals with other networks, such as Canada's FatPort, to extend Surf and Sip's reach.

Wayport: Let's leave the best for last. Wayport was founded to put Ethernet into hotel rooms, and still derives most of its revenue from that business. But it's changing. With 12,000 McDonald's under contract to get Wi-Fi service, thousands of UPS Store locations that they'll operate for SBC as a managed services provider, and a network of hotels and airports that will top 1,000 this year, Wayport is the last brand standing. Wayport has raised as much as $100 million in funding across its five-plus years in business.

Other apparently thriving hotspot operators and aggregators -- apparently because most are privately held -- include STSN, which started with Marriott hotels and now has 1,900 locations built or under contract; FatPort, with a platform they resell and hotspots they operate across Canada; Boingo Wireless, reselling its software to business service divisions and end users for aggregating hotspot access; and iPass, with aggregated worldwide access to dial-up, broadband, and Wi-Fi service. GRIC is also an aggregator along the same lines as iPass, but with fewer Wi-Fi locations.

AirPath and NetNearU continue to sell their platform and network service which allows individual locations to enable for-fee service and network resellers to build hotspot operations and tie them together through their respective authentication and billing systems. Even more platforms, roaming enablers, and networks exist outside the U.S., in numbers that grow daily.

Other failures include most recently Cometa and Toshiba, both of which lost out in the McDonald's trials to Wayport; and Joltage, which had a strange grassroots plan.

I had thought SOHOWireless was in this category, but they said via email despite the 2001 copyright date on their page listing a handful of locations (which are described as "initial locations" this many years later) that they're still kicking and are working hard on the next release of their LANRoamer 2 software platform.