Why does fee cost more than free to run? Scott Rafer wrote several days ago that it cost about $30 per day to run a for-fee hot spot, while a free hot spot cost $6 per day. I commented on his remarks, and he responded in the comments section.
In the last week, I've been interviewing hot spot operators for an article I'm working on, and Scott's comments came up a few times. Most of the operators were vaguely dismissive, pointing out that for most venues, even ones they operated, the cost were pretty minimal even when dividing out OSS (back end billing and authentication) across the system.
But it struck me that there's one key difference between most free and fee hot spots: a T-1 one. Many of the fee networks have decided a T-1 line is the basic level of service they want. Speakeasy Networks will sell you a T-1 for about $650 per month with unlimited bandwidth in many parts of the country. Other providers, with different assurances and network configurations, could charge much more. But evn at $650 per month, you've got to recoup $20 per day just to pay bandwidth.
Free hot spots are more likely to employ an inexpensive DSL or cable modem connection that can cost $50 to $100 per month, or more like a few bucks a day to recoup.
Until backhaul drops significantly, we'll probably continue to see that disparity. With low usage rates at hot spots, the big cost may remain high-quality backhaul. DSL has latency and reliability issues, even with good providers; T-1 typically doesn't.