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« Intel Will Add Wi-Fi Back into Pentium 4 Chipset in 2005 | Main | England to Get 802.16 Network »

November 3, 2004

By Day, He Builds For-Fee Networks; By Night, Free

You see him here, you see him there, you see him Wi-Fi everywhere: Nigel Ballard is Portland's Wi-Fi king: Nigel doesn't offer service himself, but he's behind or beside--with many other volunteers--the most public and popular free Wi-Fi installations in Portland, Oregon. He's also a commercial Wi-Fi guy at his day job, in which capacity he installs service at resorts, golf courses, marinas, and, yes, hotels and motels. Captive venues, let's say.

Nigel wrote this linked analysis at the always interesting He notes that truly captive hotspots can charge $10 a day (or more, I've found). They have their audience where they want them, and unless they're non-exclusive--like having a choice of similarly priced hotels--they don't have competition for those spaces. (Well, not yet anyway: as 3G spreads, people may opt to spend $20 to $80 per month for unlimited 100 to 400 Kbps service instead of $10 per day for captive higher-speed access. Depends on the applications.)

For more competitive locations, like coffeeshops, Nigel argues it's a race to the bottom to charge nothing for service. And he has numbers and years of service to prove his contention. Personal Telco Project (PTP) gets a venue set up for about $60: they buy a router and use a donated PC that Personal Telco has rehabilitated. The folks at PTP recommend business DSL, about $45 a month, which gets around the shared-access issue.

Nigel also makes a good case for why T-Mobile's plan of unwiring Starbucks makes sense: ubiquity and consistency. This is a message I've put out for years, too. If you need high-speed--there's a T-1 in each location--and you want an almost certain chance the service will work and be available in many places wherever you travel, T-Mobile is the service for you.

But Nigel addresses the PTP "customer": just want a good cup of joe, a comfy chair and free access to a Wi-Fi node, then the community model may well serve you and your wallet better.

From the financial angle of the venue, Nigel points to World Cup Coffee's experience in trying to charge for Wi-Fi with Toshiba SurfHere's service. They lost customers to PTP nodes nearby. Turning off SurfHere had results he doesn't report--they're obviously happier--but they only had a handful of customers pay for service off months of having it on a fee basis.

Wading into more challenging waters, Nigel points to SBC's $1.99 per month unlimited FreedomLink Wi-Fi hotspot service that SBC introduced recently to SBC DSL customers. I believe he's incorrect about the billing and customer service costs: this is incremental to the existing overhead of servicing DSL customers, which already pays the associated expense for those factors. $1.99 is just more revenue.

Nigel wonders where this rate leaves Wayport, T-Mobile, and Boingo. In pretty good condition, I'd wager. Wayport has already turned their ship, moving from per-session fees to per-month-per-location fees. If an aggregator wants to roam onto McDonald's or, soon, Hertz locations operated by Wayport, that aggregators pays a fixed amount per month for access to those locations. They don't have to recover a per-usage fee, which means that they're free to offer it, as SBC is, to millions of customers without increasing their cost basis.

Wayport will eventually try to shift all of its contracted hotspots to the Wi-Fi World model, they said months ago, and they'll have the SBC usage data to show hotels and airports why it makes sense. Airports might be hard to convince because they're truly captive outside of cellular. (And they make money by charging cell operators to have good reception in the airport terminals.)

T-Mobile still has the factor of ubiquity now coupled with a greater international presence. Wi-Fi is not racing to free outside the U.S., and that's part of T-Mobile's worldwide advantage. Because T-Mobile just added 802.1X authentication, that gives them an additional leg up: T-1, business-grade security, high reliability, and per-user unique encryption over the local link. It's an IT person's dream, and at $20 per month unlimited use or per-session resale through iPass, it's not a sufficiently high bar to cross for road warriors and their companies' expense-approving managers.

Boingo Wireless is only nominally a customer-facing service, and until free is really ubiquitous, Boingo's client software is the best thing out there. At some point, SBC's portfolio of hotspots might be better than Boingo's, but Boingo might also be reselling SBC and Wayport Wi-Fi World locations when that point would be reached. At $22 per month for unlimited usage worldwide (for virtually all locations), Boingo is probably the best bet for an international traveler visiting countries that they serve. Boingo feeds out Wayport, which gives you inclusive access at many hotels and airports, too. Again, not a hard decision. In any case, Boingo has a large business building private-label and back-end software, so it's unclear if long-term their strategy is offer a retail price and retail brand.

I agree entirely with Nigel that free is making huge inroads, and most spectacularly in the hotel industry which I would find surprising if, outside of certain independent or boutique properties, breaks Internet service out as a separate fee within a year or two. Some hotels will definitely continue to try to charge, but as the majority of them offer free Internet and free Wi-Fi, the number crunchers will find that unless they try to compete solely on room rate, they can't make it work.

Wayport's Dan Lowden told me Monday that certain Wayport hotel properties now see 25 percent of guests using Internet service in a given night. Wayport operates both fee and free properties, including the Wyndham chain which offers free Internet to members of their no-cost guest club. Even if the highest usage is at Wyndham, it still shows that the Internet is a service that's being used at hotels, and thus the race to free is certainly going to continue there.


I feel the race to free wifi at hotels and motels has already happened. Paid wifi or ethernet access at motels is less then 5% in my area now. Airports will not change unless individual business franchises in the airport can open up their own free AP hotspot. Seems there was a FCC decision that would open that possibility up, but maybe the airport rules and lease contracts prohibit that activity. I know that I do not pay for wifi at a airport. Usually the wait is only an hour or two, and then I will be in my free wifi hotel anyway! g

There is also a growing number of small businesses that are simply installing wireless routers and offering access for free.

802.1x at Starbucks is nice for added security but a VPN connection can work almost anywhere and is just as secure. There's also

I don't think a T1 makes a difference to users when you can get a reliable 6Mb DSL connection for a fraction of the cost.

We also work with businesses to provide managed Internet access and in many cases it's free.

The norm is going to be free everywhere and for the few places that still charge for access, there will be enough RF in the air to pick up a good signal.


Excellent submission. I've been saying for the past year that WISPs can offer an effective hotspot/hotzone campaign if they consider providing free access to end-users but charge the venues for the service which could range from an entire turnkey application to just providing a simple unit. There's money to be made in the "free" model, believe it or not, as it seems that users aren't willing to pay for the service but that venues are if it can increase traffic and, ultimately, customer purchases.

Thx much!

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