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« Free BBC Online via The Cloud | Main | Wee-Fi: Nokia's New Tablet; City Pays $10 for Network »

October 17, 2007

Boingo for Nokia and the State of Boingo

Boingo announced that their compact Boingo Mobile client is now available for Nokia phones, tablets: The software, available now for E60 phones and handhelds like the N95 and in November for the N800 tablet, connects the devices to Boingo's worldwide network of tens of thousands of hotspots for $7.95 per month. The price includes Wi-Fi voice calls and Wi-Fi data used on these hotspots. As with the Devicescape deal announced last week, this doesn't put the software on the phones, but makes it simple for the Boingo-developed software to be found and installed on supported Nokia devices. (Boingo's laptop-enabled network has 100,000 hotspot; the mobile-enabled locations and pricing model requires more work and negotiation with operators as Boingo continues to build the mobile footprint.)

Christian Gunning, Boingo's head of marketing, said that while Nokia's S60 and N Series phones weren't well known in the U.S., that they were "widely available and widely successful" elsewhere. Subscribers typically pay the full cost for phones in Europe, and users aren't limited as to what they install on them. That means that VoIP over Wi-Fi isn't an unusual application, and Boingo can enable that by providing the network at a predictable monthly cost. The deal also allows Nokia's multimedia phones and tablets to access streaming and downloadable media over Wi-Fi at a much lower cost than with comparable laptop-oriented Wi-Fi deals, including Boingo's own U.S. and international unlimited plans ($22 and $39, respectively).

While Boingo put part of its software suite into open source licensing to allow their service to be ported to platforms that they wouldn't themselves have spent the time to develop under, the Nokia deal was in cooperation with the Finnish handset giant. In contrast, Belkin developed their Boingo add-on for the Skype phone they released last year on their own, and contracted with Boingo to allow retail Boingo customers to gain access to the aggregated network. (Manufacturers can choose to contract for users and keep part of the fees, but that requires minimum monthly fees paid to Boingo.)

I took the opportunity to talk to Gunning about the company's current strategy. Founded in 2001, they've been pursuing their aggregated network approach for nearly six years; I first wrote about them in Dec. 2001.

Gunning said that to ensure quality on their increasingly large and non-U.S. aggregated network, they contracted with a third party, Lionbridge to handle not just localization--customizing their applications and Web sites for other languages and countries--but also worldwide testing. "We contract with them literally to jump on planes and go from country to country to country with laptops and handheld devices and do quality testing on major networks around the world," Gunning said.

Boingo tried to handle this in house and on an ad hoc basis, but they couldn't achieve the level of quality from the platform partners, Gunning said. As I have explained to the many people over the years who have asked me how Boingo made money selling subscriptions at retail, Boingo is the private-label backend or hotspot component for products sold by Fiberlink, Verizon Business, and most recently, Alltel.

Through this testing, Gunning said that Boingo was able to help its hotspot partners to achieve better results, but also that they were able to remove a handful of locations from their directories that they couldn't guarantee consistent performance on. "We can monitor if there's a specific SSID or a specific venue ID that's consistently failing," said Gunning.

Because Boingo has been in a position to work with networks worldwide to improve their consistency, I asked Gunning where 802.1X--a standard network authentication method widely supported for enterprises--stood in terms of hotspots. "802.1X in hotspots would be a phenomenal boom for the end user in terms of security and safety," he said, but besides a handful of networks like KT in South Korea (which requires it), and T-Mobile (not a Boingo network partner outside its airports), and iBahn, there's not much uptake.

What Gunning did note, however, is that the Wireless Internet Service Provider (wISPr) standard developed at the Wi-Fi Alliance (and seemingly not available on their site) has proved an effective set of guidelines for hotspot operators in providing at least a basic level of compatibility. Boingo had to build dozens of authentication scripts in their early days, but now can use one of about five scripts that work with popular interpretations of the wISPr guidelines. (It's not a certified, tested standard, but a set of basic recommendations.)

On the financial front, Boingo remains privately held and close lipped. Gunning noted that Deloitte & Touche had recently given noted that Boingo was the No. 2 company in the Los Angeles area for growth over a five-year period. This gives us a glimpse into their revenue, as firms must have had over $50,000 in yearly revenue in 2002, and over $5m in annual revenue in 2006. The accounting firm privately checks out a firm's books to determine revenues and other factors.

Boingo was reported as having a 13,398-percent growth over that period, which means that assuming at least $50,000 in 2002, they have nearly $7m in revenue by 2007. It's more likely that they had over $50,000 revenue in 2002, and thus are probably above the $20m range now, including Concourse Communications revenue. That would represent something like a few tens of thousands of regular subscriptions and some hundreds of thousands of one-off purchases at airports. While Gunning wouldn't confirm a precise amount, he stated that it is well above that mark. Gunning also said that "we are cash flow positive; we have a sustainable business."

I noted Concourse just a moment ago, a 2006 acquisition by Boingo of an airport Wi-Fi provider and cellular network equipment operator. Concourse has agreements for service for a large percentage of the major airports in the U.S., including Detroit, Minneapolis, O'Hare, and Midway in the midwest, Atlanta, Houston, Memphis, and Nasvhille in the south, and JFK, Newark, and LaGuardia in the northeast. (On the cellular side, cellular operators contract with a central network builder - sometimes a cell operator, sometimes a third party like Concourse - which in turn pays fees to the airport authority.)

Gunning said that the acquisition was a way for Boingo to expand its retail identity while also gaining chits that would allow it to expand its networks. He noted that some unique network deals that the company assembled required reciprocal roaming: Boingo could include these networks in their aggregated footprint by also extending access to those operators' subscribers when they roamed to Concourse-managed airports. This has given Boingo some exclusivity over competing hotspot network components offered by firms like iPass.

Related to that, I asked Gunning if the evil twin problem at O'Hare and elsewhere was true or overblown. In this scenario, travelers see a network name called "Free Wi-Fi" or a variant when they check on available Wi-Fi. Some security researchers have checked and seen that these are ad hoc networks. Gunning confirmed that there is a virus or viruses in the wild that are tailored to advertise an ad hoc network, and then transmit various payloads, such as spam zombie software or other keyloggers, to any vulnerable computer that connects. It also "turns your machine into a free Wi-Fi hotspot broadcasting ad hoc machine to spread the virus," further propagating itself.

It's been interesting to follow the model that Boingo founder (and EarthLink founder) Sky Dayton promulgated back in 2001, that the goal was to fill pipes, not to build networks. Dayton saw a distinct difference between the two tasks, an unpopular view at the time as companies were started that tried to pursue retail brands for their particular small number of hotspots. While T-Mobile and a few other companies do still have a strong retail Wi-Fi association, frequent business travelers have tended to move towards a subscription model with whatever the best and most well traveled set of hotspots they have can cover, whether AT&T WiFi, T-Mobile, Boingo, iPass, or others.

Gunning echoed Dayton's words when he spoke about how the company views itself: "We're all about being a big, fat dumb pipe to do whatever you want."