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« Verizon Broadband Subscribers Get Free Wi-Fi | Main | UWB Obituary Written »

May 1, 2009

Boingo Wireless Now $10 per Month

Boingo's unlimited North American hotspot access plan is now $10/mo: The hotspot aggregator has long offered access for $22/mo, often with 1 month free or $10/mo for three months promotion. Now, the price is simply $10/mo (a nickel shy to be precise, but I prefer round numbers). That number undercuts my long-standing argument that hotspot service would either be free or cost $20 per month. AT&T fulfilled the free part; Boingo and others were roughly around $20 per month.

Boingo has a huge advantage in cost containment on this $10/mo rate. After acquiring the Washington State Ferry system Wi-Fi operations from Parsons six months ago and then the Opti-Fi airports late last year, the company keeps costs in house for nearly every airport in North America with Wi-Fi (SFO and a few others excepted), as well as what I expect is relatively heavy use on the ferries, which carry many thousands of business commuters every day. (The WSF runs half the passenger ferry trips in the U.S., and a smaller but large number of car trips.) Airport sessions are likely the majority of Boingo usage, although I have nothing but intuition to back that up.

Because Boingo runs Wi-Fi at dozens of airports, this certainly gives them roaming network negotiation advantages with AT&T and others that want their home network users to have airport access. Of course, Boingo has to pay some session fee for the 10,000s of other N.A. hotspots included in this deal, but it would have to be pennies per use for it to work out on its balance sheet. (Boingo's global plan has a 2,000-minute limit at $59/mo.)

My argument for free or $20/mo was that once hotspot service was essentially ubiquitous--in nearly all hotels, cafes, airports, and so on--that networks would be vitally interested in having a large number of users to offset operational expenses.

In some cases, venues have chosen to go free. They decided that the process of extracting any money reduced the interest and excitement of a visitor or customer, and removing the friction produced a better relationship that meant more repeat business and/or higher per-person revenue. If a Best Western location can charge $79 per night instead of $69, or sells an extra room or two every few nights as a result of free Internet service, there's no real incremental cost.

Many second-tier airports--referring to traffic, not quality--such as Sacramento, Phoenix, and Las Vegas have gone for free, and some hotel chains are either all-free (mid-range, typically), or free to members of their usually free affinity clubs. Denver bucked the big-airport trend and has an ad deal with a firm that offers free, filtered Wi-Fi and downloadable movies.

Denver isn't competing for travelers, I wouldn't think--trains and driving aren't that appealing to the majority of cities someone might fly to from Denver. But second-tier airports are looking to stress their convenience and extra features, like cheaper parking, less congestion, free Internet, to get people to drive to them instead of a super-giant airport.

On the flip side, with a relatively low rate like $20–30/mo, business travelers (whether individuals or larger firms) can justify the expense in lieu of a 3G plan or as a complement to one depending on how much time a given person or employee spends on the road. Someone who bills $50 to $500 an hour can eat $20 or $30 for a month's access.

This pairs best with business venues that have opted to continue charging, and where walk-up rates are $4 to $12 per day. Many higher-end hotels are part of Boingo's aggregated footprint and charge significant fees each night.

Boingo's move to $10/mo certainly lowers the bar to ordinary consumers subscribing. While many free venues offer perfectly fine or superior service, and AT&T's free access to classes of subscribers is top-notch, I hear endless stories from people who find the up/down/no-one-around free Wi-Fi in a lot of establishments as too frustrating to use.

Myself, rather pecuniary, I finally succumbed and subscribed to Boingo several months ago when I realized I was spending more time trying to get connected in hotspots and making it work than getting work done. I also found myself passing through airports much more frequently than in the last several years--I've had four flights in the last year, which doesn't seem like a lot, but that's about 10 sessions in airports where having a connection I was already paying a fixed amount for made it easier to handle the trip.


Nice article Glenn, but I contest the notion of WiFi not being a cost to hotels. Properly implemented WiFi in every room can get very expensive. As an example, the MGM Grand in Vegas places an WiFi access point on EVERY room...and they have thousands of rooms. Swisscom Hospitality has cancelled contracts where revenue was low, such as Starbucks in Spain, due to the cost of maintaining a quality network. If you just hook a couple of Linksys routers off the hotel's DSL line, then it can be cheap, but don't expect quality out of it.

I said it was no incremental cost for hotels, not a cost at all. Hotels don't install Wi-Fi in rooms (or, still frequently, Ethernet in rooms, Wi-Fi in lobbies) because it loses them money. For fee Wi-Fi, it's easier to see whether Internet service has a net positive effect on its own or combined with more room nights, higher rates, etc.

For hotels that offer free Internet access, you can be that's undertaken as a specific competitive move that has a bottom-line result. Either they stop losing room nights to other hotels or having to discount more than they want; or they sell room nights on top of existing expectations and sell them at higher rates.

So the incremental cost and opportunity costs are issue.

As I tell everyone who claims that "airport Wi-Fi should be free because you just throw a few access points up, no big deal," of course it's expensive to install high-quality Wi-Fi. I never said it wasn't.

Expenses are balanced against revenue--and against costs of customer acquisition and loyalty.