Arun Chatterjee, CTO and co-founder of LESSNetworks, analyzed the numbers coming out of Deutsche Telekom and T-Mobile HotSpot to estimate the subscriber base: Arun and I went back and forth refining his model, and here's some good logic from him:
At the end of 2003, T-Mobile had approximately 29,000 monthly subscribers. Here's how.
At various times, the following figures have been reported by T-Mobile: - 2,000 locations in Jan 2003 - 4,200 locations in Dec 2003 - $400k gross/mo in Jan 2003 - $1.4M gross/mo in Dec 2003 - 67 percent of T-Mobile's users are on subscription plans
Starbucks, in April 2003, reported that it had 25,000 sessions/week.
I am assuming that the average T-Mobile monthly Wi-Fi subscriber pays $25/mo, and the average T-Mobile non-monthly user pays $9/session.
Here's the math:
1. Assuming linear growth, if there were 2,000 locations in Jan of 2003 and 4,200 locations in Dec of 2003, there were (4,200 loc -2,000 loc)*4mo/12mo + 2,000 loc = 2,733 locations in April 2003.
2. Revenue per location per month went up from ($400k/2,000 loc) = $200 per loc per month in Jan of 2003 to ($1.4M/4,200 loc) = $333 per loc per month in Dec of 2003. Assuming linear growth, per location revenue grew at ($333/$200) = 1.67 times in 12 months, or increased by (1.67-1)/12 mo = 0.056 per month. By extrapolating, by April of 2003, per location revenue had grown to (1 + (0.056 per mo *4 mo)) = 1.22 times revenue per loc per month from Jan.
3. Usage per location per day at Starbucks in April 2003 was (25,000 sessions per week/7 days per week)/2,733 loc = 1.3 sessions per day per loc. Assume that usage statistics at Starbucks reflected usage at all T-Mobile locations at that time.
4. Assuming per location usage growth to be proportional to per location revenue growth, by Dec of 2003, there were (1.3 sessions/1.22)*1.67 = 1.78 sessions per location per day.
5. 67% of the sessions were by monthly subscribers. That leaves (1.78 sessions per loc per day * 33%) = 0.59 sessions per location per day by non-monthly users by year end.
6. Revenue by year end from non-monthly users is: (0.59 session per loc per day * 4,200 loc * $9 per session * 30 days) = $674,932 revenue per month from non-monthly users.
7. That leaves ($1.4M - $674,932) = $725,067 from monthly subscribers per month by year end.
8. Using $25/month per subscriber, that translates to ($725,067 per month /$25 per month per subscriber) = 29,002 subscribers.
9. Further, each monthly subscriber used the service on average (1.78 sessions per loc per day * 67% * 4,200 loc * 30 days per month / 29,002 subscribers) = 5.18 times per month.