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« Hot Spots Graph | Main | "New" Attack? Hardly »

August 8, 2003

Fee Free Wi-Fi Fumbling

Wireless thinkers weigh in on when a venue can charge for Wi-Fi or offer it for free: Two of my favorite wireless Web writers offer their opinions with some back and forth on when a venue should consider charging for Wi-Fi access and when to go free. Mike Masnick opines here and then Alan Reiter speaks out.

Here's my brain teaser. If you believe folks like John Yunker, and I do, most hotels with broadband won't charge for it within a few years. Most airports, I argue, will charge for Wi-Fi indefinitely -- unless the cell data pricing changes dramatically and speeds increase.

So puzzle this: if you're a traveler and you know that in any given month you might have to pay fixed daily amounts for Wi-Fi, even though you might also have plenty of other opportunities to use it for free, would you pay a fixed $20 per month for unlimited service at 20,000 locations (including most airports and hotels) across the U.S. to mitigate any possible marginal expense? Between now and a few years from now the majority of business locations will continue to charge, too, making that $20 per month more than a marginal savings.

My contradictory conclusion is that while Wi-Fi will become increasingly free, so, too, will subscribers grow at that not-so-hypothetical $20/month rate that T-Mobile currently offers to its cell subscribers and Boingo Wireless ($21.95) is offering via a 12-month promotion.

Here's where I get slippery. The more subscribers and the more usage, the less venues will receive per user. A hotel with 200 people using their broadband/Wi-Fi network each night might only split, say, $50 to $100 with a hot spot operator, if that. Maybe slightly higher if even a few people purchase $5 or $10 one-day connections.

The venue thus sees a marginal return on charging and would probably be bearing the cost of some of the infrastructure. Thus, spending a small amount per user paid as a fee to the hot spot operator and not charging could be cheaper.

A hot spot operator who might receive even $25 to $50 per day from a hotel could profitably operate that venue for free; or, for a little higher, for a fee (the extra cost is in authentication, billing, and customer service for billing).

That's the whole contradiction. At a point when 10,000,000 users roam with $20/month Wi-Fi accounts, the actual payments for site usage become so small for each connection as to only provide a marginal return on investment rather than a real revenue source. A traveler like myself might burn through 50 connections (even if it's five minutes in an airport) across amonth; how do you split $20 less overhead and profit among all those venues?

Venues have to turn more and more to justifying Wi-Fi as an infrastructure and IT cost that also brings in more customers instead of as a revenue generator.

In my view, then, it doesn't precisely matter whether venues charge or not, because people will subscribe to avoid unpredictable rates in the minority of places that they need access and don't have an option for. With cell data rates remaining low and fees remaining high, $20 per month is also a marginal rate to pay to get high-speed access in those for-fee venues.


I am doing the $20 a month at T-Mobile, I am a T-Mobile cell customer, so it is drop dead simple. Works great, and is what I want. Paying someone else something else is not going to work for me.

Too many Starbucks, Borders in my paths, and my Treo 270 allows me to get a lot of stuff to my phone.

I am also optimistic that the Packet8 stuff works so that when I am in say a hotel with the $9.95 per night per room, I recover on the phone what I spend on the bandwidth...

I'm a manager of a local Family Sports Cafe, Cafe Hot Wing in Jonesboro, GA. We just launched our Free Wi-Fi service for our customers with wireless-ready laptops. We, however, charge a 1-time $20 setup fee for each laptop access request. We're doing this as a good faith measure to keep "stragglers" from having us program them in to use the system only once (basically, as a 1-time "frequent customer" setup charge).

We already had DSL in the office, and were just using it to do our own personal surfing. Now, however, we have set up a D-Link DI-614+ wireless router over the bar as a gateway through the "private network" to the DSL modem; and added 2 D-Link DWL-900AP+ Access Points configured as repeaters for the DI-614; placed in strategic locations in the dining room to provide a good strong signal no matter where one sits. The router's DHCP Server is enabled; however, we set it up with MAC Address filtering, so only the MAC Addresses that we program into it are authorized internet access. That provides security that "Cyber Cafe" software would not provide, while at the same time offers ease of setup; and the customer's computer is set up for DHCP.

While we would have continued paying for DSL anyway, we have effectively added a useful service for our customers now at a cost of less than $300 in equipment. The added business that we expect to see as a result will more than pay for the equipment in no time, as well as offset the cost of the DSL in the long run.

We hope that other businesses will begin to follow suit, remembering that the average "wireless junkie" would sooner drive an extra mile or so to go to a business that offers Wi-Fi over one that doesn't.

It's interesting how most folks seem to believe that hotels will stop or won't charge for Wi-Fi when many still charge for local phone calls. I think that the mix of a captive audience, access to laptops and available/disposable time make hotel rooms prime candidates for paying Wi-Fi.