Bay Area metro-scale wireless ISP MetroFi drops charges: MetroFi offers Wi-Fi-based service across Cupertino, Sunnyvale, and Santa Clara. Its Cupertino and Santa Clara services originally required a monthly fee for mobile or fixed access. When they launched in Sunnyvale, they decided to try whether an advertising-supported model, in which a strip of advertising appears while connected, would provide enough revenue to create a profit on their fixed and per user costs. It did. (Press releases here.)
CEO Chuck Haas said last week, "Most communications business--and MetroFi is no different--is a high fixed cost, low incremental cost business. Your denominator, how many subscribers you have to amortize that cost, is one of the big drivers of that business." Haas said that his top three per-user costs were customer acquisition, support (mostly to do with billing), and Internet bandwidth. By removing the first two major factors, it's cheaper for him to offer free service.
"The rapid awareness and the numbers we have are take rate are phenomenal. We've broken the code on how to fund this network with advertising. and we've also broken the code in using 2nd generation radio technology," Haas said.
While Haas declined to provide numbers, it's an easy calculation. At roughly $20 per month for unlimited usage, a good percentage of that had to be devoted to the expensive tasks of billing and marketing. If MetroFi netted $2 per month per customer, that might be an optimistic rate. By that token, having ten times the users bringing in an average of 50 cents a month each in advertising should cover increased capital and recurring expenses while reducing staffing requirements.
The company uses SkyPilot equipment, which uses mesh techniques for backhaul in which up to eight high-gain 5 GHz point-to-multipoint links per node are given scheduled slots to allow highly efficient spatially and temporally separated spectrum re-use.
MetroFi noted in a press release that advertising can be targeted based on a user's location. While all three cities don't have 100-percent coverage, most of each town does have access, and the company will be expanding service and node density as more users come online.
MetroFi uses a BYOB model (bring your own bridge), in which fixed users can purchase any Wi-Fi bridge and then connect into the MetroFi network.