Wayport acquisition by AT&T makes me go whoompf: Yesterday's announcement that AT&T would purchase hotspot operator Wayport for $275m in cash gave me pause for reflection. I started covering the Wi-Fi field in late 2000, spurred by testing Apple's AirPort system, which, despite being on the market for a year, I was quite dubious about. It worked well, and it led me to find that Wi-Fi was being deployed as an amenity. I hopped on the story, and wrote a very early feature for The New York Times about public-space Wi-Fi in airports, cafes, and elsewhere. (See The Web, Without Wires, Wherever, 22-Feb-2001.)

Of the firms mentioned in the article, several disappeared within a year. And later startups like Cometa had big runs up and then giant flameouts. (I run down the failures as well as some other details of the Wayport deal at Ars Technica.)

Wayport may have survived and thrived due to two moves. First, the operator was an early partner with Boingo, renegotiating its contracts with venues to allow the pricing model of wholesale aggregation resale to work. On a panel at 802.11 Planet after Boingo launched, if I recall correctly, Wi-Fi veteran Phil Belanger (then at Wayport) explained that contracts with its venues needed to be renegotiated, but it was worth it to increase volume of use.

Wayport was right. Firms that resisted reasonable resale pricing or availability seem to have all gone by the wayside. The latest of these was T-Mobile, which had very restrictive roaming/resale agreements, and was replaced at Starbucks by AT&T, which has expansive agreements.

The other element was Wayport grabbing the McDonald's contract through the use of a still-innovative pricing model. Instead of reselling sessions at McDonald's to aggregators or others, Wayport offered only a flat rate based on the piece of the McDonald's network that a reseller sliced. It had hoped to get cable systems interested as a competitive tool against 2.5G networks and other telecom advantages. It didn't happen.

But the Wi-Fi World model, as it called the program at launch, proved the right approach for consumer electronics and gaming firms, like Nintendo for its Wi-Fi-enabled DS system, ZipIt Wireless for its instant-messaging handheld for teens, and Eye-Fi for the geotagging Explore model of its Wi-Fi memory card.

Wayport also was able to snag AT&T as a resale partner early on; AT&T was providing backhaul to many stores, and wound up buying access to resell to some of its customers. That later expanded into Wayport becoming AT&T's managed services provider, and AT&T slowly but dramatically expanding cheap ($1.99 per month) and then free access to its base Wi-Fi network to a large portion of its wireline, fiber, business, and smartphone customers.

I'd say Wi-Fi World paid off as an approach.

Some might ask where this puts Boingo in relation to AT&T. Since Boingo is an aggregator, the advantage of which is to take many disparate networks and repackage them for resale at a predictable and reasonable price, why would you need Boingo when you can get 20,000 U.S. locations at no cost (if you're a qualifying AT&T subscriber) or as part of AT&T's own aggregated worldwide network of 80,000 locations ($20 per month for non-subscribers; $10 per month for those who qualify for free service)?

I checked with Boingo yesterday, and it has about 24,000 U.S. locations in its network. So...that's nearly 85 percent AT&T when the Wayport acquisition closes. But don't worry about Boingo. The company has a trump card: Airports.

Its acquisition a few years ago of Concourse Communications gave them the golden ticket: Boingo controls Wi-Fi access in most major airports in North America. AT&T and T-Mobile each have a handful that they operate, but Boingo has the big plums. Boingo operates the big NY/NJ airports (EWR, JFK, LGA), Detroit, Minneapolis, Chicago (ORD and Midway), and on and on. The firm has 24 airports, most of them biggies, across the U.S.

Boingo told me some time ago that the Concourse acquisition was partly for revenue, partly for marketing, and partly for strategy. With airports in hand, it has better bargaining power with networks onto which it wants its users to roam, including outside the U.S.

If AT&T were to try to push to hard as the new Wayport owner with 85 percent of Boingo's domestic footprint, Boingo has the counterbalance of the critical airports that AT&T's business travelers want--and increasingly consumer and leisure travelers as those categories of passenger carry mobile devices that rely on a Wi-Fi network for their sole or best performance. (Think iPod Touch as well as iPhone.)

The end of Wayport spells the end of a long period in which many hotspot operators were in play. Now it's AT&T and a number of much smaller firms--T-Mobile will still have perhaps 3,000 locations--and company-operated networks, like Panera, run through in-house divisions or through managed services.