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Is WiFi Access Worth $10/hour?
Roland Piquepaille writes "This special report from CNET News.com carries an eloquent subtitle: 'Wireless expectations rose in 2003, but growth was hobbled by security concerns and unproven business models.' It's much worse than you think and I'm going to tell you why Wi-Fi will still not be broadly used in 2004 in this column. Technology columnists are usually looking at their own part of the world, in Silicon Valley or on the East Coast of the U.S. And obviously, their opinions are largely biased. Our world is much bigger than that. My arguments are based on real-world examples, both in Greece and in Paris. They're also based on costs of access. Paying $10 an hour for Wi-Fi access is almost twice as you pay for a movie. Would you pay $20 to see a movie? Probably not. So will you pay $10 to use a Wi-Fi connection for one hour? Certainly not."
where I live, there are 5+ unencrypted unsecured WLANs at any place. why in hell should I pay even one cent?
... so the actual thrust of your complaint has to deal with the fact that, in places that aren't the United States, WiFi is traditionally charged for? And that the sums are not to your liking? Cry me a frickin' river.
WiFi adoption in 2004 will likely exceed expectations in the United States precisely because tons of free hot spots are coming up stateside! Take a look at Baltimore, which is attempting to wire up the entire Inner Harbor area into a gigantic, free hotspot. As for whether or not other international localities will follow suit, it's really up to them -- recall also though that gas prices tend to be higher in Europe as an example that infrastructure there does not equal infrastructure here.
Since the only argument that came out of the article was a long-winded whine about WiFi prices around the mediterranian, and had nothing to do with actual adoption of the technology in the coming year, I'd have been forced to mod it -1, Troll.
$10/hr isn't too much if you're a corporate-type, assuming you can VPN into your corporate net and get your critical e-mail, calendar updates, etc, or just download the latest version of tomorrow's presentation.
Now there's probably cheaper options: cellphone-based (only 160KB for the best service out there), hotel-based broadband... but I'm sure the convenience wins out.
Now, I've never needed it, but if I had needed it, my boss wouldn't bat an eye on the expense account. The only problems with that? (1) there's no line item for that on the expense system, and (2) I no longer am employed by that company.
Design for Use, not Construction!
where do grants come from? where is this volunteering for free isp's? who has the time to do this. anyone leaving a hotspot open in their house is a jackass and a security risk. if you want to start a commune with like-minded people, that's cool. but a massive amount of free wireless access is going to take time and private investment.
There was a time when air conditioning was not universal. Places of business advertised and promoted the fact that their place of business was air conditioned and they managed the burden of the increased cost of air conditioning in order to attract customers.
WiFi will follow the same trajectory. Wise businesses like restaurants and coffee shops will just provide it like air conditioning and leverage the log-on portal for advertising. I think it will be likely that they will filter on mac addressess and quota traffic over ports like tcp25 to prevent abuse, but eventually they will provide it for free. It will become the new air conditioning--the mark of a savvy service business.
Until then, people will try to charge for it. The main problem with that is the variety of needs that customers will have. Some need it a lot, some need it once a year. Some just prefer to have it, some can't live without it. How do you price-model that?
You don't.
It's the new utility. Figure it into your overhead.
The best way to do is to be.
"Paying $10 an hour for Wi-Fi access is almost twice as you pay for a movie."
I'm sorry, but I don't see the relevance of comparing movies to internet access. Keep reading...
"Is this an incentive to cross Paris, carrying your laptop, to meet a friend in a Wi-Fi connected cafe? I don't think so. As long as prices will remain that high, the utilization will remain very low. And of course, nobody will make money... As long as prices will remain that high, the utilization will remain very low. And of course, nobody will make money."
I'm impressed with the short-sightedness of this guy's comment. Does he know anything about business? Economics? Everything starts off expensive and gets CHEAPER as time goes by, customers get used to the idea, and competition settles in. These services that run $6-$10 are NOT aimed to him, the causual user. They are for the business traveller. $10 to get on the net, wirelessly, at broadband speeds for an hour is reasonable, especially when it's expensible. If you can business expense it, it means you're paying $10 to be productive.
How long will this pricing be in effect? Well, for one, they need to recoup their expenses. So the early adopters (the ones who'll really benefit from this service even if it is a bit pricey) will cover that. Then, over time, prices will go down, and if the service is popular, they'll expand their capacity. By then, the expenses of running that service will go down. And, perhaps, another business will be built on a similar service, and provide a little competition, causing services to go cheaper/better.
It's as simple as that. Just about every technology service has worked that way. So what does this have to do with the price of a movie ticket? Nothing! This isn't an hour of entertainment, it's an hour of business dependent service. Prices don't stay at a constant level unless you're selling music CDs.
"Derp de derp."
Is that simply it's current deployments are poor. Who want's to go to McDonalds where the food is usually greasy and get your laptop all greasy? Who wants to go to starbucks and sit in a cramped, high traffic area to try and get some work done? Then you factor in privacy issues and it's just not worth it. It doesn't mean that WiFi isn't deployable it just means that it takes more than just declaring "WiFi Hotspot" on some cup somewhere.
I'm not an everyday joe so I won't pretend to speak for them. However, I find it disturbing that in NYC I can't find a place to sit down and use my laptop on the internet. The WiFi is there it's just that the spots are simply uncomfortable, and or as this story shows cost large sums of money. There are many others like me who would like to just simply sit down and use their laptop and maybe get a cup of coffee. Wrap the cost into the coffee if need be.. I don't want to worry about paying, or metered usage.
This is where I think some of the Mom/Pops can win back some of their business lost to places like Starbucks. I'd be more willing to hit a Mom and Pop that has less traffic, more room and WiFI access. Also, with the number of people working out of the office nowadays it only makes sense. Make my environment comfortable and let me sit there and buy coffee and food all day while I get some school/work done. It's really a win win situation, you get repeat customers, who most likely have friends, who will most likely end up hanging out in your place actually buying stuff all day while they hang out and get work done. I mean the possibilities are endless, if someone was really smart they'd start a chain of these things and market it to people like me, a college student/work person on the go. If I wasn't broke i'd open my own.
Currently Internet in Russia is expensive:
Dialup: $0.30 to $1.00 per hour
DSL: $30 to $100 per 1Gb
The $10/hour WiFi is not that expensive by Russian standards
WiFi enabling a place like a cafe costs almost nothing.
Unfortunately, that's a factoid. It looks true, but it's not.
You can set up a wide-open WiFi for next to nothing. But, really you can't. You'll trip over your ISP's terms of service, and they'll hold you responsible when somebody starts spamming from your bandwidth or downloading copyrighted material...
You can set up a secured WiFi point, but then you'll need to hire somebody to run that. Suddenly not so free anymore...
People are willing to use iPass which allows them to dial in with a local call around the world for ~$2.50 an hour depending on where they are located. The option of just getting an AOL Account which would provide about the samething for ~$22 a month. They now are offering Wifi. A comparision would be this for $10 an hour vs. $40 for Boingo service. I think people are willing to pay if they are not aware or don't want to deal with alternatives.
So, will people pay. To begin with, some are going to pay a minute or hourly fee to have a connected laptop. The convenience is worth the money. The fact that people bought telegraphs, land lines, beepers, cell phones, and net connections when the costs were astronomical attest to this fact. These connection were not available to everyone, nor did base charges allow you to connect to or from a place outside your local area. However, in the current climate, people do expect cheap connections that work everywhere. Given this, will the market be large enough to support WiFi access points. I would agree with you that it is probably not the case.
So, what is the answer. Movie theaters. Contract with the proprietors of coffee houses, book stores, airports, anywhere that people se laptops. The proprietor can offer access free to customers, or with a per minute charge. This is already being done, but needs to be pushed a no or low cost solution to these establishments. This might provide enough money if every laptop is WiFi capable.
And this means that most laptops must come with WiFi connections just like most desktops come with network and modem connections. If it cost $150 and requires you to muck around the systems setting to get WiFi, most people will not do it. they will say it is not worth the trouble for the few hours a week they might use it. But if the laptop is already set up, and they may choose to go to a place with WiFi connections, and spend the $5 for a half hour in addition to their $5 for coffee.
"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
The coffee shop I hang out in Fort Collins CO offers free wireless. The cost of their setup was fairly minimal and the fact that people bring their own computers means that the sink nothing into having their own computers available.
They make their money by attracting people and selling them things. They aren't in the ISP business. Wireless is just another item along the same lines as a couch or table to make the place comfortable.
Has no one really looked at the total dichotomy of McDonald's and Starbuck's trying to do this? McDonald's is a fast food restaurant where they have spent tens of thousands of hours of designing a restaurant based upon throughput. The chairs are uncomfortable. The color scheme is not a good long term colorscheme. The designers wanted people to stay approximately 15 minutes and then leave.
Starbucks is not much better, from the ones I have seen. It is also based upon getting people through the line and out of the store.
Then add in that they are making a huge capital investment in an area outside their expertise at the corporate level. I don't know the details for this, but I suspect that the corporate headquarters is driving the architecture design and signing a lot of very large contracts for IT from 3rd party vendors. Looking at the local coffee shop here, I see about $200 in equipment a 20GB DSL at $55 a month (metered above that, but I do not know the rate. They purchased the DSL connection at it's yearly rate of $600). It's a total investment of around $1000.
So..
*NO*
It's not worth $10 an hour. That coffee shop considers it more time and effort than it is to hire someone to track what is a marginal expense in their yearly budget. Hardware is cheap. Setting it up and occassionally fixing it is cheap. Headcount to add accounts and manage accounts is expensive as it having enough equipment to maintain those accounts. They aren't an ISP. They're a coffee shop. They sell coffee.
But I'm sure there are some that will pay. Like say you are the head network badass for a web hosting company. There are other people on staff to do support, but you are to go guy that knows the whole system and can fix any problem. This might be something your company would have you signed up for, along with data on your cell to make sure that even if you are on vacation or something you can get at the routers if need be. Expesnive, but not as expensive as a disaster taking out their bussiness. In time it'll get cheaper, and you'll see more adoptions (or it will die out and be replaced by something else).
We're already seeing this with data on cellphones. Alltel said they could hook my up with something like 400 minutes of data time (144k where available) for like $40/month. Well that's not worth it to me, I mean the speed isn't that great and I'd burn through those minutes in a hurry. More worth it ot just find a network jack or access port (not hard in my job). However, there are plenty of people who I could see that as being appealing to. It's also much cheaper than what they used to offer. I'm sure in time it'll come down even more. If it starts looking like $10-$20 for 500+ minutes, I'll probably add it to my plan for when I'm out and about and as a backup is the DSL dies.
Wireless access is very likely to follow the same pattern as wired access, eventually ending up as something that is quite affordable to most people that want it. However it's new and being developed now so the costs are currently going to be high. Even so, they'll see people that use it.
As a different example take international cell phone roaming. It's something that's only receantly been possible since the providers got together. Even more receantly in the US since we only just got GSM. However, it now is possible. You can get an AT&T cellphone and places and recieve calls on one number in New York, Tokyo, London, Sydney and so on. So, what does it cost to do this? Well first you have to have a cell plan and minutes. It uses minutes as normal and has the normal overusage fees. Then there is the long distance cost (since you are usually calling long distance). Tends to be from $0.30-$1.00 per minut depending on where from and to. Then there is the international roaming fee. $1 per minute. So if you are in London calling the US you are spending somewhere around $1.30/minute plus using your minutes. Ouch
However, people use it. Both my dad and his boss have AT&T GSM phones for just that reason. They find that the convienence of being reachable at a single number anywhere in the world outweighs the costs. In time, it will go down, and the same with wireless data.
It is when the alternative is flakey 3/MB GPRS running at a princely 28.8kbps.
I am TheRaven on Soylent News
I recently stayed at the Hyatt Regency hotel in Washington D.C; They've got a nice gig going of charging $10 (or was it 15? I can't remember) for 15 minutes of wired access. Of course, staying there for 4 days, I had no real choice but to connect at least once.
Classic example of "the customer has no choice, so he'll pay whatever we charge."
--
http://nemilar.net - Not your grandmother's soup kitchen
WiFi is worth $10 per hour if I'm at a hotel and I only have an hour before I head to a conference or meeting and I need to check my e-mail. To compare it to the cost of a movie is silly; of course very few people are going to pay $10 to surf the web for fun, but for business travelers on the go, it may be perfectly acceptable to pay $10 an hour plus to get on the net on their own laptop. That being said, companies have to make a choice. They can either market themselves as a business solution and charge $10 per hour, in which case they ought to be providing high bandwidth, high reliability service with excellent support, or they can offer a crappy service for less money which will attract people who are just looking to kill time or surf for fun. The point is this: there are plenty of situations where I'd be willing to pay $10 for an hour's use of WiFi. There are tons of other situations where that's not for me, in which case the people who do need the service will be happy to not have me stealing their bandwidth.
In the early days of Cell Phones, just after the earth cooled, the monthly fee included a whole 30 minutes of air time. Roaming cost a buck a minute and service was spotty.
The day will come when a few bucks a month will get you more wireless access than you can possibly use.
New stuff is always expensive. In a competitive environment, prices come down to cost plus a small profit margin. If you want to project the price of wireless access in a few years, figure out how much it will cost (hardware, labor, capital) for an efficient vendor to supply it, add a little for profit and you'll be genius.
As for secured APs, what makes you think you have to hire someone just to change a password once a week? Let me guess, you're a consultant...
And realistically, if you don't think Starbucks is worth $4 a coffe, then you're not a Starbucks customer.
Thing is, right now, I have lots of reasons to go somewhere other than Starbucks. Not only do the three coffeehouses in town I prefer make dramatically better coffee, but they all have free WiFi.
Free WiFi wouldn't win me back as a Starbucks customer -- but it would at least give me one less reason not to be one.
I think you just reinforced his point -- the cost of billing, administration, and support can easily overwhelm the cost of the network itself. This is a basic fact that was known to AT&T back in the 1950s, if not eariler.
There are numerous possible billing models. You can pay a fixed amount per month; per MB; you can pay directly to the hotspot provider; you can pay via you ISP; The payment can be post-paid or pre-paid. Maybe you want to "top up" the pre-paid account. Maybe the pre-paid account should expire 72 hours after activation. Maybe the hotspot location wants to sponsor your access. It all boils down to 1 thing: Getting money from your pocket.
The billing model has to be predictable and transparent. Most end-users do not really grasp the concept of per-MB billing. Per-month models have problems with high-bandwidth users.Pure wireless ISPs have problems with getting the customers in the first place, while the regular ISP (where the users already have an account) may not have the necessary infrastructure to handle roaming users.
2004 is going to be a very interesting year.
Around here (Washington DC) there are plenty of places where you can pay $4 for a coffee, and plenty where you can use Wifi while you're drinking it. But Starbucks is the only one I know of that makes you pay for access. Therefore, all the laptop people are at the other places - I have never heard of anyone using Wifi at Starbucks.
Meanwhile, while I've also never seen any freeloaders camping outside one of the free-Wifi places using their laptop on the sidewalk (except me, and only briefly), there are definitely a lot of people who park their computer and cell phone at a table and order one tea every 3 hours while doing a day's work, which I can't imagine is that financially rewarding for the cafe. Some of the places are tolerating this during the day when they wouldn't be that crowded otherwise, then turning the lights down and the music up around 5pm to clear out the people who've turned it into their office.
At the one nearest my home, if you arrive after 10am, it's gotten to the point where you have to bring a power strip and re-plug your table-neighbors into it, or there's no chance you'll be able to find a spare AC outlet.
I doubt any of these independent places report stats on usage to anyone, so whenever we read in the newspapers about Wifi access business models, we just hear about Starbucks and its microscopic utilization. But that's definitely not the full picture.
"Patriotism is your conviction that this country is superior to all other countries because you were born in it." -- GBS
Recently I was waiting at an airport gate in Philadelphia and noticed signs for AT&T wireless access. Eagerly launching my browser, I discovered that access would cost me $10 for a 24/hour period. While this initially seems like a good deal, I only had an hour or so to kill at the gate, not twenty-four, and so it occurred to me that I'd be paying $10 for about an hour of access. Checking their web page for AT&T's other airport locations, I determined that I wouldn't be able to use the access in my next connecting city (where again, I only had about an hour and a half connection anyway). So I thought about how much work I could do in an hour - essentially catching up on some e-mail - and decided it wouldn't be worth the $10.
On the other hand, I've noticed that in European airports, public internet terminals are the norm - but you rarely see those in American airports. The European terminals bill in small time increments; one can typically get online for 20 minutes or so for about 3 euro. They seem to get a lot of use.
Obviously, there are disadvantages to public terminals: the possibility of keyboard sniffers; clunky, no-moving-parts keyboards; the possibility of an unfamiliar language mapping, etc. But - the business model seems to make a reasonably shrewd assumption: that people in airports have small blocks of time available, and that they'll pay a few euro to make use of that time catching up on e-mail. Perhaps carriers offering WI-FI in airports should consider this - while there may be a few people with lousy enough flight connections to make good use of a 24 hour block of access in an airport, they might get a lot more users by also offering, for example, one hour for $3.