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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."
$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!
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."
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.