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NYT: Making Free Wireless Wi-Fi Internet Pay
securitas writes "The New York Times' Matt Richtel writes about the the challenges of finding a sustainable business model for 802.11 Wi-Fi wireless Internet. The problem for entrepreneurs, telecom companies and others is that the proliferation of free wireless access hotspots at the municipal and grassroots level has obviated commercial carriers' revenue and profit models in many cases. One user quoted in the story sums up the attitude of many wireless users: 'The Internet is free here.... Why would I pay?' IHT, published by the New York Times in Paris, is carrying an abbreviated version of the story."
A free internet wifi connection... but then you are buying coffee and a muffin, so you ARE paying. The cost is absorbed by the cafe. A big business might be able to run at a loss to gain customers, your local cafe sure as hell can't. And really, if you think about it, how much is a coffee and muffin? Is it cheaper than 1 paid hour for web access? Sure, you might have bought a cappacino anyway, but its the little extras you buy that make it worth the cafes while to offer *free* internet.
Do you need a website upgrade?
The problem in the future might be that there is limited capacity for the wifi spectrum on the one hand and that for short time usage (at least within Europe) UMTS beomces affordable...
This *IS* a business problem... I agree!
I travel by air frequently and would love to hop onto the hotspots that are available within terminals, however the rates are just too high! The time I spend while waiting to board is limited to 2 hours or less usually -- why would I want to pay $20 for a day-long "pass" at this location? Seriously, all I need to do is check my email and maybe hit slashdot. (And no, I don't want to do it on my phone)
If these guys got a clue, they would realize that everyone of us "out there" realizes that this is essentially a "free" service. Short of of the hardware infrastructure and the collection of my billing info -- how much cost is really being incurred by my login?
Don't most porn pages offer a limited subscription for less than $10? Can it be any more difficult than this for Wireless operators? After all, there's probably a lot less data transfer involved.
Then look at it from a security standpoint. Because it's your home and church you need to have the security because of liability. What if someone searches for kiddie porn, or shares music and the RIAA comes after you or a million other things.
If the US at least if its yours then you are liable. That's why those places that offer it free have an agreement first.
Evolution or ID?
Everything costs money...deal with it. The "Internet" was never free and never will be. Fiber optics, switch gear, etc...all cost money. I am a network enigeer by trade...I know first hand how much equipiment and staffing can cost. The saying "you get what you pay for" is very true in the networking world.
There are actually a few airports that do free wireless. Do a quick search and you'll find them. Since we both agree that this is a business problem, let's look at your particular business case. Is free Wifi a good enough incentive for you to switch airports?
Probably not. Which is why I don't think you'll see Free Wifi at every airport.
You hit the nail on the head when you said that Wifi, relative to many other costs of an airport, is nearly free. But profit-seeking businesses look to charge what the market demands, regardless of how much it costs to meet that demand.
We've seen prices below cost from Microsoft and prices wayyy above cost for...say...porn.
I believe that economists would argue that choice of airports are quite possibly a fantastic example of an "inelastic demand curve."
In other words, If the local airport doesn't offer wifi, but one 500 miles away does, am I going to take a Taxi? No way!
Most business travelers choose airports based on the cheapest flight (with their preferred carrier, if possible -- so they get the points).
I would doubt most business travellers have a checkbox on their expense reports listing an addendum: "but this carrier / route had wifi -- so disregard the higher airfare."
To compete you must add value, or offer a lower price.
Competing with free removes the price driver.
I don't see that many options to add value. But it isn't my job to dream up business models for others.
This should be Insightful, not Funny. Or maybe that's because I fully agree - it's getting to the point where it's cheap to add WiFi access for businesses and people are starting to expect it.
I'm going to be staying in a hotel in Indianapolis soon, and they have a free wired ethernet connection in every room. About two years ago, I stayed in a hotel with a similar setup, except it cost $10/day to use the connection. I wonder if the pressure of free wireless access has forced the hotels with wired connections to go free.
--RJ
finding a sustainable business model for 802.11
Why business? Companies are not important. Citizens are important. It doesn't matter if companies cannot get money from wifi. Just keep them far from wifi. Citizens gobern (in democracies), not companies.
Wifi, as it is now, is good for citizens. Don't impose business into social proyects.
I used to use SurfAndSip way back when it started in San Francisco. $20/Month for unlimited internet access is not bad, especially if you have a cell phone (save $10 on land line) and spend a lot of time in or around cafes anyway.
But last week, i saw the death of this model. I went into the Canvas Cafe - free wireless access from 8 am - 6 pm, and the typical hipster atmosphere we all love and loathe. I sat down with my latte, and saw in front of me 30 (thirty!) laptops. Everybody in this place had a laptop. All of them with WiFi (new and shiny PCs and 50% macs). I think i saw maybe two people without computer. The whole cafe had turned into some kind of office. It was packed.
Now, this cafe was popular to begin with, but this was a weekday, and this was sometime in the afternoon.
The euquation is simple: Free WiFi = more customers!. Once that begins to sink in, imagine how many Cafes would _not_ be able to affort $50 per month for a serious DSL line. Exactly Zero. Any business can afford that. The cost is negligible.
This isn't some theory or opinion. This is reality: It's happening right now, it already happened, it's working, and there is no stopping it or turning back the clock.
I am sorry for SurfAndSip (which always had excellent service and good prices) and less sorry for others (e.g. t-mobile with their attempts to sell the internet as something close to Gold). But the reality is: The future is free wireless access. Paid-for hotspots will be gone in no time. The only way i can imagine these companies making money is by reselling DSL and installing the equipment.
Its very hard to get people to pay to use a road - sure there are .1% toll roads - and maybe we will end up with .1% toll WiFi Spots.
But as a people - we need to realize that communication, like travel, is a net benefit, and the cost/benefit is highest when use is convienent and costs are shared.
Making WiFi a national project - like going to the moon - really has more merit, more justification, and would in the end provide more benefit - at a ridiculously low price.
Sure - some argue they don't want to pay - because they don't "USE" it.
But I suggest that even those who think they don't use it - would still reap the benefits.
Fedex-like tracking systems would be very inexpensive - almost everyone gets mail somehow.
Appliances like smart sprinkler system which could save water by responding to the weather forecast could be commercialized successfully.
Water savings helps everyone.
Almost everyon recieves a service which in some way involves computer transactions which could be carried over the internet.
Thus the most logical way to pay for it is - the national treasury.
Unlike cars which pollute - using the internet has very little negative externalities - and so they is little reason to extract a price at the point of use.
AIK
Actually some of the regional airports are doing this. It is a push by the regionals to get people to fly out of them. Your point about a hub would be interesting though. As you point out, it would be interesting to see how much traffic a carrier could pull from the others if they offered free WiFi at one of their hubs.
I personally believe that free WiFi is a bonus that can be provided by a variety of businesses. In large markets, you can get a WiFi provider to come in and setup and run a pay for use service. However, in many small cities, you can't even find one of those.
The best hope for WiFi in these locations is convincing business owners in the area to create free hot spots as a competitive advantage. I know I would consider going more frequently to a given restaurant for lunch if WiFi were available.
Likewise, the whole WiFi handheld market is headed to a point where an organization like Walmart or Target would have a competitive advantage if free WiFi existed in their store. If it weren't for the fact that I can't find an 802.11b card for my Palm m515... I mean seriously, WiFi is making it's inroads everywhere. In my city we have at least one local church that got an access point and now the pastor often goes online with his handheld to look up a scripture reference or another translation during sunday service.
WiFi is becoming so prevalent that keeping it "pay for use" is almost impossible. However, WiFi has to pay for itself somehow. Free WiFi pays for itself as an advertising tool in the increased business. The sooner that businesses see the benefit of attracting customers, the sooner hot spots will appear. The regional airports are just the "pioneers" of this.
Sorry, but regardless of your guilt or innocence, you're still liable for a large fine in this case: it's called "legal fees". If the RIAA sues you for activity on your broadband connection that one of your neighbors did, it'd probably cost more to defend yourself in court against the suit than it would to just pay the $3k settlement.
So, would you rather pay $3k to the RIAA for your neighbor's downloading, or would you rather take a few minutes and set up the security features to prevent your neighbors from using your connection?
I feel I should put in my 2 cents as I have been working on a wifi project for about a year now.
Why pay $6 an hour for internet service when most people would rather catch a movie for the same price and get an hour an forty minutes of entertainment.
So the model has changed, instead of charging the coffee drinkers of america- charge the cafes of america.
This model happened naturally because companies compete with each other and try to add more value to their products and services. For example, restaurants, bars and grocery stores are buying wifi installations (from us) to offer free wifi at their locations.
Most are choosing to offer just a plain, bare wifi access. No portal or billing. This is because there is a rather high cost for a small company that is offering wireless service as an amenity to deploy a "captive portal" with a billing back end.
We deploy Colubris for a few customers, but even that which is a one unit solution is well over $500+ and isn't what most places recommend. Usually, most places recommend a three unit system, one unit the "ipzone" or firewall is located on the premise- the other are the authentication server and a billing back end. This gets costly.
Most places are gonna just buy a sub $200 wap and offer free wifi.