Wednesday, May 11, 2005

Wi-Fis Elusive Business Model

Mark Evans


One of the great mysteries of the wireless industry is the inability for Wi-Fi to find a proper business model (airports being the one exception). Sure, Boingo is out there in 17,000 locations but how many people want to pay a third-party $9.95 a day or $21.95 a month for a service you may not use that frequently. The other "opportunity" for Wi-Fi has apparently been in coffee shops where - for whatever reason - there is this notion that masses of people are looking to drink lattes and surf the Web. Still, Wi-Fi continues to get rolled out with much fanfare. Yesterday, Bell Canada said it will operate Wi-Fi hotspots in 275 Mail Boxes Etc. stores. The service is aimed at small business customers but I'm not sure many of these people are going to whip out their laptops to check their e-mail or do some e-commerce. Perhaps the biggest hole in the Wi-Fi business model is how easy and inexpensively it can be offered. To encourage customer loyalty and improve customer service, a coffee shop owner could offer Wi-Fi by spending $50 on a router and another $50 a month for a broadband connection. Why charge when you can gain invaluable goodwill in a competitive market?
What puzzles me about Wi-Fi is why wireless carriers have yet to make it an inexpensive add-on for their subscribers. Rather than charge $9.95 a day, why not offer it for $2 to $5 a month - a fee that makes it easy to say "sure, why not" even for people who may only use a hot-spot once a month. Consider it a "convenience" fee. If they were reallly smart, carriers would enter into cross-usage agreements so a Verizon customer could use a Wi-Fi hotspot offered by SBC, and still be able to get online. Until someone comes up with a better Wi-Fi mousetrap, it's going to be a technology with plenty of potential but not a lot of revenue.
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