Monetizing Wi-Fi Starts Here
Monetizing Wi-Fi Starts Here
By: Ron Dennis
Jan. 1, 2000 12:00 AM
WBT's Wi-Fi editor reports on a recent conference that was devoted to examining the value, profit prospects, and real-world obstacles inherent in deploying and maintaining wireless public Internet access networks commonly called "hotspots." In light of the estimate that there will be over 10,000 public wireless access points by the end of 2002, Ron profiles the players in the hotspot market today, and explains some of the flavors of the 802.11 standard that's fueling the growth of Wi-Fi.
My mind often defies logic. My wife will attest to that. I'm more likely to dream about the desired result than the work required to get there. The first time I looked at a Web browser I immediately wanted to download audio and video files. I didn't think about the infrastructure challenges, the privacy/security problems, and the slow access speeds that would need to be overcome in order to make it happen. I wanted music and video!
I had the same experience with Wi-Fi hotspots. The first time I used it I knew what I wanted: "To be connected to the Internet all the time." Fortunately, the presenters at the Wireless Hotspots Conference and Expo, held this past September in San Jose, CA, have been working on how to get there.
Wi-Fi is a revolutionary grassroots movement, but it's not free. In fact, the possibility of making money is one of the main drivers for Wi-Fi's explosive growth. Another is saving money. Companies can realize significant savings by incorporating wireless access into their corporate network schemes. Increased productivity is also an important driver because an "always connected" worker is, in theory, a more productive worker. For users, the fundamental driver is access anytime, anywhere.
Traveling Road Warriors
Laptop and PDA makers are already providing the tools for the unwired user. According to one of the first speakers, Gary Singh, director of marketing, Wireless Networking Group, Symbol Technologies, Inc., laptops that have 802.11 built in are taking off. Estimates are that 9 out of 10 new laptops will be Wi-Fi enabled by 2006; and any laptop can accept a third-party PC card. Toshiba is the first PDA maker with a "Wi-Fi ready" model, and the other PDA makers are not far behind.
Gary introduced the concept of "data fueling" for road warriors. When a road warrior stops for gasoline, a flight change, or a hotel, his or her laptop can "fuel up" with the latest inventory changes, company news, and other information. Gary called this data the "Mobile Enterprise Fabric" (MEF). Data fueling can even occur in a customer's lobby while the road warrior is waiting for the next meeting.
Eric Blaufarb, market development manager, Americas Wireless Networking Business Unit, Cisco Systems, Inc., compared the shift from desktop to laptop to the shift from wired to wireless. Both are a big shift in mobility. Mobile workers need mobile data. Cisco calls this data the "Corporate Mobility Framework" (CMF).
CMF and MEF are, of course, trying to describe the same thing the information and applications mobile workers need in order to do their jobs better. It doesn't really matter what you call it. What's important is that all the companies focusing on the enterprise know what it is and are trying to supply it. In other words, Wi-Fi customers are like me the technology is close enough to reality that they can visualize what they want. It's up to the companies at this conference (and others) to make it happen.
'Just Make the Battery Last Longer'
Sean Wargo, senior industry analyst, Consumer Electronics Association, provided some excellent consumer and market growth information, but it was mostly about cellphones. Based on his surveys, over 31 million phones will be bought next year in the U.S. That's a lot of digital access, even though most of it is voice.
Mobile phone marketing information is useful to wireless users because, Sean said, "The number one feature consumers want in their mobile phone is a better battery." More important than better reception, Internet access, or nifty designer colors, consumers are saying, "Just make the thing last longer." I saw this consumer need in action at the conference, and I'll tell you about it in a moment.
Kurt Sehnert, director, Mobile Infrastructure Programs, Mobile Platform Group, Intel Corporation, said that Intel corporate is at 80% notebook usage and wireless networking was a priority. "Intel's mobility vision," said Kurt, "is about computing and connecting anytime, anywhere. Battery life and performance are equally important to laptop users." However, these two needs are often at odds. As machines add performance and functionality, the energy drain goes up and battery life goes down.
Kurt opened up about Intel's next-generation mobile PC platform, code-named "Banias," an entirely new chip architecture designed to be faster, thinner, and lighter, and to extend battery life. 802.11a and 802.11b capability will be built-in, and will work in concert with existing and future microprocessors. But don't expect to buy a "Banias" laptop now the release date is next year. Still, Intel and the analysts are on the right track about battery life. Here's why.
I brought an old Windows 98 laptop to the conference, which has never had a wireless card in it. Its poor old battery lasts only half an hour. I got a loaner card, from Proxim, put it in the computer, brought up a Web browser and Shazam! I was connected to the wireless network provided by Symbol. I didn't need to change anything or use an access code because there was no security set at all. A free network is a beautiful thing, as long as you don't mind the eavesdropping.
But my poor battery ran down in five minutes flat. Then I noticed the attendees clumping around wall sockets like moths at a light bulb. And most of them were using the latest and greatest long-life laptops. Anyone who is contemplating a commercial hotspot better think about providing lots of power outlets no matter what new technology comes out!
Searching for the Rainbow: Monetizing Hotspots
Breakout sessions at the conference went over the nuts and bolts of revenue sharing, contract negotiations, and business models. One thing is sure. A "Doing Business Standard" comparable to the 802.11 technology standard does not exist yet. Many first-generation wireless companies have already bitten the dust because they based their business model on unreal expectations and forecasts. The current crop is trying lots of different approaches to providing hardware, software, and wireless services to hotspot owners.
At one end, there's the "It's All Free" approach. All the hardware, software, installation, and services are free! Sounds good, but all the revenues go to the wireless access provider, leaving hotspot owners with very little incentive to educate their employees or customers about their Wi-Fi network. Also, if uptake is slow and revenues are low, the WISP can disappear.
At the other extreme is the "Do It Yourself" hotspot. A small business can hire a techie to rig up a wireless hub to the DSL line and cut deals with Boingo and Joltage or even set up a homemade fee system. And a large business probably already has its IT department looking into setting up a wireless network. Adding public access to a private network is just another task for a large project like that.
Most realistic hotspot deals being cut today have the hotspot owners sharing some of the expenses, some of the risk, and some of the revenues that are generated by the wireless network. Things like equipment maintenance, server logs, roaming charges, and working with Internet access and service providers stay in the realm of the WISP, and everyone tries to make a little money as the number of hotspot users approaches some sort of critical mass.
Even aggregators, like Boingo, are broadening their offerings with "Hotspot in a Box," a hardware/software package for hotspot owners, and "WISP in a Box," for empire builders who want to sign up all the bowling alleys in their area (or the nation) under one banner.
Boingo's Hagen Says Everyone Needs to Pull Together
These challenges are going to get solved. Wi-Fi is still a tiny business, but Cisco, Intel, and Microsoft are betting hundreds of millions of dollars on the potential. And according to Dave Hagen, president of Boingo, it's going to take all companies, large and small, to pull it off. He talked about Wi-Fi and 3G networks working together. How great it would be to speed up data access when you're in a hotspot, then back down to 3G speeds (like 56K or so) when you are between hotspots. A lot of coordination is required for this to be a relatively transparent experience for the user. It can be done now, but there is a great deal of unplugging and plugging, signing off and logging on that must be done for it to work. I speak from experience.
How about the future? I spoke with Magnus Gunnarsson, director, product management, CDMA Systems, Ericsson, who reminded me of the 2.4Mbps wireless phone data system Ericsson demonstrated in 2001. Ericsson already has a phone (using Bluetooth technology) that needs no wires to connect to the earpiece or to a laptop to provide Internet access.
Now that's what I'm talking about! Take that phone, add 802.11 capability for the hotspots, a "transparent access interface," and I'd be a happy mobile camper. One thing is sure. The technology and business models I saw at the Wireless Hotspots Conference and Expo represented a snapshot of a fast-moving target. I came away more convinced that we are moving rapidly toward "ABC" or Always Being Connected, as Magnus Gunnarsson called it. We are going to experience a lot more change and upheaval, and accumulate a lot more stuff for my spare parts closet before we get there.
Note: Hotspot operators should not expect to make money from the hotspot, but rather from whatever products and services are at the core of their business.
On the other hand, here are the potential big moneymakers:
Back in the early 1980's, Funk Software's claim to fame was "Sideways," a utility that printed documents in landscape mode. It was a big deal at the time because word-processing software only printed in portrait mode. "Sideways" was a short-lived success because landscape printing became a normal feature. This should be a lesson that Funk Software remembers, and all the firms in the Wi-Fi space should take to heart. Wireless network technology is going through a revolution and there's plenty of upheaval left. Today's most popular software/hardware may well be tomorrow's doorstop. But "Sideways" was in the right time and the right space, and so is "Steel Belted Radius."
You can check what hotspots are near you at www.wifinder.com. Liz Kerton, VP Marketing, WiFinder, Inc., launched WiFinder in 2001 when there were 400 hotspots in the U.S. She estimates there will be over 10,000 public wireless access points by the end of 2002. You hear a lot about hotspots covering the world, but at 150 feet per hotspot, that's about the size of four Las Vegas Convention Centers. Coverage is a challenge. R.D.
For speed comparisons, your laptop modem is probably rated at 54Kbps
(kilobits per second); a low-end DSL is about twice as fast (128Kbps), and
high-end DSL and T1 access can reach 1.5Mbps (megabits per second) or about
27 times faster than a laptop modem. 802.11 speeds are much faster, but
remember a network runs as fast as its slowest access speed. So, if your
DSL line is bringing in the Internet at 700 Kbps and your wireless network
is running at 11Mbps, Web pages are loading at a maximum rate of 700Kbps.
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