The Failure Of Fee-Based WiFi

from the it-just-ain't-happening dept

Fri, Mar 19th 2004 12:59am — Mike Masnick

For quite some time, we've been pointing out the problems with most "for fee" WiFi network plans. While it's still early, and not a perfect comparison, this article points out that fee-based WiFi will earn as much in one year as Verizon Wireless earns in 12 hours. Meanwhile, all the companies that rushed into the for-fee WiFi hotspot market are trying to figure out ways to adjust their plans, since it doesn't seem possible to make a standalone business model with it.

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3 Comments

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Noah Rosenblatt, 19 Mar 2004 @ 6:21am

Fee Based Wi-Fi
I think that pricing is still NOT where it needs to be for this type of service, and that general awareness of Wi-Fi is no where near the level everyone hoped it would be as a result of some major marketing campaigns, i.e. T-Mobile & Intel.
The wi-fi industry, in my opinion, MUST invade the homes. Once security issues are ratified with 802.11i, wi-fi technology needs to be discovered by the masses, and installed in their homes. By this happening, people will discover the benfits of wi-fi technology, and most likely, invest in a portable computing device to experience true mobility.
As with any new technology, the really good ones make people wonder, "How did I live without this", after they use the new product or service for a while.
I believe wi-fi to be in this category.
As for pay-per-use wi-fi business model, at this point it is not working. There is just not enough demand out there, and it is still a niche market, enjoyed by tech enthusiasts and business men and women.
Thats not to say their is not potential here. It is only to say that those businesses that offer free wi-fi as a value added service, are the ones seeing an increase in company revenues as a result of the added service. Those hoping to profit from fee based wi-fi in their venues, probably won't see much usage for a while.
As for me, once I began using wi-fi in my home, I realized how great having a portable laptop is. Now, my friends are still amazed when they see it for the first time, even at a time when I thought wi-fi was beginning to become more widely known.
Truth is, it isn't. And people do NOT know it is out there yet. Maybe it is the misconception of it being a confusing a hard to set up technology. But that is not true today. Wi-Fi Equiment makers now offer very easy setup wizards for setting up a home network.
Maybe it is the worry about security. With 802.11i being ratified soon, this concern will be addressed.
Maybe it is the price. NO WAY! Its only a 1-Time fee for equipment and that is at most $150-170 for the lates 802.11G routers PLUS notebook cards.
Maybe it is the reliability. HARD TO IMAGINE. The wireless technology works fine in my 1300 sq. ft. apartment, and if the access pojnt is centrally located, most of a single family home will be covered.
Some complain that there are dead spots in the back left of the basement. SO DONT USE IT THERE!
All in all, Wi-Fi IS a revolutionary and disruptive technology, and everyone should be aware of it.
So how do we do that?
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- Neilathotep, 19 Mar 2004 @ 4:52pm
  
  Re: Fee Based Wi-Fi
  This has all been said before, but I really don't understand why places like Starbucks don't offer an hour of free networking with a drink. Well, I realize that part of it is that they chose the most expensive supplier of t-mobile, but regardless, there have been a number of times recently when I might have gone to a starbucks and bought a drink and pastry to get an hour of free networking, and instead went to either the Palo Alto library, or some random Cafe that had free wireless. I am not a huge fan of Starbucks overall, but they are all over the place. Operating a wireless access point is not that expensive, if you had 10 people come in each day for a month it would probably more than pay for it. And those people who came in when they needed networking might come back when they just need coffee or a pastry, as long as the service was good. I think the "return visit even when networking wasn't needed" would work even better for Starbucks than for the local coffee shops.
  What this means is that this doesn't seem to be a good business opportunity for network providers, which the numbers are showing. It seems to make more business sense for the actual locations themselves.
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  - AMetamorphosis, 22 Mar 2004 @ 7:28am
    
    WiFi not marketed correctly
    
    I couldn't have said this better.
    Why should I go to Borders or Starbucks for a cup of coffee and pay for wifi when I can visit my local Panera and get it for free ?
    I also tend to spend more in Panera and will opt for lunch & dessert. Panera usually gets about 10-15 dollars out of me a visit due to free wifi.
    
    Most businesses like Starbucks are not marketing wifi correctly. Because people are not willing to pay exorbitant amounts or lock into yet another monthly " plan " for service, these businesses will consider wifi a failure. Sadly, it could be one of the best marketing or advertising tools if they just used it correctly.
    
    Consumers are jaded and turned off to marketing. Tell me I get an hour of connection with my McMeal & I'm sold.
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