Where Next for Sprint Hotspots?
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Last summer, Sprint PCS said its users would have access to 2,100 hotspots nationwide within a year. In fact, the telecom giant has exceeded that goal, with roaming agreements that have brought into the Sprint fold some 3,000 hotspots. Where to next? We talked with Wes Dittmer, general manager of wireless LAN service for Sprint, about the company's ambitions and about the changing dynamic within the hotspot market.
Q: Your network now makes available some 3,000 hotspots. What's your next goal?
A: We have been saying that by the end of this year that number will be at least 10,000 hotspots, with some large North American percentage and some large international percentage. We are not deploying those ourselves. Those are hotspots that we have via roaming agreements with other providers, such as Wayport, AT&T Wireless, Truckstop.net, STSN, Concourse, Airpath and others.
Q: What kind of locations are you targeting?
A: The people who are going to be using wireless LAN are business travelers who are going to be visiting airports, convention centers and hotels. So we have aggregated a footprint via roaming agreements [in those locations] and we have also deployed wireless LAN in some key airports throughout the United States.
Q: How do the economics shape up?
A: There is a $49.95 monthly plan that gives customers unlimited access at any of our locations around the United States. You also can do a pay-as-you-go plan, and we charge $9.95 per venue for a 24-hour period. In our roaming deals, I can say that we are buying on a wholesale basis from our roaming partners on a rate less than we are selling to our retail customers.
Q: A lot of people have bemoaned the complexities involved in billing for Wi-Fi roaming usage. Has that been a challenge?
A: There are certainly companies that are making it more complex than it has to be. Early on we decided that clearing for these transactions was not something we wanted to do internally. So we have partnered with two companies -- iPass and Syniverse. At the end of the month, they tell us the total amount of roaming activity, and how much was attributed to each partner's footprint. It's very similar to what goes on in the voice space today.
Q: Why did you choose to contract out that work?
A: If a carrier was to step back and create that technology, it is not going to be their core strength, so they are going to have to dedicate a sizeable IT resource to that effort. At the same time, there is an inherent unwillingness for a carrier to allow another carrier to clear transactions. It would mean sharing a lot of information about each customer that could be used to create a marketing campaign. That was always a concern in the voice space, and it is also a concern in the wireless LAN space. Customer credentials are pretty sacred.
Q: Speaking of which, you have signed a roaming deal with direct competitor AT&T. What's the business logic behind that decision?
A: As to business strategy, there is the driver of ubiquity. If AT&T said they would not let anyone roam, and the only way you could get access to the footprint in the Denver airport was to be on the AT&T wireless LAN program, it starts to break down the wireless LAN model.
Q: How so?
A: If you are paying a monthly plan, you want to be able to go from location to location without incurring any incremental charges. Business travelers want it simple, they want to get connected very easily, and they want to know what they will pay to get connected. If it's a corporate account, they will expect unlimited access. Now, if they start moving around and suddenly they cannot get access, they are already getting frustrated. We will get calls from time to time: "Why can't I get access in this or that airport?" And it is because we cannot get a roaming agreement with that company yet. A year ago, this would have been a big problem. But now it is getting much better. The companies who are deploying wireless LAN infrastructure understand that they cannot just sell to their own customer base and make a profit. They need all the carriers' wireless LAN users in order to make a profit, and for that you need roaming agreements.
Q: What's the biggest challenge to achieving such ubiquity?
A: In the airport space especially, it is competition and bureaucracy. There are competitive bids, and it takes a while to create those bids and put them out on the street. Then they have to evaluate the responses and then select a partner. It takes a while. Then once it is up and running, there is the challenge of generating the awareness that that service is available. If someone came to me tomorrow and gave me all the money I need to deploy wireless LAN in every airport in the United States, I still couldn't spend it, just because of the process that is involved.
Q: What does Sprint have in mind for the immediate future?
A: We have our eyes set on a number of airport assets where we would like to be the owner/operator, and we will be fighting it out with a number of others to get that space. We also will be pushing very aggressively to execute new roaming agreements.
Q: And on the marketing side?
A: I think that the way Sprint will move in terms of selling wireless LAN to our customers will change soon. There will be a move away from selling just wireless LAN, Dial IP, or 3G networks as stand-alone options, and a move toward a scenario in which you pay me one amount and you as the consumer select the means of connection. We have heard loud and clear that business travelers want that. Bundling those together sets us up to be very successful in the business environment.
Q: You said at the beginning of this talk that you are looking toward 10,000 hotspots. Is that realistic?
A: I would be very disappointed if we only ended up with 10,000 by the end of the year. There are probably 25,000 out there, although it is difficult to get a real count once you start getting outside the United States. So we will stay committed to the 10,000 figure and then going into 2005 we will not want to stay in a static position. We will want to continue to grow.