Alex Housley is a lot like other young high-tech entrepreneurs. The former dot-com wunderkind, who helped launch a successful e-commerce service in Britain when he was only 16, looked at the explosive growth in the Wi-Fi industry and thought, hey, how can I cash in?
His response, though, was a little different from others who have asked the question.
After deciding the service provider market was already over crowded, Housley, by now 21 and finished university, launched Total Hotspots Ltd. earlier this year. It’s an independent UK-based hotspot directory service that operates mainly in Britain — and claims to list every hotspot in the country. The directory also includes international coverage and the company plans to roll out to the rest of the world starting next year with Europe.
Total Hotspots is by no means the first company to provide a Web-based international directory of hotspots. However, it was the first to offer a service that lets mobile phone subscribers send a one-word SMS (Short Message Service) message to an automated service and get back by SMS a list of nearby Wi-Fi hotspots. The service uses cellular triangulation to locate the caller, then does a “geospatial proximity search” in the company’s hotspot database. It’s available only the UK for now.
“I originally looked at becoming a wireless [hotspot] operator,” Housley explains, ” but was surprised at how many had already been formed. I did see a big gap in the market, however, for end users finding out where all these locations were.”
Existing Web-based directories were not very good, he decided. Mapping to show the location of hotspots was one serious deficiency. “It ranged from no mapping to incoherent mapping,” he says of the competition. The first thing he did was research the Internet mapping industry and form a partnership with UK-based pioneer MultiMap.com. He bought MultiMap’s Storefinder service and then built a custom application that adapts it for use in locating Wi-Fi hotspots.
If a user at most other directories input “Oxford St.” as a search term — it’s a street name that recurs throughout Britain — the service would return a list with all the hotspots at addresses on any Oxford St. anywhere, Housley says. The Total Hotspots service first asks the user to narrow the search by indicating which of several Oxford streets he wants, or which section of the Oxford St. in London, then delivers not just the hotspots in premises with Oxford St. addresses, but also locations just off the street as well.
Another deficiency in existing hotspot directories was that they provided often confusing search results by showing the same location multiple times for each roaming partner that provided access at the site. The Total Hotspots service shows only unique sites — there are slightly more than 20,000 in the database from about 35 operators. It also lists under each site all the roaming partners whose subscribers can use that hotspot.
“We’ve had a lot of praise from consumers and operators who say this is the best way to do it,” Housley says. “It’s difficult to do — it requires a large de-duplication and merge job — but we think it’s worth it.”
The Web directory and mapping service has been relatively successful. It generated just over 100,000 maps last month and usage has been doubling since the site was launched in June. The SMS service, which Total Hotspots purchased from developers MultiMap and Mobile Commerce, was only launched in September and usage numbers were less than 10,000 by late October.
Part of that may be the price — about $1.85 per search. Housley is almost apologetic about the pricing, but points out that his partners, including the mobile carriers, all get a cut. Total Hotspots gets less than a third. As volumes increase and the partners find efficiencies, prices should come down, he says. In the meantime, many users are more than willing to pay the price.
“It’s not so much that they don’t want to use the service, it’s more that a lot don’t know it’s there,” Housley says. He hopes that some upcoming joint marketing of the service with MultiMap will help get the word out.
The company earns revenue from the SMS service, from advertising at the Web site, from Google-style premium listings for operators — they don’t pay for basic listings — and from analytical services it provides operators. Total Hotspots uses historical data from user searches at the site to help operators figure out strategies for selecting types and locations of sites for new hotspots.
It is now offering operators a private SMS service — they can give their subscribers an SMS address to query to find just their own hotspot locations. It is also offering operators the opportunity to sell vouchers for short-term access at its site. Universal vouchers that would work at any operator’s sites are a possibility, Housley says.
In the meantime, the company remains small — with only two full-time employees — and privately (read, poorly) funded. Some of its directors are industry veterans interested in the concept who are working for Total Hotspots part time for equity in the company while running other businesses. Direct marketing consultant Shane Redding of Think Direct is one example.
“To afford the salaries of people like that would have been out of the question,” Housley points out.
Housley is not currently seeking venture capital funding — “though we’re open to discussing the possibility with venture capital firms.” The company has already absorbed the biggest capital hit building the technology infrastructure and partnerships to provide the current services, he says.
However, it stands to reason that Total Hotspots will need capital to fund a roll out to Europe — making the location database as comprehensive as it is now for the UK and setting up the SMS service — which the company hopes to do in the first half of 2005.
Introducing the SMS service in North America, may take longer. The U.S. market with its less technologically homogeneous cellular landscape will make it difficult to provide SMS service everywhere.
