In a recent
article we looked at MobileStar
Network, which is building a network of Wi-Fi (802.11b) access points
in airports, hotels, and restaurants—notably Starbucks
locations—across the country.
As we saw, MobileStar’s stategy is based on deploying a far-flung network
and selling services directly to subscribers. The company is not completely
averse to the idea of partnering with wireline Internet service providers
to make wireless roaming services available to their customers,
but it’s certainly not a top priority.
By contrast, for GRIC
Communications Inc. of Milpitas Calif. (an aggregator so far offering
mostly dial-up roaming services) partnering with ISPs is central to its
business plan. And now it’s making a determined push into the Wi-Fi public
access space.
“We see Wi-Fi as a natural extension to what we’re already doing in dial-up,”
says Perry Lewis, GRIC’s manager of business and corporate development.
Wireless, Lewis says, is really starting to get hot.
“I’ve been in wireless for close to nine years and every year people
said, ‘This is the year.’ Now though with the deployment of wireless LAN’s
for the enterprise rising and Wi-Fi chips being put onto the motherboards
of laptops, the push is getting much stronger.”
Air-to-where?
MobileStar and Wayport
Inc. of Austin TX are the pioneers in this area. They have, as Lewis
says, “plowed the field.” But both use a similar business model—again,
deploying their own access points and dealing service directly with customers.
The one flaw, as we pointed out last time, is that most of those subscribers
will need to have at least two ISP accounts, one with MobileStar, another
with an ISP that provides conventional business or residential access
services back home.
MobileStar functions as its own ISP, but doesn’t provide any wireline
services.
In GRIC’s business model, roaming is what it’s all about. The company
is constantly adding new ISP members to its GRIC Alliance, a network of
service providers that offer roaming access to each others’ and GRIC’s
subscribers.
There are 300 Alliance members, mostly Tier 1 and 2 players, with over
15,000 dial-up and Wi-Fi locations in 150 countries.
GRIC contracts with each ISP to provide roaming access at an agreed hourly
rate. Then it brokers the services.
Some members only provide access to their footprint for a fee. Others
also provide their own customers with roaming access to other members’
footprints.
“Our business model is the antithesis of what some companies have done
in the dial-up world, where they’ve tried to create their own global networks,”
Lewis says. “What GRIC did was it took existing service providers and
showed them how they could all work together.”
Service trinity
GRIC provides three essential services. First, it does the authorization
and authentication of roaming customers. To do this, it maintains its
own servers attached to members’ POPs—over 500 of them.
When subscribers dial up or log on at a Wi-Fi location anywhere in the
world, they connect first to a GRIC server, which sets up the connection
with the local Alliance member.
The benefits for subscribers are three-fold. They need only one ID and
password. They get one bill for all their ISP services.
And they pay far less for GRIC’s roaming service than if they dialed
long distance back to a home ISP or used other roaming services. GRIC
estimates the savings at 60 to 90 percent.
Second, GRIC does all the financial settlement for members, keeping track
of who owes what to whom.
Finally, it supplies subscribers with a continually updated piece of
secure client software that sits on their laptop and acts as a director
of services.
Wherever they go, subscribers can pull up the GRICdialer with its database
of local services available and click on the one they want. The software
makes the connection with no further intervention by the subscriber.
So far so good.
Grab and go global
We asked Lewis if joining the GRIC Alliance provided an opportunity for
ISPs to get access to Wi-Fi roaming services they could then turn around
and offer their customers as a value-added service.
“By all means,” he says. “The GRIC value proposition for service providers
is that we’re extending their global reach, we’re giving them additional
sources of revenue—they can charge a premium for the wireless services.
And it’s also a way to ensure customer retention.”
There are, inevitably, a few little snags.
One is that Tier 3 players need not apply. GRIC’s perception is that
smaller ISPs don’t provide the kind of quality of service its subscribers
expect.
Second, GRIC doesn’t have very many Wi-Fi locations anywhere yet—only
about 65, Lewis says. And most of those are in Australia, New Zealand,
and Southeast Asia.
At the time of writing, the company was in the final stages of negotiations
with two other Wi-Fi public access service providers. Once—if—they’re
signed, the total number of Wi-Fi locations available would go to about
350. Most are still in Asia Pacific, though.
Asia in fact is GRIC’s main focus for Wi-Fi right now.
Eastern focus
This is partly, we surmise, because the company’s president and founder,
Hong Chen, is from there and originally had the idea for GRIC because
he was frustrated at not being able to get reasonably-priced roaming services
while traveling on business in Asia himself.
Another reason, Lewis says, is that Asia, which doesn’t have the kind
of high-speed wireline infrastructure North America and Europe enjoy,
has enthusiastically embrace wireless.
Many Asian airports and telecoms are currently in the early stages of
deploying Wi-Fi roaming networks—in some cases with plans to cover
whole cities, he says.
Another reason for the Asia Pacific focus, though, is that it’s currently
difficult for GRIC to get Wi-Fi coverage in Europe and North America.
This could be a problem. If it can’t get adequate Wi-Fi coverage where
American business people travel most it will certainly make GRIC less
attractive to North American ISPs as a Wi-Fi partner.
In Europe, with the exception of Scandinavia, Wi-Fi doesn’t have much
profile at all.
This is partly, says Lewis, because the European industry over-invested
in 3G licenses and doesn’t have capital to invest in deploying Wi-Fi. Plus
3G is perceived as a potential alternative to Wi-Fi.
And it’s partly that in some European countries regulations prohibit
the use of 2.4GHz spectrum for public access applications—the UK
and France, to name two. GRIC and others are lobbying European regulators
to make changes.
North America is problematic because—well, because MobileStar and Wayport
have a lock on a lot of the best locations for Wi-Fi access points. And
so far MobileStar and Wayport have not been responsive to GRIC’s overtures.
That may be changing, however.
Wire-free sustenance
“We have been and are in negotiations with both companies [MobileStar
and Wayport],” Lewis says. “I can’t tell you any details but, yes, we
are talking with these companies because they do have footprints we’d
like to utilize.”
According to Lewis, both companies rebuffed GRIC’s initial advances,
believing they didn’t need roaming users to make their businesses economically
viable.
“We’re saying to them, ‘Let us give you free money.’ They were not seeing
it at that time,” Lewis says. “But their tune has changed drastically
since then, because of the economics of building out their networks.”
He points out that Metricom, now in Chapter 11, thought the same thing
as MobileStar and Wayport—and Metricom had about 50,000 subscribers
compared to the 5,000 or so he believes MobileStar currently has.
“Five thousand customers will not sustain them,” he says. “I believe
all these companies are now starting to see this.”
If MobileStar and/or Wayport cave and join forces with GRIC, it could
bust the Wi-Fi public access wide open.
Grab and go global
We asked Lewis if joining the GRIC Alliance provided an opportunity for
ISPs to get access to Wi-Fi roaming services they could then turn around
and offer their customers as a value-added service.
“By all means,” he says. “The GRIC value proposition for service providers
is that we’re extending their global reach, we’re giving them additional
sources of revenue—they can charge a premium for the wireless services.
And it’s also a way to ensure customer retention.”
There are, inevitably, a few little snags.
One is that Tier 3 players need not apply. GRIC’s perception is that
smaller ISPs don’t provide the kind of quality of service its subscribers
expect.
Second, GRIC doesn’t have very many Wi-Fi locations anywhere yet—only
about 65, Lewis says. And most of those are in Australia, New Zealand,
and Southeast Asia.
At the time of writing, the company was in the final stages of negotiations
with two other Wi-Fi public access service providers. Once—if—they’re
signed, the total number of Wi-Fi locations available would go to about
350. Most are still in Asia Pacific, though.
Asia in fact is GRIC’s main focus for Wi-Fi right now.
Eastern focus
This is partly, we surmise, because the company’s president and founder,
Hong Chen, is from there and originally had the idea for GRIC because
he was frustrated at not being able to get reasonably-priced roaming services
while traveling on business in Asia himself.
Another reason, Lewis says, is that Asia, which doesn’t have the kind
of high-speed wireline infrastructure North America and Europe enjoy,
has enthusiastically embrace wireless.
Many Asian airports and telecoms are currently in the early stages of
deploying Wi-Fi roaming networks—in some cases with plans to cover
whole cities, he says.
Another reason for the Asia Pacific focus, though, is that it’s currently
difficult for GRIC to get Wi-Fi coverage in Europe and North America.
This could be a problem. If it can’t get adequate Wi-Fi coverage where
American business people travel most it will certainly make GRIC less
attractive to North American ISPs as a Wi-Fi partner.
In Europe, with the exception of Scandinavia, Wi-Fi doesn’t have much
profile at all.
This is partly, says Lewis, because the European industry over-invested
in 3G licenses and doesn’t have capital to invest in deploying Wi-Fi. Plus
3G is perceived as a potential alternative to Wi-Fi.
And it’s partly that in some European countries regulations prohibit
the use of 2.4GHz spectrum for public access applications—the UK
and France, to name two. GRIC and others are lobbying European regulators
to make changes.
North America is problematic because—well, because MobileStar and Wayport
have a lock on a lot of the best locations for Wi-Fi access points. And
so far MobileStar and Wayport have not been responsive to GRIC’s overtures.
That may be changing, however.
Wire-free sustenance
“We have been and are in negotiations with both companies [MobileStar
and Wayport],” Lewis says. “I can’t tell you any details but, yes, we
are talking with these companies because they do have footprints we’d
like to utilize.”
According to Lewis, both companies rebuffed GRIC’s initial advances,
believing they didn’t need roaming users to make their businesses economically
viable.
“We’re saying to them, ‘Let us give you free money.’ They were not seeing
it at that time,” Lewis says. “But their tune has changed drastically
since then, because of the economics of building out their networks.”
He points out that Metricom, now in Chapter 11, thought the same thing
as MobileStar and Wayport—and Metricom had about 50,000 subscribers
compared to the 5,000 or so he believes MobileStar currently has.
“Five thousand customers will not sustain them,” he says. “I believe
all these companies are now starting to see this.”
If MobileStar and/or Wayport cave and join forces with GRIC, it could
bust the Wi-Fi public access wide open.