Hot Spots and Fast Food: The Bets Are On

I wish I had made it into a bet. About a year ago, my boss and I were strategizing about how to prepare for the emergence of 802.11 hot spots. At the time, Boingo, T-Mobile, and Wayport were in the early stages of building public hot spot networks. But we also knew that there were thousands of free, public hot spots, and hundreds of smaller companies offering access at single locations.

Growth for 802.11 networks in homes and inside enterprises was solid. But retail hot spots? Mobilestar teetered on insolvency before T-Mobile scooped it up. Most observers couldn’t see the business model and Chris Elwell was one of them.

“Some day they’ll be in McDonalds and Dennys,” I said with uncharacteristic optimism. “People will pick a hotel or a restaurant with WiFi because they need to check their email.” Back then, I wasn’t optimistic about too many technologies. This was early 2002, and there were few signs of growth anywhere on the tech landscape. Except in wireless 802.11 networks.

Chris’ objection to the McDonalds idea was solid business analysis, “McDonalds doesn’t want someone tying up their tables with a laptop. They need to keep turning the tables.”

Much as I hate to admit it, my optimism was based on familiarity with McDonalds’ table occupancy rates. With two young girls just out of the Happy Meals stage, I had seen day time traffic below the golden arches; other than during the lunch time rush, I knew most McDonalds’ managers would be happy to see anyone at those tables, even if they had laptops

We didn’t bet on McDonalds, but Chris and I continued to develop the 80211 HotSpots list. Today, the list includes more than 4,000 public, commercial hot spots. So far, we don’t have entries for Dennys, McDonalds or any other food chain other than Starbucks.

But I think my time may yet come. McDonalds is now testing 802.11 access at a handful of restaurants. They’re using Cometa Networks to do the infrastructure and they’re charging about the same for an hour’s access as they charge for a Big Mac (without the fries).

A Knight-Ridder reporter found that, so far, McDonalds store managers like the extra traffic generated in the ten New York area test locations. But McDonalds won’t even finish rolling out the first wave of test locations until the end of the year, so it’s much too early to declare fast food & WiFi a success on a national scale.

Results from smaller tests are also encouraging if not yet conclusive.

Most of the 4,000 hot spots are operated by regional chains like Telerama, an ISP now running 50 hot spots in western Pennsylvania. Many of Telerama’s hot spots are at coffee houses or other public spaces like a Suds & Duds laundromat.

Doug Luce, Telerama’s founder and president, said he still regards this as an experiment, “I’m not going to risk the company on an unproven business model.” Until now, the ISP is offering WiFi access at no charge. Over the last 8 months, it has served 100,000 wireless sessions. The real test is at hand; it will start charging later this month. The primary focus is to sell existing monthly DSL and dial-up customers to add wireless access for $9/month. The daily rate will be $4.

Luce said there was early skepticism from coffee shop owners who worried that laptop users would camp out and hurt business. Instead, what owners find is that if wireless users “stay for any amount of time, they’re buying more.” That, plus the bounty Telerama pays location owners for new accounts, is helping grow the network.

Even if the first wave of tests are successful, WiFi is still far from winning a permanent place on the fast food menu. So Chris may still be right. But if anyone is still willing to take this bet, I’m ready.

Gus Venditto is the editor-in-chief of the and networks.

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