Hotspots are Dead — Long Live Hotspots

Littering the Wi-Fi roadway are the bodies of hotspot operators seeking the perfect business model. Since the late 1990s, public Wi-Fi access has made countless course changes, none really elevating public Wi-Fi hotspots to the point of economic viability. Now, in the wake of Cometa Networks’ death-spiral, we talk to hotspot players holding two differing views of the future of public Wi-Fi.

While the growth of wireless networking in offices and homes is growing by leaps and bounds, the need for Wi-Fi by road warriors is still considered to be huge. Nearly 65 million business people travel, according to Dan Lowden, vice president of marketing for Wayport.

Wayport won the contract to put Wi-Fi in between 7,000 to 9,000 McDonald’s restaurants. Along with T-Mobile, Wayport comprises 95 percent of the hotspots in the U.S.

Losing the McDonald’s deal is thought to have been the nail in Cometa’s coffin. Backed by blue-chip companies such as AT&T, Intel and IBM, “wholesale” hotspot provider Cometa blazed breifly then burned-out in a matter of a year. Fittingly, Cometa took its name from the Italian word for ‘comet.’ Losing McDonald’s also did in Toshiba’s short-lived SurfHere hotspot business.

Lowden says Cometa’s demise “was a wake-up call” for hotspot providers and how they do business.

Traditionally, a hotspot provider would offer a coffee shop or other business Wi-Fi connectivity. The provider would then get a cut of the profits. Although costs were often fixed, the usage amounts varied. The Wayport model, called Wi-Fi World and introduced as part of the McDonald’s deal, involves flat-fee charges. Wayport charges venues $32 per month and then McDonald’s, SBC or any other reseller could offer customers Wi-Fi for a per month fee, or even free.

Although Lowden believe hotspots are “still in their infancy,” he predicts their future health will be “tremendous.” As proof he points to the half-million connects each month his company handles.

Lowden admits, however, that “usage was not there for a couple years” for hotspots. Indeed, he told the Associated Press that Wayport is not profitable. When talking to Wi-Fi Planet, he said that turning a profit is “critical” for any hotspot.

Despite the growth of companies and groups offering free Wi-Fi access, Lowden calls open access “scary.” But “it’s not a battle between free and for-fee” hotspots, he says. Wayport obviously recommends charging for Wi-Fi access., believing that giving away access provides no incentives for advertising and cross-promotions of the wireless service.

Lowden says the future of hotspots will be as a subscription service offered by major carriers.

Bert Williams, marketing vice president for mesh-based infrastructure company Tropos Networks sees a bleaker future for Wi-Fi hotspots. He believes hotspots are outmoded and on their way to be history.

Hotspots “are the Internet equivalent of pay phones,” says Williams. Williams says pay phones were public access communications points which quickly lost luster as cell phones became more economical.

The “hotspot model is broken,” declares Williams. “Far from finding Wi-Fi everywhere,” he could not locate a Wi-Fi hotspot during a recent trip to San Francisco — one of the cities leading the list of Most Unwired U.S. cities.

Williams points to mesh networking technology and the wireless ‘clouds’ Tropos and others are erecting over large areas, such as Cerritos, Calif., or most recently, the National Mall in Washington, DC. Before mesh networking reaches the same level of public recognition as hotspots, it will take at least five years, according to Williams.

Wi-Fi hotspots will be known as “something they did in the old times,” Williams tells Wi-Fi Planet.

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