Paying Your Local WISP

By Adam Stone

July 11, 2002

The days of simple credit card debiting for your Internet access may be over, as travelers learn the ins and outs of paying for wireless access.

Like most WISP operators around the nation, Asim Beg would like people to pay him for the use of his services. Unlike his peers in the business, however, Beg does not collect the money himself, at least not directly. Instead, he tells users to pony up at the popular PayPal Web site.

"Most people are used to Paypal because they buy on eBay. It is the mostly widely known payment site that is out there," said Beg, president of the Minnesota-based Jasamba wireless service.

What do consumers want in a payment mechanism? Well, it must be easy to get to, convenient, secure and reliable. Beg believes that by letting PayPal handle the money he is able to satisfy all those conditions, and at least some analysts see merit in his logic. "It is perfect for me because PayPal takes away all the headache. For the very minimal amount of money that I pay them, I can get a service that is rock solid," he said.

In addition to processing payments, "PayPal also allows you to create subscriptions. There is a checkbox you can use to indicate this is a recurring payment, and since 802.11 hotspots are all about subscriptions, that is very helpful," he said.

It's non-conventional, but not without its merits.

"I think that approach makes a lot of sense," said Warren Wilson, practice director for mobile and wireless solutions at Summit Strategies. WISP operators essentially face the choice of either creating their own payment mechanisms or contracting with a third party to handle transactions. It's a build-or-buy scenario, and with the WISP marketplace still very much in flux, it may make more sense to buy a solution, he said.

Still, most WISPs are opting to control their own destinies, as they see it, by implementing their own payment solutions.

Surf and Sip is a typical example. "People can pay for our services with a credit card [online] or they can buy a prepaid card over the counter, said CEO Rick Ehrlinspiel.

Those who choose to subscribe to the service through the Surf and Sip home page can do so from their desktops and feel secure in the transaction. For spur-of-the-moment buys in coffee shops, Ehrlinspiel recognizes that some people won't feel safe doing credit-card business over an 802.11 network. At the same time, coffee shop owners don't want to be bothered with managing wireless subscriptions. "They bring in the people, and they bring you in to handle the services," said Ehrlinspiel. "They just want to get paid every month."

The prepaid cards seem to resolve all these issues. The cards are secure, and also fairly low-maintenance.

(Ehrlinspiel also has managed to eliminate some of the need to handle payments at all, by teaming with players like iPass and Boingo. Users who roam onto his network through those services obviously pay their subscription fees to the aggregators and not to Surf and Sip.)

Credit cards and prepaid cards are popular among WISPs. At the same time, some players in the WISP space have begun to develop alternate models that are even more aggressive that Beg's PayPal plan.

Take for example Wayport, whose high-speed wired and wireless network reaches some 100,000 customers a month in hotels and airports. The firm has worked in close cooperation with hotels in order to enable those hotels to include wireless access as a line item on guests' bills at the time of checkout.

"It took a lot of work," said Wayport's VP of Marketing Dan Lowden. "There is a lot of interface and back-end work that needs to take place between the hotel system and our system to make sure that this will be a very simple process."

Was it worth the effort? Absolutely, said Lowden. "That is how a lot of business travelers want to do it. They want to have a receipt that they can expense back to the company, and putting it on their hotel bill is the most convenient way for them," he said.

Of course, getting wireless use included on the bill at checkout is only half the battle. Once the bill is paid, those monies still need to make their way back to Wayport, and the wireless provider has therefore crafted a secondary lawyer of software to ensure that transfer takes place in an accurate and timely manner.

"We provide [hotels] with Web-based tools where they can track usage on a monthly basis and then at the end of the month they can add it all up and send us a check. Then we have the same tools running here so we can be sure that it all matches," Lowden explained. He noted that all these solutions had to be custom-built by Wayport. "Tthere really is not anything off the shelf out there that would have done this for us."

As smaller WISP operators continue to cast about for cost-efficient payment mechanisms, it may be worth noting that in the long run, the question may become irrelevant.

Industry analyst Wilson noted that telecommunications carriers are taking a growing interest in WiFi hot spots as a potential source of revenue for themselves. They are working internally and also with third-party developers to acquire solutions that will allow them to sell 802.11 subscriptions which would then grant users access to a range of hotspots, including those operated by smaller private WISPs.

Consumers may well be drawn to this model.

The big telecom operators "certainly offer the potential of a seamless bill, where my wireless use shows up on my bill no matter what wireless services I use. There is certainly a lot to be said for that kind of simplicity," said Wilson.

"On the other hand, if any independent company makes it easy -- if you can walk into a coffee shop or an airport lounge and get 100 minutes for a certain amount of money just by using your credit card -- that kind of prepaid model could also be simple enough to win some traction.

In the short term, at least, "the market is still new enough that there is room for a lot of different models to claim a share of the market," he said.

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