Hotspot Venue Negotiation
October 10, 2002
When a wireless hotspot provider comes knocking, what's in the deal for the venue?
A wireless hotspot provider comes knocking. But what's in the deal for the venue?
You've been a successful restaurant owner for a decade. You have neither knowledge nor interest in information technology. You may not even have a dial-up connection for the premises. So when a hotspot provider comes knocking with promises of increased traffic and revenue, how do you separate fact from fiction?
Several arrangements are currently being explored. Both the hotspot provider and venue share costs and revenue. In some cases, the provider looks after costs and takes all revenue.
Bruce Johansson, director of sales and marketing at The Xone agrees. "The business mechanics can be arranged in different ways. A venue can participate in costs and get a share of revenue." Network operations and deployment are relatively expensive, he says. "But as a small company we have more flexibility than carriers, who take a cut and dried approach. "Our whole aim is to work with the property owner and organise a deal that works for both."Greenwood Plaza where the service was recently launched, consider hotspots a value added service, according to Johansson. "A service that will attract people and encourage them to spend money with tenants."
Sydney's Cafi Euro, another client of The Xone, has a different business model. Basically, the hotspot provider was responsible for deployment and takes all revenue. "We're not looking to make money off the service," says lessee, Peter Ubaldi. "The cafi is quite happy to give them a leg-up. We don't do any selling and the service is of mutual benefit."
Previously, Cafi Euro had no Internet connection and Ubaldi has no personal need for the network. "We've been here for ten years in the main business district, surrounded by law and accountancy firms. Those people can now run presentations and hold meetings."
Ubaldi has plans to incorporate the wireless service into a new cafi being built across the road. "The theory is, you will have your own meeting room," that is wireless enabled.
But the situation of Cafi Euro is somewhat unique, as Ubaldi had gleaned some IT knowledge from his customers. In Melbourne, management of an historic hotel are also quite tech savvy.
"The Windsor Hotel is actually over 100 years old," says public relations and marketing co-ordinator, Brooke Ruscuklic. "But we've gone to great lengths to be up to date with new technologies." That includes dial-up and ISDN in some rooms and suites. Recently, Azure Wireless deployed a hotspot in their lobby and function rooms.
"Increasingly, people are familiar with what we're talking about," says David Gold, Azure's CEO. He says customers remember mobile phone carriers placing antennas on buildings. "The key difference is that we're talking about numerous access points. One of the hardest aspects is rationalising what the model should be. Some have the attitude we should be paying them rent."
Gold is optimistic but steers clear of unrealistic predictions. He "doesn't think anyone expects a greater number of new customers trafficking their venue. We're clearly not selling our service on that basis. It's a learning curve, setting expectations correctly about what the technology can or can't do. Coffee shops are a little different, as many have customers familiar with wireless networks in their offices. They would love to come down into the coffee shop and do a presentation."
For The Windsor, wireless function rooms are a value-add service, according to Ruscuklic. "Customers can easily access corporate information in an informal atmosphere. We do market the service to potential corporate clients as something very few hotels can offer."
Soon believes a venue is more likely to market a wireless service when they have a financial stake. There are two aspects, he explains. "Firstly, you need to convince the venue it's good for their business. Secondly, you need some form of commitment. "Unless you can do a deal with revenue coming from other sources, it's hard to justify paying for everything. The key is someone must also make the commitment, apart from yourself."
The sales pitch varies according to the venue. "A hotel, if they are corporate focused, it's quite clear the mobile professional market is growing," he says. "Millions and millions of people require access away from the office. They are used to broadband at work and probably at home. They are paying five star rates. Why should they use dial-up? Additionally, all laptops are going to be wireless enabled in the near future. If they don't provide wireless LAN services they will miss that market. Can they afford to do that? The clear answer is no."
Cafis are a different scenario, Soon continues. "In the city, the clientele is business people who tend to eat breakfast and lunch. Outside those times is when a customer is likely to use a hotspot. That provides another reason to go there, increasing traffic and revenue."
"Because we're a wholesale provider," says Gold, "it's up to our ISP partners to advertise based on location, where their users are likely to access a hotspot." Azure on-sell access to ISPs. Customers can then have seamless access for dial-up at home to wireless on the road. "People don't want several ISPs for different functions," he says.
Soon acknowledges that "it's still every early days and everyone is sceptical about the entire market." He likens wireless hotspots to 3G. "Originally, many people questioned whether the service would be another WAP. The concept is great, everyone loves the product. But, as a technology, will it be mainstream? There is evidence people consider the potential of hotspots and it's already heading in that direction."
Reprinted from australia.internet.com.