Payphones: The Next Hotspot Wave?

By Ed Sutherland

January 27, 2003

Bell Canada is converting existing payphones into instant hotspots in a new pilot program. Is it the latest craze in creating public access Wi-Fi or a flash in the wireless pan?

Remember payphones? Once a vital link for people away from the home or office, payphones now languish in the shadows of cell phone users, collecting dust and graffiti. But in one of those technological ironies, the very cause of the death of the payphone may inspire a new revival.

In a pilot program that's now testing public reaction, a Canadian telephone company and Californian wireless think tank are breathing life into unused products by converting traditional public phones into 802.11 hotspots. Hotspots create an area where wireless users within a 300-foot radius can connect to the Internet using laptops or other portable devices equipped with an 802.11 network interface card.

Don Blair, a spokesman for Bell Canada, says wireless local area networks (WLANs) "are a natural extension" of its wireline business. Bell Canada worked with inCode Telecomm, a San Diego, CA-based wireless consultancy to design AccessZone, a Wi-Fi hotspot device with a physical footprint matching already existing payphones.

While Blair says payphones are actually still profitable in Canada, sleek 802.11b access points about the same size as a public phone have replaced twelve payphones in high traffic areas. Each unit contains a Cisco 1200 AP, an Alcatel ADSL modem and a 3Mbps DSL Internet connection using already existing wires. During the three-month pilot, which began in December of 2002, access is free, says Blair.

AccessZone Takes to the Rails, Airports

AccessZone is available in Toronto, Ontario's Union Station and several Air Canada lounges, among other spots. Although Bell Canada has not done much marketing for the program, Blair says feedback from users has been favorable. During the test period, Bell Canada will look at options for billing and deciding on a subscription or pay-per-use model.

Eric Carr, a senior manager at inCode, says the firm has worked with Bell Canada for more than a year to jointly develop AccessZone. Using the already existing payphone infrastructure "was the most cost effective and compelling method of conducting a pilot," says Carr.

There are other reasons for using payphones as a platform for Wi-Fi hotspots. There were no hassles arranging right-of-way to install the access point, sales channels already exist for the payphone locations and installation is less expensive, says Carr. Also, the time it takes for a hotspot to reach the market is quick because of reduced negotiating headaches.

From Concept to Reality

"There were technical hurdles to overcome," says Carr, but inCode and Bell Canada "were able to take the concept from drawing board to reality very quickly."

Although the payphone hotspots are different from an access point and some cables, "payphones are very similar to other hotspot models," says Carr. Bell Canada, which entered the wireless market in October 2002, will also deploy traditional hotspots, Carr says.

InCode CEO John Donovan said payphone hotspots "can help wireline carriers grab wireless market share, leverage their existing payphone infrastructure."

Carriers Express Interest

Carr believes U.S. carriers will soon follow Bell Canada's first step. Carr says he has received many inquiries "and even visits by folks" interested in inCode's payphone concept.

"We feel it is a beneficial model of deployment and expect others to follow suit," Carr says.

"Payphone businesses are competing with cellular for mobile minute usage on the voice side," Carr says. Adapting payphones to include wireless data is "an attractive potential revenue stream."

Allen Nogee, analyst with In-Stat/MDR, says in the United Kingdom, old payphones are already used to house cellular gear.

"In the U.S., I'm not sure it converts over as smoothly as in the UK," Nogee says. He points to airports, which host many payphones, but are still grappling with how WLAN can outperform the longer-range cell calls.

Will public phones pay off as the next venue for 802.11? "It can't hurt, but payphones are probably only one solution of many," says Nogee.

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