Asia's Hotspots Come to the U.S.

By Ed Sutherland

June 09, 2003

Teletronics believes, from what it learned in Asia, that it can make Wi-Fi hotspots profitable by giving up to 90 percent of the revenue made to the venue owners.

A Maryland wireless company believes it can make Wi-Fi hotspots profitable by giving up to 90 percent of the revenue it makes from 802.11 Internet connections to the hotspot venue owners and bringing lessons learned in Asia to the unwired shores of the U.S.

Teletronics International, a Rockville, Md., designer and developer of wireless systems, is promoting its "EZ Hotspot" service as a low-cost, venue-friendlier alternative to current hotspot providers.

"We could never figure out" the pricing model for Wi-Fi hotspot leader T-Mobile, says Teletronics CEO Dr. Dickson Fang. His company's $500 hotspot gateways will allow unlimited monthly usage for $12.99, complete with national roaming. Teletronics argues that is nearly 1/3 lower than competitors. T-Mobile, for instance, charges its cellular customers $20 per month for unlimited access at its 2300 hotspot locations at sites like Starbucks, Kinko's and Borders Books & Music. For those not part of T-Mobile's phone service and unwilling to sign-up for a one-year contract, unlimited Wi-Fi access is $40 per month.

Fang says the low rate is possible using Teletronics' National Operating Center, "a giant server-based system" handling user authorization, authentication and accounting back-end functions. It has a capacity to serve up to 1,000 customers per second, according to Fang.

That system is under no threat of collapse as there are only a handful of EZ Hotspot locations available in the Washington DC-area. Fang says that number should climb to 30 in around a month.

The hotspot service was launched May 21 in Taipei, Taiwan. High profile Wi-Fi cheerleader Intel was at the news conference, alongside McDonald's, the latest venue promoting Intel's Centrino 802.11-based chipset for laptops.

Also making interesting Teletronics' entry into the hotspot market is its planned revenue-sharing.

"Our hotspot strategy in the U.S. is based on an operator-favorable revenue distribution, that an entrepreneur with a publicly accessible space such as a restaurant, shop, parking lot, apartment or mall can buy our gateway," said Fang in a prepared statement.

Venue owners using EZ Hotspots, by picking and choosing which options they want to handle themselves, can keep as much as 90 percent of the revenue generated by Wi-Fi customers, says Fang.

Aside from the back-end server, provided by Teletronics, and the hotspot location, provided by the venue operator, EZ Hotspot members can choose their own Internet Service Provider and may install the Wi-Fi gateway themselves, or Teletronics can provide a turn-key system.

EZ Hotspot operators generally choose a mix of setup options resulting in their sharing 45 to 60 percent of the revenue, according to Fang. Between nine and ten customers use the hotspots each day with a prepaid $2 card worth 20 minutes of Wi-Fi access the most-popular payment method, according to Fang.

The Teletronics CEO says in Tiawan, where 802.11 services are growing by leaps and bounds, wireless customers see low-cost and dependability as most important. The U.S. Wi-Fi experience "is very different," he says.

Although Teletronics may appear new to U.S. customers, its presence is felt widely in Asia. Teletronics has its Easy-Up Hotspot system in around 800 Asian locations, including 363 Taiwan McDonald's along with hundreds of Internet cafes, shopping malls, colleges, airports and hotels throughout China.

In a development also related to boosting the number of hotspots in the U.S., Placentia, CA-based networking vendor ZyXEL has released its ZyAIR B-4000, a combination 802.11b wireless access point, router, 4-port switch and wireless service gateway with a $649 price tag.

The device is aimed at coffee shops, bookstores, libraries and other public venues seeking to offer customers Wi-Fi service with the least hassle.

"Small retailers, for example, may be able to offer free Internet access with a minimum customer purchase," said Munira Brooks, vice president of sales and marketing at Zyxel.

Features pointing to the product's ease-of-use include

Built-in printer to handle billing and account information without costly back-end support. A gateway which can be operated by store clerks who needn't be computer savvy. A built-in portal launched whenever a customer is in the vicinity. No need for customers to change their computer's Internet settings. Authentication, authorization and accounting all built into the gateway.

Whether from Asia or homegrown, there appears to be new options for the mom-and-pop shop looking to easily offer their customers wireless Internet access and customers seeking an alternative to larger, expensive hotspot providers.

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