Saying Oui to Wireless
December 17, 2003
A Montreal hotspot operator is positioning itself for the consolidated future
Is there a major market left in North America that doesn't boast an ambitious regional Wi-Fi hotspot player?
The amazing thing is that most want you to believe that they're in it for the duration and bank on becoming national or even international players, or die trying. Ah, guys, you can't all do that.
Unheralded Tadaa Wireless Communications in Montreal, Canada -- that's tuh-DAAH as in the verbal equivalent of a drum roll -- may be the exception in this regard. Or not.
On the one hand, Tadaa CEO and co-founder Daniel Yeboah says the company definitely has aspirations to be a national player, which he figures would mean having at least 25 to 30 sites in a half-dozen or so major Canadian cities.
"In order to increase the number of people using this technology," Yeboah says, "you have to have a significant footprint."
On the other hand, he admits he would not be unhappy to be acquired.
"That's a scenario that works," Yeboah says enthusiastically. "We essentially go out and build the infrastructure and then we get gobbled up by a larger carrier that wants to enter the space -- but with somebody who has infrastructure already built."
Two-year-old Tadaa does have some of the infrastructure built. It has 25 managed hotspots up and running. Roaming agreements add another 200-plus sites in Canada, the U.S. and Europe.
Roaming partners include Monzoon Networks in Switzerland, Trustive, a Netherlands-based European aggregator, and Utah-based Hotspotzz. Tadaa is also in the process of "finalizing" a roaming agreement with Boingo, Yeboah says.
Five of Tadaa's own sites are in hotels, mostly hotspots in lobbies and other public areas. In one, however, it will offer in-room services over the wireless network, including movies on demand and possibly wireless voice over IP (VoIP) in the future. It's also in the process of installing other hotels with in-room services, Yeboah says.
The rest of the Tadaa sites are conventional hotspots in Cafés and restaurants. Most are in Montreal in the French-speaking province of Quebec. Montreal is Canada's second largest city with a population of a little over 3 million.
Tadaa has recently begun to expand out from its Montreal base, first to Toronto, where it's installing an unspecified number of hotspots -- none of which has been added to the company's published list as yet.
Yeboah expects to have 45 to 50 Tadaa-managed locations by the end of December and 150 to 200 by the end of next year -- unless, of course, a big fish comes along and eats him up first.
He took note earlier this year of an announcement that the major cellular carriers in Canada would cooperate on roaming agreements and strategies for building the hotspot market. Some of the cellular carriers already have entrepreneurial hotspot partners. Some don't yet, including Montreal-based Microcell.
"These guys are like big giants," Yeboah says. "They take a long time to make decisions and to execute. Our overhead is a fraction of theirs and we can move a lot faster. We took notice because we definitely would like to work with any of these carriers."In the meantime, Tadaa is a very small company, with just 12 employees. It was founded by Yeboah and partner William Piliguian, who is vice president of sales and marketing.
The partners originally funded it themselves, but later received angel financing from Montreal-based DVC Capital. According to Yeboah, Tadaa's funding will see it through completion of the currently scheduled hotspot roll-outs.
Like all very small companies it has a few problems. One is branding. Tadaa would be a cool name, if anybody knew what it meant. The company's bilingual but francophone rent-a-receptionists invariably pronounce the name TAH-duh Wireless, with the emphasis on the first syllable.
"We've told them about that," Yeboah says, exasperated.
Plus, Tadaa is apparently a little understaffed in the Web site creation department. Its current site does not list many of the roaming sites Yeboah claims the company has.
Tadaa has changed its business model since launching two years ago. Initially, it paid for the infrastructure and installations.
Now it charges site owners for hardware, software, installation and a broadband connection, which Tadaa re-sells from a local carrier. The up-front investment for a typical coffee shop site is under $800, Yeboah says.
Hotels pay $18,000 and up for installations that involve in-room service. Plus, they pay for the broadband connection. If they want to give the service away free to guests, Tadaa charges a monthly management fee based on anticipated usage.
If the hotel is charging for the service, Tadaa gets all the revenue, except for a retail margin on pre-paid cards.
Yeboah claims the company has a little over 1,000 annual subscribers, another 1,000 or so monthly subscribers and 1,000 to 2,000 casual users per month.
They pay $5.50 for 60 Minutes over a 48 hour period, $7.75 for four hours over a 48 hour period, $11.75 for a 24-hour period over a week and $31 for a month of access. Tadaa also offers annual subscriptions. Monthly and annual subscribers pay premiums for roaming services that vary from location to location.
Tadaa built its own billing and authentication server software which runs at its Montreal network operations center (NOC), and integrates seamlessly with roaming partners' triple-A systems, Yeboah says.
The company is marketing to its target customer base -- individual business travelers -- through a second company, Crevice Marketing Management, run by Piliguian. It's mostly using direct mail, but has also had success at trade shows, Yeboah says, including the Montreal Internet Marketing Conference.
Can Tadaa become a national presence in Canada? Can any regional player make that leap?
Tadaa does have new chain-wide deals with two Quebec-based coffee shop chains, Café Dèpôt and Café Suprême, and Yeboah hints that he's working on a strategy to work out roaming agreements with other Canadian operators.
The more likely possibility, though, for Tadaa -- and most of today's regional players -- is that it will be engulfed by a larger operator. The brand, especially given the linguistic barrier it faces, would not be worth a lot to a Microcell or another carrier bent on acquisition. On the other hand, Yeboah wouldn't be heart broken if that was the way it worked out.