The End of Free Access?

By Adam Stone

March 15, 2004

The great debate between the future of for-pay hotspots vs. free access continue, as one pundit predicts that popularity and tech support issues could be the death knell while a free provider begs to differ.

Did you just hear a groan and a dull thud? That was free public-access Wi-Fi dropping dead.

It's a bold prediction. Coffee shops, sandwich stores and retail zones nationwide are quickly driving toward hotspot ubiquity, and many are giving away their airwaves for free in an effort to stand out from the crowd. Yet there are those who say this freebie feast cannot last long.

In his thought paper Free Hot Spot WiFi is Dead, Leigh Fatzinger offers the following scenario. "Ask any barista at a coffee shop offering free WiFi the following question: 'My NIC software can't find your SSID and says I need to disable WEP to use your Hot Spot. What should I do?' "

Welcome to the land of blank stares.

It's not just the lack of technical expertise that raises concerns for Fatzinger, a principal with vParciera, a Seattle startup building applications for public WiFi networks and hot spots. He notes that customer usage of free Wi-Fi access is still relatively low, limited mostly to early adopters. But as the Wi-Fi experience becomes more user friendly, sandwich-shop owners may find their bandwidth taxed. At that point, the customer experience could degrade rapidly, and what started out as a nice way to draw in new customers could suddenly become a reason for the business-lunch crowd to chow down elsewhere.

Such cyber-squatters have long been considered a possible problem -- some solve the issue by not allowing customers to use AC outlets. Some just turn off the network during high-traffic times. Not exactly Wi-Fi user friendly.

Fatzinger says it won't matter. Once people decide they need Wi-Fi access, they will find the places where access is best, even if they have to pay for it. "There is a reason there are no free cell phone calls," Fatzinger said.

The cell phone analogy may be especially apt. Drivers for example may avoid areas where they know coverage is going to be spotty, but as long as the service is generally solid, people will not be likely to switch carriers and thus the phone company keeps its core business intact.

Now consider a sandwich shop. Sometimes an unsatisfied Wi-Fi user may choose to eat elsewhere. Unlike that cell phone carrier, the venue "risks losing their core business if they can't deliver Wi-Fi as an experience comparable to delivering a great sandwich," Fatzinger said.

There are exceptions to the idea that free Wi-Fi is headed the way of the dodo. Universities, for instance, and municipally funded "hot zones" typically have budgets in place for things like upgrades and tech support. Hotels, too, will likely factor in the cost of network support if they wish to offer Wi-Fi as an amenity.

Still, some say that even small retailers and eateries could keep free Wi-Fi alive, if the conditions are right.

Take for example , a Boston consortium delivering free Wi-Fi to about a dozen users a day at 16 different retail locations around the city. In this case, the network is able to thrive thanks to corporate sponsorship. Specifically, IT consulting firm Tech Superpowers founded the network and supports it at no charge.

Even without such support, free Wi-Fi could work, said Tech Superpowers president Michael Oh. In the first place, technical problems are unlikely to deter would-be users of a free network. "When people walk into a free Wi-Fi zone, they don't really expect a whole lot of service. We have seen exactly that on our network," he said. "It is not like they are paying for a tech support call. There just is not that level of expectation."

Moreover, Oh offers a different sort of business logic from those who predict the demise of free access.

Sure, he said, things will soon get busier, and that will mean a greater need for tech support. But if that becomes the case -- isn't that a good thing?

"Even if it does require some tech support, if it is drawing customers in from Starbucks then I think there is a business reason to do that," he said.

Suppose, though, that the nay-sayers are right. If free access truly is to be short-lived, those who offer such services will need to reevaluate their long-term strategies.

"Companies that are doing this are going to have to set very clear expectations for themselves, that it might not be free forever," Fatzinger said. "If they have that expectation about operational and capital expenses, they will be safer than if they assume a one-time Wi-Fi installation."

Would-be hotspots therefore might want to partner with an outside manager, as Starbucks has done with T-Mobile Hotspot , in order to ensure that security upgrades, bandwidth management and other crucial issues are handled appropriately. At the very least, Fatzinger said, it makes sense to purchase equipment that can be easily upgraded in terms of bandwidth and future security requirements.

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