Iowa's I Spot Takes Wi-Fi on the Road

By Gerry Blackwell

March 17, 2005

This provider of free hotspot access is working with the state DOT to offer service to highway travelers, using time limits and advertising to generate revenue.

I Spot Networks recently won an unusual contract from the Iowa Department of Transportation to put Wi-Fi hotspots in 40 rest areas along Interstate highways in the state. The contract is unusual in that the DOT isn't paying I Spot one red cent to build the hotspots, and on top of that, it slapped restrictions on how the hotspots could work.

I Spot is certainly not unique in offering Wi-Fi services to highway travelers. We wrote not long ago about SiriCOMM, for example, and its wireless access services at truck stops operated by Pilot Travel Centers. There are others. However, I Spot is, in a number of ways, challenging the accepted wisdom about how to build a hotspot business.

Formed three years ago, the company started by putting hotspots in restaurants, hotels and shopping malls, mainly in the Des Moines area. Nothing unique about that either—except that access at I Spot hotspots is almost invariably free. The company has convinced site owners to pay for the infrastructure and also pay I Spot a management fee, but charge customers nothing to use the service. The return for the owners will come from increased traffic. The profit for I Spot will come from advertising.

Mark Wheeler, the company's founder and president, is hoping the DOT contract will help kick this business plan into high gear by luring highway travelers off the road and into his site owners' and advertisers' establishments, and also by opening up a whole new set of roadside advertising prospects. The highway hotspot initiative comes at some cost to the company, though.

"We're doing this project with 100 percent of the risk to our company," says Wheeler. "It's not an approach just anybody can take. You'd better have a very resourceful business model if you're going to do it this way."

After running a six-month pilot with hotspots in eight rest areas, he's convinced it will work. During the pilot the network was used 111,000 times by about 16,000 registered users. Users of I Spot's other hotspots can also take advantage of the service at the rest areas and travelers can register on the spot to use it.

Wheeler originally approached the DOT, which made it clear from the start that it had no budget to pay for hotspots. He convinced the department to cooperate with a trial.

"The DOT had a lot of questions going in," Wheeler says. "Should it be in this business? Should it allow hotspots at the rest areas? Will travelers be interested? Early in the test, they knew it was the right thing to do."

At the end of the pilot, the DOT issued a Request for Proposals, which I Spot won. Having won, it now has to put hotspots in 32 more rest areas by the end of June—all at its own cost.

Wheeler isn't sure if any companies responded to the RFP in the end, though the department definitely had enquiries from other vendors, he says. There can't have been many that saw the advantage in undertaking a project that generated no direct revenues. Wheeler could.

"We were seeing a nice traffic at our restaurants and hotels and malls, but in order to create a value stream for advertisers, we needed more than a dozen users a day in restaurants," he says. Highway travelers, often looking for food and accommodation, could provide that value stream, he reasoned. "We believe there are thousands of highway drivers who, being away from home or away from the office, need to be online to pick up e-mail or whatever."

Given that the state reported 18 million visits to its rest areas last year, this is not an unreasonable assumption. Not all of them have Wi-Fi-equipped PDAs or laptops, of course, but I Spot will also install Internet kiosks at the rest areas so that even travelers who don't have Wi-Fi devices can access the DOT information—and his advertisers' pages.

Besides having to pay for the hotspots, I Spot also had to conform to "state and federal regulations" governing how advertising can be done in government-owned facilities. It could not present advertising information unless users expressly asked for it. When Wi-Fi users first associate with a rest area hotspot, they see a page with 511 information—511 is the U.S. Department of Transportation-funded free phone service for distributing local travel information—and other Iowa DOT information.

Only when they click on one of the standard blue highway symbols for food, gas or lodging do they actually register and/or log-in and go out on the Internet. I Spot provides sponsorship opportunities that allow major brands to have graphical links to their local information pages on top-level pages.

It has also developed a very effective scrollable graphic index page showing the highway ahead and behind with each exit marked and labeled with a legend indicating what services are available at the exit. When they click on an exit, they see a page with links to advertisers and hotspot venue owners at or near it.

"So now travelers who want to find services don't have to wait to decide where they'll pull off until they're on the road, when they can only see signs for the next exit," Wheeler says. "And also highway travelers can now refer themselves to other I Spot hotspots, so it creates a nice promotional opportunity [for site owners]. It's really a win-win-win situation."

Response from advertisers was reasonably good when I Spot first approached them with the concept before the pilot, but the company only had three months to sell ads. Some who were interested wouldn't commit when it wasn't clear whether there was any future in the rest area hotspots. Now the company is going back to the same prospects, starting by making contact with every business that has a highway sign on an Interstate. This time it's using a marketing company partner to do the door knocking.

"Once again we're getting very positive feedback," Wheeler says. "We're optimistic that this is going to be very fruitful."

Advertising is just one source of income. Travelers can only use the hotspots for free for up to 30 minutes at any one rest area. The state has authorized I Spot to sell premium access which would give them an additional hour of connect time. The company is also looking into offering VoIP access as a premium service and setting up surveillance cameras that TV stations could use in traffic reporting.

Of course, I Spot still has to build out the hotspot network before it can cash in on any of this revenue. At each rest area—or each pair of rest areas, in cases where they're across the highway from each other—it installs one access point (usually a Proxim model) and two antennas: one for coverage of picnic and parking areas, one for indoors. It also installs a Linux server which handles the minimal authentication process—I Spot built its own hotspot management software—and hosts the DOT road safety and public service information.

Wheeler wasn't sure at the outset how much of a problem getting backhaul to the rest areas would be, and still isn't entirely sure. Some are fairly remote. For the first four pairs used in the pilot, he "cherry picked," he says, selecting locations where high-speed access was readily available and the pairs of rest areas were close together. In three out of four, he used backhaul services from a local wireless ISP. For the other, he was able to get DSL.

"Satellite is certainly an option if need be," Wheeler says. "We're just finishing our final research on what's available. At this point, it looks like non-satellite options are available at most if not all locations."

The company is looking at putting hotspots into state Welcome Centers as well. There are 20 of them, some privately operated, others state run. It's also talking to other state departments of transportation.

It's an interesting business model. Will it work? Keep your fingers crossed that it does and that the concept spreads across the country, because Wheeler is surely right that many of us want or need Internet access when we're on the road—and free sure beats paying.

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