GRIC Seeks to Rewrite Roaming Equation

By Gerry Blackwell

September 07, 2001

Swiming against the tide created by public-access WLAN pioneers, this company's mission is to spread the gospel of global wireless connectivity through sharing and cooperation. Will they be able to find the right partners?

In a recent article we looked at MobileStar Network, which is building a network of Wi-Fi (802.11b) access points in airports, hotels, and restaurants—notably Starbucks locations—across the country.

As we saw, MobileStar's stategy is based on deploying a far-flung network and selling services directly to subscribers. The company is not completely averse to the idea of partnering with wireline Internet service providers to make wireless roaming services available to their customers, but it's certainly not a top priority.

By contrast, for GRIC Communications Inc. of Milpitas Calif. (an aggregator so far offering mostly dial-up roaming services) partnering with ISPs is central to its business plan. And now it's making a determined push into the Wi-Fi public access space.

"We see Wi-Fi as a natural extension to what we're already doing in dial-up," says Perry Lewis, GRIC's manager of business and corporate development.

Wireless, Lewis says, is really starting to get hot.

"I've been in wireless for close to nine years and every year people said, 'This is the year.' Now though with the deployment of wireless LAN's for the enterprise rising and Wi-Fi chips being put onto the motherboards of laptops, the push is getting much stronger."

MobileStar and Wayport Inc. of Austin TX are the pioneers in this area. They have, as Lewis says, "plowed the field." But both use a similar business model—again, deploying their own access points and dealing service directly with customers.

The one flaw, as we pointed out last time, is that most of those subscribers will need to have at least two ISP accounts, one with MobileStar, another with an ISP that provides conventional business or residential access services back home.

MobileStar functions as its own ISP, but doesn't provide any wireline services.

In GRIC's business model, roaming is what it's all about. The company is constantly adding new ISP members to its GRIC Alliance, a network of service providers that offer roaming access to each others' and GRIC's subscribers.

There are 300 Alliance members, mostly Tier 1 and 2 players, with over 15,000 dial-up and Wi-Fi locations in 150 countries.

GRIC contracts with each ISP to provide roaming access at an agreed hourly rate. Then it brokers the services.

Some members only provide access to their footprint for a fee. Others also provide their own customers with roaming access to other members' footprints.

"Our business model is the antithesis of what some companies have done in the dial-up world, where they've tried to create their own global networks," Lewis says. "What GRIC did was it took existing service providers and showed them how they could all work together."

Service trinity
GRIC provides three essential services. First, it does the authorization and authentication of roaming customers. To do this, it maintains its own servers attached to members' POPs—over 500 of them.

When subscribers dial up or log on at a Wi-Fi location anywhere in the world, they connect first to a GRIC server, which sets up the connection with the local Alliance member.

The benefits for subscribers are three-fold. They need only one ID and password. They get one bill for all their ISP services.

And they pay far less for GRIC's roaming service than if they dialed long distance back to a home ISP or used other roaming services. GRIC estimates the savings at 60 to 90 percent.

Second, GRIC does all the financial settlement for members, keeping track of who owes what to whom.

Finally, it supplies subscribers with a continually updated piece of secure client software that sits on their laptop and acts as a director of services.

Wherever they go, subscribers can pull up the GRICdialer with its database of local services available and click on the one they want. The software makes the connection with no further intervention by the subscriber.

So far so good.

Grab and go global
We asked Lewis if joining the GRIC Alliance provided an opportunity for ISPs to get access to Wi-Fi roaming services they could then turn around and offer their customers as a value-added service.

"By all means," he says. "The GRIC value proposition for service providers is that we're extending their global reach, we're giving them additional sources of revenue—they can charge a premium for the wireless services. And it's also a way to ensure customer retention."

There are, inevitably, a few little snags.

One is that Tier 3 players need not apply. GRIC's perception is that smaller ISPs don't provide the kind of quality of service its subscribers expect.

Second, GRIC doesn't have very many Wi-Fi locations anywhere yet—only about 65, Lewis says. And most of those are in Australia, New Zealand, and Southeast Asia.

At the time of writing, the company was in the final stages of negotiations with two other Wi-Fi public access service providers. Once—if—they're signed, the total number of Wi-Fi locations available would go to about 350. Most are still in Asia Pacific, though.

Asia in fact is GRIC's main focus for Wi-Fi right now.

Eastern focus
This is partly, we surmise, because the company's president and founder, Hong Chen, is from there and originally had the idea for GRIC because he was frustrated at not being able to get reasonably-priced roaming services while traveling on business in Asia himself.

Another reason, Lewis says, is that Asia, which doesn't have the kind of high-speed wireline infrastructure North America and Europe enjoy, has enthusiastically embrace wireless.

Many Asian airports and telecoms are currently in the early stages of deploying Wi-Fi roaming networks—in some cases with plans to cover whole cities, he says.

Another reason for the Asia Pacific focus, though, is that it's currently difficult for GRIC to get Wi-Fi coverage in Europe and North America.

This could be a problem. If it can't get adequate Wi-Fi coverage where American business people travel most it will certainly make GRIC less attractive to North American ISPs as a Wi-Fi partner.

In Europe, with the exception of Scandinavia, Wi-Fi doesn't have much profile at all.

This is partly, says Lewis, because the European industry over-invested in 3G licenses and doesn't have capital to invest in deploying Wi-Fi. Plus 3G is perceived as a potential alternative to Wi-Fi.

And it's partly that in some European countries regulations prohibit the use of 2.4GHz spectrum for public access applications—the UK and France, to name two. GRIC and others are lobbying European regulators to make changes.

North America is problematic because—well, because MobileStar and Wayport have a lock on a lot of the best locations for Wi-Fi access points. And so far MobileStar and Wayport have not been responsive to GRIC's overtures.

That may be changing, however.

Wire-free sustenance
"We have been and are in negotiations with both companies [MobileStar and Wayport]," Lewis says. "I can't tell you any details but, yes, we are talking with these companies because they do have footprints we'd like to utilize."

According to Lewis, both companies rebuffed GRIC's initial advances, believing they didn't need roaming users to make their businesses economically viable.

"We're saying to them, 'Let us give you free money.' They were not seeing it at that time," Lewis says. "But their tune has changed drastically since then, because of the economics of building out their networks."

He points out that Metricom, now in Chapter 11, thought the same thing as MobileStar and Wayport—and Metricom had about 50,000 subscribers compared to the 5,000 or so he believes MobileStar currently has.

"Five thousand customers will not sustain them," he says. "I believe all these companies are now starting to see this."

If MobileStar and/or Wayport cave and join forces with GRIC, it could bust the Wi-Fi public access wide open.

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