Validating the Hotspot Model?

By Eric Griffith

August 27, 2002

Toshiba's quiet play into providing hotspots seems ready to go wide as they sign iPass as the first partner in their new, national wireless public access network.

Announced rather quietly earlier in the summer, it looks like Toshiba's Computer Systems Group (CSG) hotspot initiative is ready for phase two. The company seems poised to give the push toward increasing the number of public hotspots in the U.S.

The fist part of the strategy was the June release of the Toshiba Wireless Broadband Hotspot, a $199 piece of plug-and-play hardware a location owner can stick on their broadband connection to provide instant 802.11-based surfing for customers.

The latest announcement has Toshiba and iPass integrating their products. Toshiba hotspots will offer full support for universal client software of the iPass Global Broadband Roaming (GBR) service. In addition, Toshiba's hardware will follow the generic interface specification (GIS) that iPass hopes will become a standard for WLAN roaming at all hotspots using smart client software.

"[Toshiba is the] first big brand getting into the provider space," says Dave Ballard, Senior Manager of Business Development at iPass. He feels that Toshiba's hotspot network "validates the [hotspot] business model."

By integrating, Toshiba's managed hotspots will be added to the iPass 'phonebook' of supported public access locations. iPass users will in turn be able to get to corporate networks while on the road at any Wi-Fi location powered by Toshiba's products.

Toshiba's access controller hardware, a simple box with a port for the broadband connection, a power cord, and a couple of lights, is apparently not much to look at, according to John Marston, VP of Business Development at Toshiba CSG. But, he says, that just makes it all the easier to setup and use.

Fast deployment is what Toshiba wants, thus the simplicity and the low price (similar products from Nomadix, Colubris, and Pronto cost hundreds more). Toshiba CSG's Product Development VP, Oscar Koenders, has been previously quoted as saying the company would like to see 10,000 hotspots in the United States by the end of 2003. But the company is faced with a "chicken and the egg" quandary: even with millions of Wi-Fi capable devices out there, there's not enough hotspots for them all -- yet not enough people will start to use hotspots until more are deployed.

Their first phase of rolling out the Toshiba wireless network is to get setup with potential hotspot operators -- the entrepreneurs who will get the training on how to install and maintain the equipment. Those operators will then be sent forth to bang the drum and sell Toshiba hotspot equipment to location/venue owners (the usual hotels, airports, coffee shops, etc.) in their local area.

Once a Toshiba hotspot is installed, all traffic through it comes back to the Toshiba network operations center (NOC), which takes care of the authentication, authorization and accounting (AAA). All revenue is split 50/50 -- half to Toshiba, the other half to be split between the hotspot operator and the venue owner as they see fit.

How much is charged to the end users is up to the location owner, but Toshiba also offers guides lines on pricing.

"Location owner are in a better spot to determine that price," says Marston. "They'll be registered hotspot owners with Toshiba. They'll get sales, with installation, maintenance left to the (hotspot) operator."

Toshiba hopes this hotspot-operator-to-location-owner sales method will help push Wi-Fi hotspot adoption, similar to cable companies pushing cable modems to home owners. "We'll eventually offer a retail product you can do a self install with," says Marston. For today's market, however, there isn't enough awareness. "It would just gather dust today," he says, assuming they could even get a big retailer like Best Buy to give up the store shelf space.

For now, anyone looking to get a Toshiba hotspot for their location will be referred to a Toshiba hotspot operator in their area. Marston thinks the hardware might be available direct from Toshiba's Web site by the end of the year.

Ultimately, why has a big name like Toshiba even bothered to become a wireless ISP at all?

"We've always been into mobility products," says Marston. "We've continued to drive innovation in mobility. Clients, if they can't get on the Internet, are not nearly as useful. Hotspots are part of that vision."

iPass's Ballard thinks that Toshiba could be the boulder starting the hotspot avalanche. "The advantage Toshiba has is a mature distribution channel and a name in the industry," he says. "They've got aggressive expectations."

Eric Griffith is the managing editor of 802.11 Planet.

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