Being a Hotspot, Part 3

By Adam Stone

June 04, 2004

The easy way to install a hotspot is to let someone else do it for you -- or at least work with someone to bring in customers. Partnerships are the cornerstone of most hotspots today.

We've talked about the ins and outs of setting up the physical infrastructure of a hotspot, or public-access wireless network. You can stop there if you want: Charge a fee or don't, and operate the network yourself.

But there is another way of doing business. You can tie your fortunes to those of a hotspot network operator such as T-Mobile Hotspot, Fatport, Cafe.com or one of numerous others in the field. There's also aggregators -- those that don't run their own network, but sell access to the hotspots others operate. Boingo Wireless is the primary example here for consumers.

There can be significant advantages to running a hotspot with a big name partner. First, an affiliation with a national network can help draw customers in the door: Subscribers to these networks typically will gravitate toward venues where their subscriptions will be valid. More traffic means more hotspot revenues and more potential clientele for the small-business owner.

In addition, the networks will assume a share of the burden when it comes to operating the network and collecting the money. Take for instance the Boingo model, which is typical of the aggregator setup. Boingo buys wholesale access to your hotspot network, paying you a connect fee every time a Boingo user accesses your network. Boingo also pays out a "bounty" each time a Boingo-branded subscriber signs up for service while in one of your hotspots. Best of all, Boingo or one of its partners handles all the marketing, billing and support services.

The big downside comes in the form of revenue sharing, either through a fixed fee or a percent per session. Sharing costs varies widely, but in general it is true that the more a hotspot pays up front, in terms of setup costs and other fees, the larger will be its share of revenues going forward.

In addition, a hotspot partnership will by definition come with a certain loss of control for the business owner, both in terms of marketing and also in terms of network oversight. Some may consider this a plus, though, as it relieves the small-business owner of unwanted technology responsibilities.

There are multiple options in terms of potential partners In addition to the big-name operators such as T-Mobile (which enables Starbucks hotspots) and Cafi.com (Denny's, Radisson) a number of smaller networks have been courting small businesses. Many of these target particular industry segments.

Surf & Sip, for instance, markets itself toward cafes, hotels and restaurants. Guestlink targets hotels and other business-traveler destinations. ICOA is known for its airport networks, while others serve such diverse markets as marinas, truck stops and RV parks. Many of these in turn have marketing partnerships with other larger providers. Surf & Sip for instance is accessible by customers of iPass, Boingo, Fatport and others.

The point is this: There are different networks for different needs. For those considering the partner path, it is worth doing the homework up front to get the closest match for your particular business model.

For many, the big attraction of working with a network partner will be the possibility of an easy deployment. With the rise of the so-call "hotspot in a box" model, network providers and aggregators together are giving business owners a tempting plug-and-play way to get started. Take for instance Linksys, which offers a router that is easily turned to a broadband service. Once installed, it offers easy sign-on to the Boingo network, instantly added the location to the 7,000-strong Boingo network.

The hotspot-in-a-box concept also applies to all-in-one hardware devices meant to take the oy! out of hotspot deployment. One such example is the Nomadix AG-2000w, an integrated wireless gateway that combines the Nomadix Service Engine (NSE) software with a powerful Wi-Fi Access Point, all for about $600.

The list of such products goes on, with some linking to existing network providers and others offering business owners control over their own proprietary networks.

Some in-a-box offerings aim to combine the best of all possible scenarios, as for example the Airpath WiBOSS Management Platform. In exchange for a setup fee and a monthly charge, Airpath will do more than just help you get started -- it will deliver billing services, usage tracking, management tools and optional branded customer support. It's all the muscle of a big network provider, packaged under the banner of the business owner's own brand.

With all these choices on the table, a business owner will face the need for some serious due diligence, beyond just the free-or-fee equation. Vendors have different strengths and weaknesses, and the savvy shopper will research them out before moving ahead with any hotspot program.



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