[FoRK] NYTimes.com Article: Where Entrepreneurs Go and the
Internet Is Free
Stephen D. Williams
sdw at lig.net
Sun Jun 6 20:12:54 PDT 2004
The countervailing force is pervasive, reasonable speed Internet service
directly through the phone and its network.
My SprintPCS 144Kbps (or so) service is available everywhere SprintPCS
is, which is nearly everywhere, and is unlimited and free (after the
base phone plan). (Although this is somewhat a tacit arrangement for PC
connection right now.)
Of course, I'll use a free hotspot when it's available, but I can't see
paying $9.95/day when I can get about 2-3x dialup for free with no
hassle (except running Windows).
khare at alumni.caltech.edu wrote:
>The article below from NYTimes.com
>has been sent to you by khare at alumni.caltech.edu.
>This is the exact location where I met smruti for the first time! :-)
>khare at alumni.caltech.edu
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>Where Entrepreneurs Go and the Internet Is Free
>June 7, 2004
> By MATT RICHTEL
>SAN FRANCISCO, June 6 - Linda Branagan would seem to be the
>ideal customer for entrepreneurs and telecommunications
>companies looking to make money selling wireless Internet
>connections. But, like thousands of business road warriors,
>Ms. Branagan often does not pay for the service because she
>gets it free.
>At cafes, malls and downtown business districts, there has
>been an explosion of Internet access points, or Wi-Fi hot
>spots, that let computer users log on to the Internet for
>free. That growth is a fundamental reason - though not the
>only one - that technology start-ups, investors and
>industry analysts who had high hopes for Wi-Fi are
>scrambling to find sustainable business models.
>Ms. Branagan, a director of a medical device research
>company, pays T-Mobile, a unit of Deutsche Telekom, $6 an
>hour for a wireless Internet connection when she is in
>airports if there are no free access points. But it is
>another matter when she is working outside the office in
>"The Internet is free here," she said, as she sat doing
>research at The Canvas, an art gallery with a lounge and
>cafe setting in San Francisco's Sunset district. "Why would
>I pay T-Mobile?" she asked, when the cafe owners provide
>free Internet access to attract patrons.
>The number of Wi-Fi hot spots has grown rapidly in the last
>year, with as many as 15,000 in operation in public
>locations, according to the Yankee Group, a market research
>But the difficulty of making a profit was made evident last
>month with the demise of Cometa Networks, a well-heeled
>Wi-Fi start-up backed by I.B.M., the Intel Corporation and
>the AT&T Corporation. Cometa, founded in 2002 to build a
>network of access points at retail outlets, announced on
>May 19 that it would suspend operations because it was not
>providing a suitable return to investors. Verizon Wireless,
>which said last year that it would build 1,000 Wi-Fi hot
>spots in Manhattan, has cut that number to around 500.
>Meanwhile, thousands of free hot spots have been
>established by public agencies, mom-and-pop businesses
>hoping to attract customers and individuals working to
>build a grass-roots based network. A handful of city
>governments, some in cooperation with local businesses, are
>deploying free Wi-Fi networks in parts of Jacksonville,
>Fla., lower Manhattan and Portland, Ore., among other
>"It's going to be hard for commercial carriers to make a
>profit," said Dewayne Hendricks, the chief executive of
>Dandin Group, a wireless Internet service provider based in
>Silicon Valley, who serves as technical adviser to the
>Federal Communications Commission on wireless Internet
>Mr. Hendricks said the remarkable spread of free networks
>was forcing commercial carriers to rethink their
>"The infrastructure is being built from the bottom up," Mr.
>Hendricks said, referring to a municipal and grass-roots
>effort to deploy wireless connections. "How that plays out
>is potentially monumental," he said in affecting the way
>Internet access is provided.
>Each Wi-Fi hot spot has a radio transmitter and receiver
>that is connected to the Internet through a broadband
>connection like a digital subscriber line, or D.S.L. The
>transmitter communicates with personal computers and
>enables them to send information to, and receive
>information from, the Internet. The transmitters typically
>have a range of 150 to 1,000 feet, though there is new
>technology emerging that could send a signal over several
>Because transmitters can be on different networks, a dozen
>or more hot spots can operate simultaneously in any given
>area, providing overlapping coverage. The connections do
>not interfere with each other because they are working on
>different radio channels. For users in big metropolitan
>areas like New York City and San Francisco, a free
>connection can almost always be found on blocks where hot
>spots are dense.
>Even so, not all companies selling Wi-Fi service are
>struggling. T-Mobile, for one, has a well-established and
>profitable business model, said Roberta Wiggins, an analyst
>with the Yankee Group.
>T-Mobile has 4,650 Wi-Fi hot spots in Kinko's, Borders
>Bookstores, hotels, airports and Starbucks cafes, and it is
>adding 35 a day, the company said. Last week, it announced
>plans to deploy hot-spot connections in 122 Hyatt Hotels in
>North America. Users pay $9.95 for single-day access,
>$29.99 for a monthly access to all hot spots in the network
>or $19.95 a month if they are customers of T-Mobile's
>The company would not disclose how many customers it has,
>or its revenue or profits. But Joe Sims, general manager of
>T-Mobile's Wi-Fi business, said, "We fully expect to make
>money in the public hot-spot business." He noted that the
>company has learned some important lessons - namely, that
>the hot spots need to be in locations with heavy traffic
>from business customers and that a profitable Wi-Fi
>business needs to build a national network and brand that
>will give users the ability to log on at a variety of
>locations using the same service.
>In the case of T-Mobile, he said, the company is keeping
>costs low by having the Wi-Fi division and its mobile-phone
>business share an underlying data network, as well as the
>network operation and customer call centers. Mr. Sims also
>he said the company is exploiting its brand name by
>marketing the wireless connection service to its existing
>cellphone customer base of 14.3 million users.
>Mr. Sims said he is not worried about the growth in free
>hot spots because he believes commercial networks can offer
>more reliable, more secure Internet access. Free service is
>fine for casual and periodic use, he said, but "when you
>absolutely, positively have to get that report downloaded
>or get access to your company system to conduct business,
>free probably isn't going to cut it."
>Indeed, when Ms. Branagan, 37, travels for business, she
>said she pays T-Mobile on an hourly basis for Internet
>access, mostly while waiting in the United Airlines Red
>Carpet room, where there is no free option. She added that
>she probably would sign up for a longer-term plan if the
>service were less expensive.
>Sitting beside her at the San Francisco cafe was Paul
>Hagen, 39, who runs a technology consulting company. Mr.
>Hagen said he would consider subscribing to a Wi-Fi plan if
>there were a provider that offered universal access to hot
>That challenge - giving consumers the ability to pay for a
>single plan that covers hot spots in a variety of locations
>- may be essential to growth in the service, according to
>In the cellphone industry, universal access is accomplished
>by "roaming agreements" that let the customers of one
>mobile-phone provider use the network of a competitor. Most
>roaming agreements in the Wi-Fi business, said Mr. Sims of
>T-Mobile, are still relatively limited.
>In other respects, too, the Wi-Fi business may well go the
>way of other telecommunications services, said Ms. Wiggins
>of the Yankee Group, in that it could become dominated by
>telecommunications companies that already sell cellular,
>Internet and landline phone services in bundled plans.
>SBC Communications Inc., the regional phone company based
>in San Antonio, previously said it would roll out 3,000 hot
>spots by the end of next year, largely at UPS retail
>outlets. And in an announcement planned for Monday, SBC
>said it plans to offer access in 6,000 McDonald's outlets
>around the country.
>The cost is $19.95 a month for unlimited access. But
>Michael Coe, an SBC spokesman, said the company ultimately
>planned to offer a substantial discount to its existing
>customers. He said that SBC did not expect its hot spots to
>become a stand-alone business, but rather an offering along
>side cellular, Internet and land-based telephone service.
>While Wi-Fi "offers a revenue generating opportunity," he
>said, "it's real benefit to SBC is as a customer retention
>and acquisition tool."
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Stephen D. Williams 703-724-0118W 703-995-0407Fax 20147-4622 AIM: sdw
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