Is Commercial Wi-Fi Going Away? – Part 1

Tuesday, January 19th, 2010 Barbara Nelson, CTO

As Mark Twain once said, “the reports of my death are greatly exaggerated”. We could say the same about commercial Wi-Fi.

Over the past few years, as more and more users have gained access to 3G networks (either via their smartphones or 3G devices for their laptops), the death of commercial Wi-Fi services has been predicted. Why would a user pay for access to a Wi-Fi network, when they have ubiquitous coverage on 3G? The future of Wi-Fi is being portrayed solely as a free alternative, to offload traffic from commercial 3G networks. But, is Wi-Fi really going to become a niche play, just for the home or campus networks? Will nobody make money deploying and running a Wi-Fi network? Are ad-supported networks the only Wi-Fi networks of the future? Will commercial Wi-Fi providers give up on charging users for the service, and toss it in for free with a cup of coffee or a hotel room? I don’t think so.

It is certainly true that the business model for commercial Wi-Fi is changing. The growth of alternative wireless networks (3G, WiMAX, LTE etc.) introduces new challenges to the Wi-Fi providers. Gone are the days when a Wi-Fi provider can simply deploy an access point in a coffee shop, charge $10 per session, and sit back and collect revenue. The Wi-Fi providers need to re-invent themselves.

Eight years ago, Wi-Fi represented a new opportunity, where the connected user could be untethered, no longer tied to a dial-up phone line for internet access. At the time, this was a major step forward. A user could check their email in the comfort of a coffee shop, or the relative comfort of a departure gate as they waited for their flight. For this luxury, users (or their companies) were willing to pay up to $10 per session (or even more in Europe). For some occasional travelers, this business model still works. For the user who travels regularly, though, it makes more sense to buy a subscription to a 3G network. Those users don’t have to pay $10 to check their email, when they can check their email all month on their home 3G network for a monthly subscription fee of $40.

So, when will a 3G user willingly pay for Wi-Fi? See Part 2, tomorrow.

Tags: 3G network, wi-fi access