Is Commercial Wi-Fi Going Away? – Part 2

Wednesday, January 20th, 2010 Barbara Nelson, CTO

Yesterday in Part 1, I talked about the changing business model for commercial Wi-Fi. So, when will a 3G user willingly pay for Wi-Fi?

I believe that there are lots of scenarios where a 3G user will willingly pay for Wi-Fi access:

• Lack of coverage on their 3G network – the goal of the 3G network providers may be ubiquitous 3G, but the reality is that we are far from there. There may be 3G service in major metropolitan areas, but try downloading a large powerpoint presentation or watching a video when you are travelling in the wild, wild west, and you may be more than happy to drive into town to a coffee shop to use a commercial Wi-Fi network.  The dueling ads between AT&T and Verizon focus on where they do have coverage, but both of the maps have lots of white space, where neither carrier provides 3G coverage.
• International use – 3G roaming rates are still extremely high, and many an employee has incurred the wrath of IT by incurring high roaming charges when travelling internationally.  Users travelling internationally will certainly pay for Wi-Fi, so the commercial Wi-Fi networks in airports will continue to see strong demand.
• Airplanes – Recently, we have seen tremendous growth in Wi-Fi on airplanes.  A few years ago, early attempts at offering Wi-Fi on airplanes were not successful, mostly due to the high cost of deploying Wi-Fi on each plane.  Recent technological advances have made this more feasible commercially, so we are now seeing airplane-based Wi-Fi getting broad adoption. The airplanes provide a tremendous opportunity, where users are willing to pay for internet connectivity.
• Slow performance on 3G network – for bandwidth-hungry applications (such as videos), the user experience on a 3G network is barely tolerable.  Users of bandwidth-intensive applications will pay for the higher performance of a Wi-Fi network.

So, I do believe that there are many opportunities for commercial Wi-Fi to be successful, but the Wi-Fi providers cannot ignore the competition from the 3G network providers.  The opportunities for commercial Wi-Fi will change, as the 3G networks provide acceptable service and acceptable performance for many users in many of the tried-and-true Wi-Fi locations (e.g. coffee shops in major metropolitan areas).  I look forward to watching the Wi-Fi providers continue to re-invent themselves.