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Hot Spots Start to Get Real

by Glenn Fleishman
03/06/2003

It sounds like a riddle only the sphinx would ask: "Why is San Jose better than San Francisco?" The unlikely answer: until Wednesday, March 5, 2003, San Jose's airport had full-terminal, wireless Wi-Fi coverage, while SFO (San Francisco's airport designation) had payphones, a few (very few) with modem ports.

On Wednesday, dignitaries including Intel's Andy Grove and the king--I mean, mayor!--of San Francisco Willie Brown joined SFO's airport director John Martin and T-Mobile USA's vice chairman Bob Stapleton to cut the cord at the airport. At the same time, T-Mobile rolled out its lower prices, which might have the effect of goosing for-fee Wi-Fi.

Although SFO had tried at least twice before to bring in wireless service during the heyday of the dotcom area, neither company that had originally committed to add Wi-Fi service was able to follow through. Something about money and investors, and how both had dried up between commitment and execution.

When I interviewed the information technology and telecommunications director at the airport in October 2001 for a New York Times article, he had said that they were watching and waiting, trying to find a partner stable enough to not burn them. T-Mobile was that partner.

T-Mobile HotSpot, the wireless ISP (wISP) division at the cellular telco, took over MobileStar's existing 1,200 Starbucks and few dozen other locations when it bought MobileStar's assets out of bankruptcy in early 2002. Since then, it's expanded to 2,200 Starbucks in dozens of municipalities, and has signed deals to bring HotSpots into all 400-plus Borders and 100 airport club lounges run by American, Delta, and United. They already have some service in American lounges, but they'll be expanding and branding it more clearly.

Starbucks seemed like a natural HotSpot participant as T-Mobile built momentum for its product, but now other retail hot spots are proliferating nearly as fast as Starbucks franchises themselves.

For-fee wISPs have finally taken hold in the U.S., and are starting to accelerate in Canada, Asia, Australia, and across certain European countries. The gating factor for users paying for service seemed to be a combination of ubiquity and price.

Free-access community networks have continued to grow as well, but few communities have seamless access all over; usually there are specific areas, such as Bryant Park in New York, or Pioneer Courthouse Square in Portland, Oregon, that have a "brand name" and good coverage. Ubiquity is thus an issue, but also quality: free hot spots run by community groups may be able to achieve commercial-quality uptime, but many groups are relying on connections of individuals who may have more priorities than consistent wireless service for their nodes.

Ubiquity

Ninety-seven percent coverage, or whatever would be closest to ubiquity, isn't quite here yet. It's clear that something on the order of 20,000 hot spots is needed to achieve a don't-think-about-it, cell-network level in the several hundred largest cities in the U.S.

T-Mobile is giving ubiquity a run for its money in the cities where it has pushed out dozens of Starbucks installations, literally--as no one is quite clear how they'll turn a buck with their deployment costs. For instance, in Miami alone, one of its more recent rollouts, 20 Starbucks within a few zip codes of one another have 1.544 Mbps T1 lines and T-Mobile service.

Yup, T1 lines: T-Mobile committed to T1 service with Starbucks, which means quite a lot of recurring monthly fees to pay.

T-Mobile has the largest U.S. footprint of any single wISP; the second largest is Wayport, with about 450 locations, mostly a few hotel chains and several airports, including San Jose, Austin, and Seattle-Tacoma. Several wISPs in the next tier have 50 to hundreds of locations, including Surf and Sip, which has expanded out of its San Francisco Bay base into Mexico and the U.K.

A few aggregation firms offer access to many networks through special software. Boingo Wireless is the most notable for its branding push and its founder, Earthlink's builder Sky Dayton. Boingo has over 1,200 hot spots across two dozen wISPs to which a single login provides access. Boingo requires a special client software package that works only with Windows and certain PocketPC computers. They expect a Mac OS X version out by mid-year.

Other wISPs and telcos have announced partnerships that could service hundreds or thousands of locations, but we'll have to wait and see. British Telecom originally said they'd have 400 hot spots operating by late last year, but only had a few dozen. They still plan 4,000 across the U.K., but the timetable is now several years. Likewise, Boingo's head promised 5,000 hot spots in its network by the end of 2002, but hit just about 1,000.

That burning sensation at the end of 2003 for ubiquity is Cometa, a company formed by Intel (with investments from Intel Capital's wireless fund), AT&T (with interest from AT&T's cell and data services), and IBM (focusing on IBM Global Services, which performs corporate wireless LAN or WLAN installs).

Cometa's goal is 5,000 hot spots within a year and 20,000 within a couple of years. They want hot spots within a five-minute walk or drive of most of the country. They plan to resell their service to aggregators--they announced a preliminary partnership with Boingo competitor iPass early this week--and cell telephone companies.

Cometa's head, Larry Brilliant, was also behind AerZone, a company you never heard of, as it was stillborn in December 2000. AerZone's business model was to unwire airports, starting with terminal waiting areas and club lounges and working up to entire airports. Unfortunately, they underestimated the capital and the bureaucracy involved, and shut down just before the real dotcom bubble burst.

Outside of the U.S., reports indicate over 10,000 hot spots in South Korea out of a plan to deploy 25,000 by the two major telcos; in Austria, one provider has put in several dozen and expects several hundred locations; several wISPs including Surf and Sip, T-Mobile, and British Telecom, as well as several independent retail chains and restaurants, are adding hot spots every day; and in Australia, Telstra, and Optus recently clarified their plans to compete by rolling out hundreds of outlets in McDonald's and other locations.

The Swedish cellular carrier Telia has its own hot spot division, HomeRun (homerun.telia.com, named in English, oddly). HomeRun has a few hundred hot spots across the Nordic world, mostly in Sweden, but some in Denmark and Norway. They just signed an agreement with Finnish cell operator Sonera, so that customers of either network can freely roam.

Competition in Canada might become fierce shortly, as the only player of any scale at the moment, FatPort, inked a deal to add several dozen hot spots nationwide, while Toshiba of Canada says they'll roll out hundreds. Other firms also predict hundreds, although the build-out is just beginning.

Cooling Your Heels in a Hot Spot

One of the real problems with current coverage, however, isn't necessarily density: if every McDonald's, Subway, Borders, Barnes & Noble, and Starbucks had access, you'd still find yourself without service in places you might spend much longer periods of time, if you're traveling for business or pleasure: hotels and airports.

Currently, several hundred hotels offer some combination of Ethernet in the room and Wi-Fi; more are switching to all Wi-Fi, as the cost has dropped while wiring expenses stay the same.

In the last few weeks, several hotel chains, large and small (but mostly in the premium range) have announced radical expansions to their in-hotel Wi-Fi service. Omni will add Wi-Fi to all 30 of their hotels and not charge separately for it. Marriott and a few ownership groups that have properties across several chains have talked about adding Wi-Fi to hundreds of hotels each. Intel has even gotten involved in helping hotels unwire and marketing their wireless access to try to push adoption of Wi-Fi.

(Intel, separate from its Cometa investment, is trying to push its new Centrino laptop system with $300 million in advertising, some of which is tagged to co-market wISPs and other hot spots that are "Centrino verified," which just means you can connect to them with the Wi-Fi circuitry in a Centrino laptop. Most of the wISPs have already been verified or have announced support for becoming verified.)

Airports haven't quite had the same boost. Only a couple of dozen airports offer any service, and the most likely suspects, the New York metro airports (JFK, LaGuardia, and Newark), have a contract with Concourse Communications. Concourse unwired Minneapolis-St. Paul last year, but has lagged on its original plans to have a test installation in one or two of the New York airports by mid-2002.

Because of the founding of two wISPs in Texas, Austin and Dallas have long had service. Austin even has both Wayport and MobileStar-cum-T-Mobile service, the only airport with two terminal providers.

With T-Mobile's expansion into airport club lounges, like the United Red Carpet Club, we'll see a modest increase in coverage. San Francisco's unwiring should send a message, too, that the time has arrived.

But putting Wi-Fi into an airport is a complicated matter because of several constituencies that aren't seen by passengers: airlines, airport or port authorities, and the FAA. All have their own interests in, and may even already be running, wireless networks. Those interests have to be placated and addressed, often with specific security plans that separate networks into VLANs (virtual LANs) so that one kind of user can't sniff or access other networks on the same physical wire or invisible spectrum.

I expect by the end of 2003 that at least the 25 to 30 largest metro airports will have reasonable Wi-Fi coverage; we're about halfway there already. Once New York unwires, the expectation will change for travelers, who will assume that every airport will have service.

Current North American airports with Wi-Fi service include, just for the record: Austin, Boston, Chicago, Dallas, Dayton, Denver, Flint, Greensboro, Los Angeles (one gate), Louisville, Miami, Milwaukee, Minneapolis-St. Paul, Norfolk, Ottawa, San Francisco, San Jose, Seattle-Tacoma, Sioux Falls (South Dakota), Tampa, Toledo, Vancouver (British Columbia), and Wichita.

Price

Pricing is still all over the board. Most wISPs have never turned a profit, and most reports indicate only a few connections a day, even at high-volume hot spots. While that could change rapidly because of the factors cited above, pricing is likely to remain volatile and possibly strange as companies continue to sort out the balance between what they need to charge and what the market will bear.

T-Mobile HotSpot. T-Mobile rejiggered its payment plans starting March 6, 2003. All of the new service options include unlimited data transfer; formerly, you paid 25 cents per megabyte above 500 Mb each month.

With pay-as-you-go service, you pay $6.00 per hour with a minimum charge of one hour, and then 10 cents per minute thereafter. A prepay option costs $50 for 300 minutes ($8.33 per hour), but only bills in 10-minute minimum sessions, per-minute after ten minutes. Prepaid minutes expire 120 days after purchase.

Wireless Networking Resources from Adam Engst and Glenn Fleishman

T-Mobile has two unlimited service plans: $30 per month with a one-year commitment, and $40 per month for month-to-month service. Canceling the one-year commitment requires you to pay a $200 fee; the $40 per month service requires a $25 cancellation fee. (Both can be cancelled at no charge within 30 days.)

Wayport. For frequent travelers, Wayport's monthly service plan is a bargain. They also partner with Boingo (see below), which might be a slightly better deal, depending on your usage. Wayport offers just daily and monthly rates. In airports, a day rate is usually $7 and covers until midnight of that day. In a hotel, the rate is usually $10 (although it can vary at some properties) and covers until the next check-in time.

You can prepurchase 3, 8, or 20 connections for $25, $50, and $100, respectively. For hotel travelers, the $25 and $50 options are discounts.

Monthly fees for unlimited access are $30 for a one-year commitment with cancellation penalties, or $50 for month-to-month.

Surf and Sip. Surf and Sip charges $5 per hour through prepaid 30-minute and 120-minute cards bought at their venues. They also offer 1-, 7-, and 30-day cards starting at the time of purchase for $5, $20, and $40. Their monthly unlimited plans are $20 for one-year commitment with cancellation fees, or $30 month-to-month. Surf and Sip locations are also part of the Boingo network.

FatPort. FatPort charges Canadian (Cdn) $3 for 15 minutes, Cdn$8 for 60 minutes, or Cdn$15 for 24 hours. A monthly subscription is Cdn$40 month-to-month, and a current promotion offers six months for Cdn$160. Their monthly account has a 500-megabyte download limit.

Airpath Wireless. Airpath has a random assortment of hot spots around the U.S.. They offer a hot-spot starter kit that allows venues to add for-fee service, and then aggregate listings for these locations. Check their site to find listings for smaller airports and smaller chains of hotels and other venues.

Boingo Wireless. I mention Boingo near the end not because they're least important, but because they're not a wISP. As an aggregator, their goal is to use software to ease the login and profile problem.

Their Boingo client scans for local networks, and identifies those run by their partner networks, including Wayport and Surf and Sip. It also shows some free networks. A single username at Boingo gets you in to each of these other networks, which is a huge time and management saver, and can also reduce costs.

Boingo charges by day-long sessions, which are defined just like Wayport's, as far as I can tell. A single session is $8. A limited monthly plan with one-year commitment is $25 for 10 sessions, with a discount down to $5 for additional sessions. For unlimited sessions, the fee is $50 per month. Cancellation penalties apply for both monthly plans.

• Other aggregators: Both iPass and GRIC aggregate dial-up, wired, and wireless ISP service around the world, but both generally sell to companies as a tool for their roaming employees. iPass only offers per-day and per-hour rates, depending on service, while GRIC doesn't make its rates public.

Summing Up

While it's not necessary to pay for hot spot service as you roam around a town, those of us who find ourselves in "captive venues," like conference centers, hotel, and airports, are anxious for the full rollout of consistently-priced service backed with technical support and some kind of guarantee of uptime and bandwidth.

We're on the verge of a big explosion in service, where on every block in a city, and in every property in commercial and office areas, real Internet access that's practically seamless is provided. The next step is roaming and partnership in which all of the big and small networks allow some kind of simple access to each other's networks; it's starting to coalesce, but no clear path is in sight.

I'm not necessarily looking forward to paying $50 per month for unlimited access, but I will enjoy no longer fumbling with cell phone GSM/GPRS network connections, paying $1.50 to make a local modem call, or arguing with myself over whether paying $8 for a few hours access is worthwhile.

My time might actually be valuable enough to make the fee worthwhile.

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