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More Explore the Reach of Free Wirless Internet Access

January 27, 2003
By Kate Fitzgerald

SCOTTSDALE, Ariz. -- "I'll have an albacore tuna melt with a side order of Wi-Fi."

Seemingly overnight, as many as 1 million Wi-Fi high-speed Internet access points have sprung up across

the U.S., many centered at business establishments that rely on walk-in traffic. Though not heavily supported by advertising, these Wi-Fi networks have become a new high-tech tool in companies' marketing kits. At absolutely no cost, thousands of people with Wi-Fi-capable laptop computers who know where to go can surf the Internet wirelessly anywhere from park benches to sandwich shops like Schlotzky's.

Free rides

For those stuck in a place that doesn't believe in giving free rides, Wi-Fi Internet access can cost $50 or more per month. Starbucks Corp. and many of the nation's airports and hotels are among those charging for Wi-Fi access, hoping to rack up revenue from speed-addicted Web surfers.

But collecting fees may be difficult. "Free Wi-Fi is spreading fast, and the consumer's expectation is that it should be free, an amenity of a public place or a building," says Anthony Townsend, chief operations officer for Wi-Fi installation company Cloud Networks, New York, whose clients are real-estate building operators.

The wide differences so far in the marketing schemes and business models surrounding Wi-Fi Internet access underscore the uncertain potential of a new technology that may transform many business operations over the next several years.

Innovative b-to-b applications

Already driving innovations in business-to-business applications, Wi-Fi's growth is expected to explode on the business and consumer sides later this year with the introduction of a new Wi-Fi-enabling computer chip from Intel Corp.

"Wi-Fi is primarily being used for the Internet now, but eventually it will be adapted to a lot of uses we haven't even anticipated yet," says Mr. Townsend, conjuring memories of the beginning of dot-com mania in 1998.

The enthusiasm of wireless network builders is tempered by the fact that Wi-Fi merely extends the wireless option to existing Internet users.

Still, plenty of organizations are fired up about spreading Internet access to public spaces, including some of Manhattan's business improvement districts, which began offering free Wi-Fi in public parks last year. Numerous universities and other municipalities are now following suit, providing free, wireless Internet service to citizens in downtown and other high-density areas.

Word of mouth

While Starbucks and those offering Wi-Fi at hotels and airports advertise their services online and through local promotions, in the majority of cases word about free Wi-Fi "hot spots" spreads by word-of-mouth-and fast.

"It's an amenity that encourages people to stay in our area throughout the day and spend money here," says Bryan Evans, director of public affairs for Manhattan's Downtown Alliance.

The cost of setting up Wi-Fi access varies depending on logistics and the scope of the project, says Mr. Townsend. Other consultants say installation can cost as little as a few thousand dollars or as much as $80,000.

So far, consumer advertising doesn't have a big role in Wi-Fi applications, but some real estate operators and restaurants are using it as a lure for tenants and customers, and some Wi-Fi providers are using the "welcome screen" as a way to promote their brands.

Surf while eating

Schlotzky's, a sandwich chain, is one of the few commercial enterprises committed to offering free Wi-Fi to customers. Anyone at a dozen of its stores in Texas and Georgia can surf for free with a Wi-Fi-enabled computer, and that number may expand to as many as 30 of Schlotzky's company-owned stores this year, says Monica Landers, director of communications.

The deli chain is even beaming its Internet signal into one of the larger dormitories at the University of Texas in Austin, and seems to take pleasure in offering free Wi-Fi around the corner from where Starbucks is charging for it.

"We have no plans to charge people for Wi-Fi access; we view this purely as a customer service to encourage people to come in and stick around," Ms. Landers says.

Monthly fees at Starbucks

Starbucks launched its in-store Wi-Fi service last August through a revenue-sharing partnership with Deutsche Telecom's T-Mobile USA. Consumers pay a monthly fee ranging from $29.99 to surf at Starbucks only, to $49.99 for unlimited access to the nationwide T-Mobile HotSpot service. Fees for Wi-Fi service are typically charged to a user's credit card.

The coffee cafe chain is "very pleased" with results so far, says Anne Saunders, vice president of Starbucks Interactive, though she won't reveal the number of consumers accessing the service at some 2,000 Wi-Fi-equipped stores.

Starbucks' initial research has shown heavy usage of its Wi-Fi services during the day by real estate industry professionals who meet with clients to view property listings on the Internet before setting off to view them.

"It's still very early in the adoption of Wi-Fi, but we see this as a way to increase traffic to our stores and extend the time people spend here, particularly after 9 a.m.," says Ms. Saunders.

Business travelers

Banking on the fact that business travelers depend heavily on Internet access and can afford to pay for it, Austin-based Wayport has built 475 Internet access points, some under the Wayport brand, at airports and hotels across the U.S. More than 125,000 people a month use its services -- a figure that has doubled over the last six months, says Michele DeWenter, Wayport's marketing communications manager.

Boingo Wireless, Santa Monica, Calif., is another major provider that has set up its branded Wi-Fi at 900 locations including major hotels and airports. "Wi-Fi is spreading so fast," Ms. Townsend says, "that soon people are going to say that a place without it isn't worth sticking around."

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