Who's going to pay for the great Wi-Fi revolution when the roaming public expects Wi-Fi to be free? Where, exactly, is the business model? On Friday, T-Mobile helped provide an answer. In the United States, T-Mobile has been trying to entice the public to its network of over 2000 hotspots without much success. Unlike more canny 802.11 operators who homed in on airports and hotels, T-Mobile has been left with a public access network that hemorrhages, industry sources tell us, between $1.5 million and $2 million per month.
If you perform your own back of the envelope calculations for T1 lines, routers and labor, you'll come out with a pretty similar figure.
Now, T-Mobile says it will add 802.11 access as an extra on its cellular bills. Since T-Mobile has many more cellular subscribers than it does Wi-Fi subscribers, it's simply following the market. The competing public access operators have ensured that you can't roam between, say, a Boingo point and a T-Mobile point, and in large parts of the USA there just aren't enough laptop-toting punters to make the exercise pay.
In the end, money talks - and the nascent Wi-Fi operators simply can't muster enough Apple PowerBook-toting bloggers to make the whole business viable. The smarter 802.11 vendors have focused on campus networks, hospitals, airports and hotels and convention centres: essentially captive markets, and from a call-around last week they all, albeit tentatively, seem to be doing OK.
The same can't be said for the public access ventures, such as Boingo. How could they lure so much capital to a project that essentially, wanted to give its wares away for nothing?
Such is the boundless optimism of the United States, the nation has always found it easier to create shiny new markets than fix broken old markets, and if you must understand the awful pickle the country finds itself in, with wireless, then take this with you.
The old carriers are 'bad'. Hey folks! we can create a grass roots replacement with our own Airport stations, dustbin lids and Pringles Packets, and replace them - if only everyone would pull together - and then all will be right again. And then before you know it, everyone will be carrying Wi-Fi phones that look just like Pringle packets, and can't be used anywhere else in the world, let alone outside San Francisco, because no one knows what these mutants are.
So this public Wi-Fi scenario, where all is free, is a delusion. But who's going to feast on this carcass?
Copyright 2003, The Register