If You Bundle Together Bad Business Models Does It Make Sense?
By Mike Masnick, Tue Jul 27 00:45:00 GMT 2004

As many industry watchers have started to realize that the expected for-fee Wi-Fi business seems stalled, mainly due to free competition, will better roaming plans save the fees? It just might.

Free Wi-Fi has been clearly winning the battle against fee-based Wi-Fi from the very beginning, knocking out plenty of players along the way, from MobileStar a few years ago to Cometa more recently. While providers bemoan the fact that "you just can't compete with free," that isn't always the case. If a company wants to charge for Wi-Fi, it can't be offering the identical service that all the free providers are offering. It needs to offer something of value in addition. For a while, some thought this was "security," but (so far) users haven't shown much interest in paying extra for any kind of Wi-Fi security.

While most of the focus has been on various startups (often backed by big companies and big dollars), the issue of the Wi-Fi business model is also a serious question for the various telcos who know they need to do something, even if they're not sure what it is. It's beginning to look like SBC's strategy is coming together, and while it might not make much sense at first glance, the concept of "bundling" a bunch of for-fee hotspots together may have some potential. The core of the story is SBC's growing efforts to set up roaming agreements with other Wi-Fi providers, so SBC's customers can share in the Wi-Fi connections around the country. Glenn Fleishman, at Wi-Fi Networking News, takes this bit of info and notices that SBC has "quietly assembled what will be the largest roaming network with a flat-rate price". Perhaps, then, the real "extra value" isn't security in terms of protecting your data, but security in knowing there will always be a Wi-Fi connection near by. This is what all of the other Wi-Fi aggregators have been trying to claim all along, but by spreading the network even farther with roaming agreements, SBC might be the first to get it to a point where it really is appealing to many people.

However, SBC has the opportunity to take this even further. SBC is still competing against the free and community providers. However, by building nationwide, trusted, secure, flat-rate Wi-Fi access with other services such as voice or home broadband, the offering could become a lot more compelling. In fact, SBC could follow Verizon's lead, offering what looks to be "free" Wi-Fi, with the real cost being that you need to be a subscriber to other Verizon services. Suddenly, a telco could have a very viable competitor to "free" while getting more customers willing to sign up for its other services and (perhaps most importantly) reducing churn rates by a significant amount. If such a "roaming and bundling" business model really starts to take off in the US, there's no reason it couldn't also catch on in Europe and Asia where companies have been struggling with the Wi-Fi business model question as well. The European situation seems especially backwards, with rates that very few would be willing to spend and a clear misunderstanding about what consumers want. With all of those difficulties, perhaps they should sit back and see how this experiment plays out in the US. Of course, they're having enough problems with cellular roaming rates right now, that Wi-Fi may be the last thing on their minds.