Understanding The Economics Of WiFi Pricing

from the let's-try-this-again dept

Last year, we wrote up a longer piece describing the basic economics of WiFi hotspots, where the conclusion was that it was going to be nearly impossible for anyone to make any money if they charged. There were a few, very specific circumstances under which you could make money, and for the most part, it just wasn’t worth it. It seems that debate is going into high gear today. WiFi Networking News points to a great analysis from Muniwireless where they both conclude “how can you afford to charge?” There’s almost no way to make it work, based on the competitive pressures we discussed originally. Still, there are some who still pretend they can hold back the tide. Even while reports are warning that high prices are hurting Europe’s chances in the WiFi revolution, the folks at BT are so clueless that they actually believe that there’s no reason to lower prices. They claim that: “Reducing the price does not increase usage.” Apparently, he’s reading from a different economics textbook than the rest of the world.

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