by Mike Masnick

A Business Model For WiFi Aggregation

from the interesting-idea... dept

Robert X. Cringely's latest column discusses his idea for a killer WiFi aggregator business model that makes some sense - but could be very difficult from some significant reasons. He correctly points out the problems with current WiFi aggregator business models: they have way too little coverage and way too many players have their hands in the pie. For each dollar spent at a hotspot, a portion needs to go to the hotspot owner, the owner of the network and the aggregator (and potentially others) - and there just isn't that much money being spent at hotspots in the first place. His solution is that we need more hotspots, and the way to get more hotspots is to give away the equipment free. Basically, have a company that will give you free WiFi equipment in exchange for adding your hotspot to their network and giving you free access to the entire network. This way, he believes, an aggregator would quickly get to one million hotspots and pretty much guarantee the necessary level of coverage. The money, then, would come from others who pay the subscription fee to get on the network - and since the coverage is so great, and the aggregator no longer needs to share that revenue with the hotspots, people will be willing to pay up. Maybe. I'm certainly a fan of leveraging "free" in a promotion to build a business model, but not when that "free" is very costly. In order to get this going, the company would need to give away those million access points (and, probably, handle tech support for them) before they start making money. While you can bet they'd get a volume discount (and APs are getting cheaper every day), it's still a pretty big capital chunk to eat. Then, there are two other big problems I see. First, which he brushes off, most internet providers say sharing your connection is a violation of terms of service. Sure, there's the Speakeasy exception, but it's still not too common, and I'm not so convinced (as Cringely is) that they'll just rollover when they find out what's happening. The second problem is much more fundamental. I now have two choices if I want to use this fairly vast network of access points: (1) pay a monthly fee or (2) offer to host my own hotspot - where I get free equipment and free service. Guess what I'm going to do? Is there any reason not to get their free equipment just to get free access everywhere else? Who are the suckers who are actually going to pay for this service instead of just signing up to be a provider?

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  • identicon
    Simeon, 10 Jan 2004 @ 10:45pm

    Who is gonna buy the access?

    I work internet tech support for a large cable company. I talk to people every day who would pay for the service rather than to host it. People who use networking technology but have no idea how to use it or set it up are a dime a dozen these days. It sounds like a good business model to me.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 11 Jan 2004 @ 5:49am

    The economics are very simple... really.

    ($30/((60min*24hours)*30days))/number of "aggergators"

    ...and that my friends is a very small number that is not enough to feed *anyone* in the food chain.

    The reality is that if you want to take internet access to a per-minute billing, the cellular phone companies have it all over anyone attempting "aggergate" the unwashed masses.

    Besides, 802.11* is not about doing anything more than solving the "messy wires around the house" problem. Leave the "last mile" problem to properly engineered technologyies in the appropriate frequency bands.

    reply to this | link to this | view in chronology ]

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