The Lag in Investor Confidence

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The WISP industry is still in its infancy, and there are plenty of opportunities available to the entrepreneur. However, so long as there are uncertainties about the economics and the characteristics of the HotSpot model, most large investors will remain on the sidelines. Let's examine some of the reasons for this lack of investor confidence.

Fragmentation

One poorly understood characteristic of the WISP marketplace is fragmentation, of which there are two types: one good, one bad.

Fragmentation across elements of a network of HotSpots (e.g. the venues, the infrastructure, aggregation, and branded services) is good because it helps to classify and type tasks so that the right tasks are handled by the right companies. For instance, billing tasks go to say, the aggregator, but infrastructure tasks are handled by the HotSpot operator.

Whereas, fragmentation that crosses networks is bad because it forces end-users to deal with many different settings and accounts. Here's an example. During the course of a day, a business traveler has his or her morning coffee with a colleague at a Starbucks, lunches at Novel Café, and stays overnight at a Hilton, all of which the end-user frequents because they offer Wi-Fi connectivity. However, each of these venues requires different authentication procedures and different log-on screens. That's bad fragmentation. As HotSpots proliferate, so will bad fragmentation. At least until there is unified roaming across all HotSpots. Until then, industry growth will be hampered.

In its early days, the cellular industry struggled with the same fragmentation issues that the WISP industry faces today. The cellular industry managed to overcome fragmentation within geographical regions (e.g. North America, Europe, and Asia), but there is still fragmentation within international regions (e.g. roaming is virtually impossible between North America and any other region and vise versa).

Only an industry-wide, unified roaming plan will negate the effects of fragmentation and allow the WISP industry to continue its monumental growth. If you remember, cellular adoption only took off after seamless roaming within large geographical regions became available. The same is true for ATMs—far fewer people used ATM cards when they were limited to use at only specific banking locations.

The Experience Quotient

Some end-users find the experience of locating and accessing a public wireless network difficult because Wi-Fi is invisible. Unlike a cell phone which, when turned on, will automatically take care of the connection sequence, there's no way for a potential user to know a HotSpot is present without noticeable signage or "sniffer" software. Furthermore, due to the limited battery life of most Wi-Fi-enabled computing devices, end-users are reluctant to leave their computer on. Even Boingo's vaunted sniffer software requires turning on the computing device before the software can do its job.

Also, the industry (as a whole) has done a poor job of advertising HotSpot availability. While this situation is changing, more needs to be done. Even if an end-user knows that a Wi-Fi signal is available, getting connected can be onerous. The end-user is expected to know the network's SSID (Service Set Identifier, a 32-character identifier for wireless LANS that acts both as a simple password and as an advertisement for a specific Wi-Fi network), how to turn on and off security settings, and how to program configuration software on their computing device.

Then there's the requirement that each time a user signs onto a new HotSpot operator's network, they must sign up for a new ISP, a new password, and a new billing arrangement instead of being able to port to their corporate virtual private network (VPN) connection or existing ISP. Many Wi-Fi users find the process burdensome and unnecessary.

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