A Wireless Net

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While public and private wireless LANs are a major market for Wi-Fi technology, the real promise of Wi-Fi lies in its ability to string together many WLANs in order to implement a larger wireless wide area network (WWAN), just like the Internet (it even interfaces with the Internet), but with one major difference-this network needs no wires, giving end-users complete freedom and mobility. Since it uses unlicensed or open spectrum, the costs involved in building such a wireless WAN are very low. So perhaps the most promising and exciting aspect of Wi-Fi is that this technology can enable a grassroots revolution in wireless communications, especially for data. Wi-Fi might even usurp the expensive 2.5G, 2.75G and 3G networks. More on that later!

In some places, Wi-Fi networks are already spreading into every venue, providing very inexpensive "last mile" access to the Internet to anyone with Wi-Fi capability. While currently traditional communications operators (e.g. Verizon, Qwest, BT) still provide the landline connections to the Internet itself, even the connections could begin to go wireless as vendors start offering Wi-Fi hubs that are designed to communicate with each other, and to pass traffic one to another. To give the reader a sampling of how the Wireless Net is already taking off, consider the following:

In a business model reminiscent of the early 90s, wireless aggregator Boingo Wireless has announced that it is looking for a few good HotSpot operators. Boingo states it has a way to let ordinary people turn their broadband access points into a moneymaking opportunity, using its aggregation software and a truly grassroots effort. And because of Wi-Fi's inherent low barrier to entry, a typical system could cost as little as $500, not including Internet access. This $500 buys what Boingo calls its "Hot Spot in a Box," which is basically a wireless access controller that incorporates access point functionality and which is pre-configured with Boingo's system communication tools for billing and authentication, authorization and accounting. Boingo said its second-generation version of this hardware is due out sometime in 2003, and will supposedly sport a $300 price tag.

Another start-up is Deep Blue Wireless. It offers access to the Internet via Wi-Fi at over 50 HotSpots in the San Francisco area and provides inexpensive Wi-Fi roaming at more than 600 locations across the U.S.

Through a partnership with T-Mobile (the relaunched version of VoiceStream), Starbucks coffee shops have launched a network of HotSpots for their customers' use. These HotSpots are available in 1200 locations throughout the U.S., with a further 800 planned by mid-2003. Pilot projects are also underway in London and Berlin, with more in the offering. "This service is a natural extension of the Starbucks coffeehouse experience, which has always been about making connections with the people and information that are important to us over a cup of coffee," said Howard Schultz, Starbucks chairman and chief global strategist. "Mobile professionals across the globe have been waiting for just such an offering: high-speed wireless Internet access in a familiar and widely available location that keeps them connected while on the road, or between the home and office. It's the right service offered in the right environment." In early 2003, a spokesperson for Starbucks, which considers its fee-based HotSpots "a new line of business," said that the HotSpots were really paying off for the company, with Wi-Fi users staying about nine times longer than about 70% of its typical customers-45 minutes compared to five minutes or less. Users are typically male professionals and although some are frequent national travelers, a surprising number are "local mobile professionals" such as real estate agents, who meet their customers at a Starbucks where they can conduct their business via web-based information and listings.

In late June 2003, Schultz announced that the installation of wireless Internet service at Starbuck stores was one of the primary reasons for what he called the "stunning" sales results his company reported for its second quarter. He credited the unexpectedly strong 10 percent comparable-store sales increase seen in the five weeks ending June 29 (with overall sales soaring 25 percent) in part to "popular programs such as the Starbucks card and Wi-Fi network" (and also to "market-defining beverage innovations").

Even after companies such as Boingo build out their networks, to be successful, they must expand their customer base, the more the better. For many in the HotSpot provider space, corporate customers are their gold standard. Established businesses such as bookstores, coffee shops and auto repair shops, along with residential and office complexes, are sought out to serve as initial HotSpot venue operators.

Next, these disparate networks must be connected together to build out a virtual wireless network that individuals can connect to via a single login-password infrastructure, so as to provide a comprehensive, encompassing wireless network giving individual customers the roaming capabilities that they need and demand. Cellular networks, at one time, were in the same fix. However, it wasn't long before regional cellular network operators entered into mutual "roaming agreements" to enable their customers to obtain service outside their home region. The same is expected to occur in the WISP market space.

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