Subject: [NEXTEL-1] Jostling for the Wi-Fi Lead in a Crowded Field

From: [email-masked]
Date: Wed, 13 Aug 2003 02:49:01 -0400

August 11, 2003

Jostling for the Wi-Fi Lead in a Crowded Field
By GLENN FLEISHMAN

Is there any advantage in having been ahead of the crowd now that just about every
telecommunications company is rushing
into the Wi-Fi wireless world? Wayport, a pioneer in installing high-speed
Internet access in hotels and airports, is about to
find out.

Wayport, based in Austin, Tex., is a name known to thousands of laptop-toting
business travelers. It started providing wireless Internet connections in 2000
with the popular Wi-Fi networking standard in airports including Dallas-Fort
Worth, Seattle, and San Jose, Calif. Even earlier, Wayport had placed wired
broadband connections in hotels around the country, which it now often complements
with Wi-Fi in common areas.

Not surprisingly, given the potential for this market, many well-financed rivals
are threatening Wayport's turf, but Wayport has not shied away from the battle. It
has aggressively resold its service to cellular carriers and corporate access
providers to encourage regular subscribers. "We believe our business model depends
on us opening up our footprint," the company's chief executive, Dave Vucina, said.

Wayport is increasingly relying on Wi-Fi hot spots, which are public access
wireless transmitters that carry data at high speed over ranges of 30 to 300 feet.
Strung together, a set of transmitters can offer coverage to a location like an
airport.
But even with hundreds of locations, the numbers are small. Wayport's traffic,
while growing 5 to 10 percent a month, amounted to just 30,000 connections at
airports and 170,000 connections at about 500 hotels in a recent month. Wayport
receives anywhere from 50 cents to $5 for each connection, analysts estimate,
depending on its revenue-sharing arrangement with the location and whether the
connection came from a reseller network.

Mr. Vucina said the company was also ramping up to sell its service in new places.
Although the privately held Wayport has raised $100 million since 1997, it is
seeking an additional $10 million to $15 million. "This isn't to finance burn
rate, it's to grow our sales force," Mr. Vucina said, describing plans to hire
about 20 salespeople.
Part of Wayport's pitch to new locations is its ability to bring in customers from
other networks, integrate billing and anticipate problems, Mr. Vucina said.

The competition may seem premature. Analysts estimate 2003 revenue from Wi-Fi
networks in the United States at $20 million to $60 million. Amy Cravens of
InStat/MDR, a research firm, puts wired broadband at $76 million. That is dwarfed
by cellular voice revenue, which in 2003 will be about $100 billion, said Roberta
Wiggins of the Yankee Group research firm.

Several research companies are projecting over $1 billion in Wi-Fi revenue by
2006, though, and that will include hotels that choose Wi-Fi-only service. In
hotels, Wi-Fi transmitters can cost half as much as installing Internet access
with wired broadband, said John Yunker, an analyst with Pyramid Research.

Ms. Wiggins said cellular operators now entering the market would capture more
than 50 percent of service revenue by 2006, mostly through resale agreements with
networks like Wayport's.

In the last several months, Wayport has signed agreements with AT&T Wireless,
Sprint PCS, and Verizon Wireless that allow these cellular carriers to create hot
spot networks that include Wayport's locations. These cell operators have plans
for new cellular data networks, but these may not be available outside several
major cities for another few years. While cell data networks may offer broad
coverage, they will still have only a fraction of the speed of a Wi-Fi network.

AT&T already resells Wayport's hot spot network, supplementing it with its
exclusive access to the Denver airport's Wi-Fi network. Sprint and Verizon expect
to introduce services by fall. T-Mobile operates its network in more than 2,500
Starbucks and Borders locations and at the San Francisco airport. Nextel has no
announced plans.

SBC Communications signed a deal with Wayport just last week, both to resell
access to Wayport's network and to have the company build the infrastructure and
handle billing for an estimated 6,000 hot spots by 2006. SBC will also work with
Cingular to create a roaming service combining cellular data and the new Wi-Fi
network by 2005.

Wayport also resells to aggregators, which provide service to business travelers
or corporations. Boingo Wireless, GRIC Communications, and iPass use software
installed on subscribers' computers that allow network access to many service
providers through a single account and bill.

Wayport turned to reselling in part to cope with the one-two punch delivered to
its core audience from the dot-com slump in early 2001 and the travel slowdown
after Sept. 11, 2001. The company changed its model from paying for most of the
capital costs of installation to requesting that locations share or provide
upfront costs, with tradeoffs for later revenue sharing.
It also formed a relationship with Concourse Communications, which built the
cellular and Wi-Fi networks at Minneapolis-St.  Paul, LaGuardia, and Newark
airports. But other providers have either opened their networks or have taken
airport contracts, shaving Wayport's advantage. Wayport's two keenest competitors
are closely following its model for resale while hunting for similar locations.

Both STSN and Cometa have received investments from Intel Capital, a venture
capital arm of Intel that backs new technology.  Intel itself has helped spread
the word about Wi-Fi through its new Centrino laptop and associated marketing
program. STSN has over 500 hotels in its network, and is Marriott's preferred
provider; Marriott is also an investor. Cometa, which has significant investments
from AT&T and I.B.M. as well, has just 75 locations in the New York area, all
McDonald's restaurants, but projects 20,000 hot spots within two years.

Cellular operators and phone companies are also angling for locations. While
Sprint will resell Wayport's network and that of another national service
provider, it coupled its announcement in early July with a plan for service in
1,300 business locations like hotels, conference centers and airports. Sprint
plans to resell all its hot spots. SBC plans to pursue similar locations.
Wayport faces a third front from alternative hot spot networks like Airpath,
NetNearU and Pronto Networks. These networks provide billing, user account
management and customer service, and often sell hardware to allow locations or
resellers to set up their own branded networks.

With so many rivals, it might seem that the company with the most to offer could
win. To equip a 360-room hotel with Wi-Fi might cost $75,000, said Mr. Yunker of
Pyramid. An airport like Boston's could cost $2.5 million to equip with Wi-Fi,
according to a recent bid for proposals from Massachusetts's port authority.

Sky Dayton, chief executive of Boingo Wireless, a Wi-Fi service reseller, noted
that his research showed that of 50,000 hotels in the United States, perhaps 1,500
have broadband service. STSN's chief executive, David Garrison, estimated that
only 15 of the nation's more than 200 commercial airports had substantial coverage
areas.

SBC's commitment to use Wayport for its infrastructure and operations could allow
the company to turn its early advantage into an ongoing expansion, and keep it
from becoming a steadily smaller fish in an increasingly large pond.
Mr. Vucina asked rhetorically, "Who can best position themselves to win in an
industry that still has some questions on it?"

http://www.nytimes.com/2003/08/11/technology/11WIFI.html?ex=1061179200&en=dbc31a04181666a2&ei=5062&partner=GOOGLE

------------------------ Yahoo! Groups Sponsor ---------------------~-->
Buy Ink Cartridges or Refill Kits for Your HP, Epson, Canon or Lexmark
Printer at Myinks.com. Free s/h on orders $50 or more to the US & Canada. http://www.c1tracking.com/l.asp?cid=5511
http://us.click.yahoo.com/l.m7sD/LIdGAA/qnsNAA/61FxlB/TM
---------------------------------------------------------------------~->

Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/