Subject: [NEXTEL-1] As Wi-Fi service expands, debate centers on covering the costs

From: [email-masked]
Date: Wed, 13 Aug 2003 04:15:14 -0400

As Wi-Fi service expands, debate centers on covering the costs
Source: "Daily Herald; Arlington Heights, Ill."
Publication date: 2003-08-11
Arrival time: 2003-08-12

It may seem an odd association, but a Starbucks coffee shop on Michigan
Ave. and a 42-block area of St. Louis have one thing in common.

Both are public "hot spots" - the increasingly prevalent places where
anyone with a wireless fidelity-enabled device can be connected to the
Internet without a wire.

If these disparate locales have Wi-Fi in common, though, a key distinction
separates them: who's covering the costs?

As this developing technology moves toward mainstream acceptance,
there's debate about who should pay.

At one end of the spectrum, the expenses are passed on to the end user
as monthly usage charges. At the other end, third parties - a city
government trying to revitalize downtown, hotels and restaurants trying to
draw customers, or, as many in the industry are predicting, advertisers
trying to penetrate a new medium - are footing the bill and allowing Internet
surfers to log on free of charge.

To log on to a wireless network, users need a wireless card on their
laptops or PDAs. Many newer laptops come with the hardware pre-
installed, but aftermarket cards are widely available for less than $100.

For paid service, users also need a subscription to a wireless Internet
service provider, which typically costs $30 to $50 per month.

Some companies are betting that consumers will open their wallets for
Wi-Fi.

"Definitely I use it frequently enough to justify having it. It really depends
on the needs of the person," said Jeff Zabin, an author and vice president
of a marketing firm in Chicago who pays $29.95 per month for T-Mobile
Wi-Fi access.

"I tell people my office is a soft, cushy chair at Starbucks or Borders."

T-Mobile USA Inc. operates about 2,700 hot spots nationwide, mostly at
Starbucks coffee shops and Borders bookstores. Boingo Wireless Inc.,
Wayport Inc., Verizon Communications Inc. and AT&T Wireless
Services Inc. all offer access at comparable rates and have partnerships
with businesses in high-traffic areas.

Estimates show that there are currently between 2.5 and 5 million Wi-Fi
users. In total, the country has about 5,000 public hot spots.

Wi-Fi has made inroads in the corporate world, especially with business
travelers who relish the convenience of instant access to e- mail and
digital information at airports, hotels and convention centers.

It has yet to catch on with the non-road warrior, however.

James Carlini, president of Carlini and Associates, an East Dundee-based
consulting firm for telecommunications companies, compares Wi-Fi
access under the current pricing structure to the lukewarm response to
satellite radio.

"Most people aren't going to be subscribing to satellite radio because they
aren't truck drivers taking eight-hour car trips all the time," he said. "You're
not in the car enough to justify paying for something that you can get for
free."

In the same way, he explained, many consumers are reluctant to buy into
Wi-Fi because their need does not warrant the charges.

There is relief on the horizon for the cost-conscious, however, as more and
more places offer free access. In a single store or building, creating and
operating a wireless network isn't difficult, requiring only a land-based DSL
or cable connection and a wireless router costing $100 to $250.

Alex Chung, the owner of Art Gallery Kafe, 1907 N. Milwaukee Ave. in
Chicago's Bucktown neighborhood, offers free Wi-Fi to draw customers
and differentiate himself from competitors.

Panera Bread Co. already operates about 70 free hot spots and expects
to add 60 more by the end of the year.

CEO Ron Shaich said that free access is a way to differentiate it from "the
revenue-based model others in the industry are embracing."

But Jeff Miller, whose company, Chicago-based PCTEL Inc., recently
inked an agreement with AT&T Wireless to market its software with AT&T
Wi-Fi service, sees demand for a paid service.

"If you want a high quality service you're still going to pay for it," said
Miller, the vice president of business development and licensing, adding
that paid services may eventually include more features, such as voice
over Internet protocol and more sophisticated network security.

Even with better service and more features, though, he predicts lower
prices.

"T-mobile started out at about $40 per month. I wouldn't be surprised if it
was down to about $10 a month in the next few years," he said.

Publication date: 2003-08-11

http://cnniw.yellowbrix.com/pages/cnniw/Story.nsp?story_id=40836564&ID=cnniw&scategory=Telecommunications%3AWireless&

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