TORONTO – Toronto Hydro Telecom Wednesday launched its downtown Wi-Fi service with pricing it claims is 35 per cent below the average for high-speed Internet service in the city.
The first area to go live is Toronto’s financial district. Four other areas will be switched on before the end of this year, culminating in a New Year’s Eve launch for the final phase in Toronto’s entertainment district. The service, which is being called “One Zone” will be free for its first six months of operation (until March 6, 2007). After that, three pricing packages will be available: a pre-paid monthly subscription rate of $29; a 24-hour rate of $10; and an hourly fee of $5.
The pricing plan is based on the usage patterns of its potential audience: permanent users, occasional users and visitors to the city. Toronto Hydro Telecom president David Dobbin said, “we have a wide pool of users available to us,” but admitted the key to the service’s financial success will be the number of business customers it can win.
Dobbin said the pricing is competitive with existing rates for DSL and cable-based high-speed Internet service. Wi-Fi is also mobile – a selling point Dobbin hopes will draw users.
“You don’t have to pay an additional charge. The service follows you wherever you go,” he said during a press conference held at the Toronto Stock Exchange.
Gartner Canada telecommunications analyst Elroy Jopling called the rates “(not) bad but they’re not great. I think that’s the thing that jumps out.”
Jopling said he was surprised that Toronto Hydro Telecom didn’t take the opportunity to set its rates significantly below that of its competition.
“If you’re a new kid on the block, or you’re late coming onto the block, I think you have to bring something more,” he said.
He pointed out that the voice-over IP wars are being waged over price. Montreal-based Videotron, for example, undercut the market by 30 per cent, garnering the company immediate customer acceptance.
The Toronto wireless hot zone has come across a number of obstacles since the project was <a href=first announced in March. Originally, the service was to have gone live in June, but <a href=there were problems with the street light poles that were used to attach wireless antennas. There were also concerns from police services that the wireless service could be used for drug trafficking communications and other illegal purposes.
Despite the delays, Dobbin said Toronto is the first major North American city to get its Wi-Fi service off the ground. Similar initiatives in San Francisco and Philadelphia are still in planning or implementation stages.
Toronto Hydro Telecom is also in talks with the City of Toronto to use the network for municipal services. Possible uses include Wi-Fi parking meters, vehicle management systems and surveillance for law enforcement. “Those will unfold over time,” said Toronto mayor David Miller, who also attended the press conference.
Dobbin said Toronto Hydro Telecom did not have any estimates of the service’s eventual audience, but said the outlook was positive. The service was quietly turned on last week to allow for last-minute tests and had 200 users online the morning of the launch. “Our take rate is going to be stronger than we thought,” he said.
The next move may be up to Hydro’s competitors, said Jopling. If they choose to lower their Internet rates in response, Toronto Hydro could have a price war on its hands.
“This probably one where the winner will be the consumer,” he said.