Industry analysts are skeptical about the profitability of the public wireless Internet hotspot market, but an Ottawa-based service provider believes it may be a lever for new business.
“”It’s a no-brainer,”” says Einar Murchison, vice-president of sales for Magma Communications Ltd., after becoming one of the first resellers of a low-cost Wi-Fi high-speed bundled service offered by BoldStreet Wireless Inc.
“”If you’re a coffee shop without high-speed it’s a super no-brainer.””
He credits the package with helping his company sign up six businesses for its DSL (digital subscriber line) service.
Ottawa-based BoldStreet announced the package this week for Internet service providers trying to sell high-speed DSL to retail outlets who think they can’t afford it.
The hook is that it includes BoldStreet’s wireless connectivity for customers able to useWi-Fi equipped devices.
For $525 the store gets a DSL connection, a wireless access point and three months of Internet access. After that the store has to pay the ongoing price of access.
“”If a restaurant is looking for DSL for their own requirements they can piggyback on
BoldStreet”” and draw in wireless users, says Murchison. “”That’s just one more thing in our arsenal when we speak to a potential client.””
Magma will focus its hotspot sales in Toronto, where it also does business. It’s the kind of marketing that backers of Wi-Fi (also known as 802.11) believe is needed to help spread the technology. They are sure it will attract laptop-toting customers to restaurants, coffee shops, airports and hotels.
Last week McDonald’s Restaurants of Canada announced plans to add Wi-Fi access at select outlets, joining hundreds of coffee shops, bars and hotels across North America with hotspots.
Meanwhile, an increasing number of mobile computer equipment manufacturers are adding Wi-Fi capability to their gear.
However, it isn’t clear who will pay for the equipment and the connection to the Web. Many companies, such as Bell Mobility, are running free trials to gauge user interest and willingness to pay each time they connect.
It’s assumed business travelers are the most likely to cough up cash. Murchison says BoldStreet’s approach is to use Wi-Fi as a loss-leader. After the three-month trial runs out, his customers will have to pay $69.95 a month for DSL access.
But, he adds, “”that’s like two bucks a day. If (wireless) sells another coffee the service is paid for.””
BoldStreet, which has partnered with Toshiba and Proxim for equipment, wanted to create an offering that would let ISPs sell wireless at a low cost, says Tom Camps, the company’s president.
So far six service providers have signed up.
“”It allows them to sell DSL to a new market segment that hasn’t bought high-speed based on business value, not price,”” he says, by pitching improved traffic and customer loyalty.
The ISP does the installation, with the wireless equipment pre-configured by BoldStreet.
“”I think it’s a pretty clever move,”” says Warren Chaisatien, senior telecommunications analyst at IDC Canada.
But, he cautioned, “”nobody knows today which business model is the best”” and acknowledged that there’s not a lot of hard evidence whether a wireless hotspot increases customer revenues.
IDC expects there will be 450 commercial hotspot locations in Canada by the end of the year, rising to 4,200 locations in 2007 – with the number of users growing from 5,400 to 25,200 respectively.
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