It didn't require a huge amount of capital to get started, and established players like AOL hadn't exactly set high expectations for service quality. Over time, these local or regional ISPs expanded their customer bases with low-cost, no-frills offerings. Some have survived to this day, while bigger players have swallowed up many others (their customer lists, if not their employees).
Today's equivalent may be the wireless microcarrier. All it takes is a few hundred dollars for an access point and the skill to negotiate a deal with the owners of target sites -- hotels being the most popular location -- and you're in business. That may be a bit of an over-simplification, but it's safe to say this wireless hot-spot market doesn't have huge barriers to entry. So, it's no surprise these services are popping up all over the place.
But the target audience for these services -- the mobile professional -- doesn't want to deal with a separate carrier in every location. Enter service aggregators.
hereUare Communications (hateTHATname) is one of the leading wireless hot-spot aggregators. Last week, the company released a wireless hot-spots report ranking the U.S. cities with the greatest number of hot-spot locations. The San Francisco Bay area ranked first, with over 250 public access points, while Seattle, New York and Dallas each has over 100. Cleveland has only six. While I don't doubt the company's diligence, I honestly don't think hereUare found all the hot-spots. I bet Cleveland has at least seven.
Over 1,000 locations are listed in hereUare's database, including a substantial percentage of sites that are developed by industry leaders Wayport and Mobilestar. hereUare's business consists of two major elements. First, it licenses 'eCoinBox' software to equipment manufacturers, allowing the company to provide authentication, authorization and accounting services on its access point platform. Second, hereUare is a service aggregator, which allows consumers to gain wireless access at multiple sites through a single account. hereUare also offers subscribers software that includes a directory of service locations.
Boingo (hateTHATNAMEtoo) offers similar services, and the company has strong management and financial backing. It also claims the largest wireless broadband footprint in the world. Instead of deploying its own network infrastructure, Boingo purchases from 802.11b microcarriers on a wholesale basis, integrates these networks and sells a single service to its customers. Boingo markets to, supports and bills the end user. Its pricing model is an interesting one: there is a $7.95 fee for a single day's service, a $24.95 charge for 10 connect days in a month and a $75 fee for unlimited monthly connectivity.
And where are the established service providers? Mostly, they're trying to figure out a business model that would allow them to make money at this without negatively impacting their plans for 3G data services. Some are more active than others. Sprint has invested in Boingo and VoiceStream also is a major player, having bailed out MobileStar, one of the original wireless hot-spot providers. In fact, reports indicate that VoiceStream is following through on MobileStar's commitment to install wireless services at Starbucks locations.
With service aggregators like hereUare and Boingo out there, look for the number of hot-spots to explode over the next 12 months. It's just one more excuse to make that caffeine-inspired stop at Starbucks.
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Send your comments on this column to Dave Molta at dmolta@nwc.com.