AT&T, Cometa Cut Wi-Fi Hotspot Access

AT&T has abruptly dropped out of its relationship with Cometa Networks' offering that involves scores of Wi-Fi hotspots at McDonald's sites in the New York City area.

Users logging onto AT&T's Wi-Fi service page are greeted with the following terse statement: "Thank you for your interest in AT&T Wi-Fi Service. Unfortunately, this service is no longer being offered."

The link between AT&T and Cometa was announced with great hoopla in December of 2002, with IBM and Intel joining in the announcement launching Cometa and its plan to build a 20,000-strong hotspot network across the country.

It was not immediately clear what impact AT&T's move will have, if any, on the Wi-Fi offerings of Cometa--or of AT&T, for that matter. Published reports quoted an AT&T spokesperson as saying that the Wi-Fi arrangement with Cometa was "not a business model it wanted to pursue."

The loss of AT&T follows a decision last November by another telecommunications company, Verizon Communications, to drastically scale back its plans to deploy Wi-Fi by installing transmitters on city pay phones. With more than 300,000 pay phones, Verizon was shaping up as a potent Wi-Fi competitor until it cut back. Verizon later announced its nationwide BroadbandAccess data network, so it remains firmly in the wireless data business.In addition to the rapid growth of paid Wi-Fi sites, free Wi-Fi sites are also being launched in growing numbers. For instance, in Austin, Texas--which bills itself as "the free-est wireless city in the world"--more than 25 free Wi-Fi sites have been launched. Customers at Starbucks, which offers a paid Wi-Fi service, often sit down for coffee and log onto free Wi-Fi service transmitted from nearby Schlotzsky's sandwich shops.

While the Wi-Fi consumer market is increasingly marked by free services, market-research firms predict corporate use will boom. For instance, the Dell'Oro Group predicts Wi-Fi use in the enterprise will grow from $431 million in 2003 to $1.1 billion in 2008. In addition, business users are more likely to sign-up for paid Wi-Fi service offerings.

McDonald's has been testing Wi-Fi in more than 200 of its fast-food locations in the U.S. In addition to Cometa, its service providers in the trials include Wayport and Toshiba's Computer Systems Group. The fast-food company has remained upbeat on its Wi-Fi prospects and has said it will also likely rollout the service in the hotspots it is testing in 25 countries.

While AT&T has cut its consumer Wi-Fi service, the firm continues to add business Wi-Fi sites and views that market as a growth business.