Boingo posts WiFi white paper
WiFi aggregator Boingo Wireless today has posted a white paper about the dynamics and business aspects of the WiFi business. The white paper is available for viewing on the Web or via a .pdf file you may download.
Although Boingo obviously wants to convince potential partners (WiFi network operators, hotels, ISPs) to work with the company -- and the white paper is part of that persuasion -- it's well worth reading to get Boingo's point of view.
A key point in the paper is that there's a huge degree of fragmentation and Boingo can -- surprise! -- help ameliorate some of the fragmentation by marketing WiFi under a single brand, a single bill, easy-to-use software and customer support.
This is no news to people in the WiFi industry, of course.
How many potential venues?
In the "lack of ubiquity section, Boingo writes:
"Despite the explosive popularity of Wi-Fi networks in homes and offices, there are only about 3,000 commercial US hot spots today, concentrated in hotels, airports and a few national retail and cafÈ chains. In contrast, according to Boingoôís own market research, there are nearly two million potential hot spot locations in the US alone, broken down as follows:
[sigma] 212 conference centers
[sigma] 3,032 train stations
[sigma] 5,352 airports
[sigma] 53,500 hotels
[sigma] 72,720 business centers
[sigma] 202,600 gas stations
[sigma] 480,298 restaurants, bars and cafes
[sigma] 1,111,300 retail stores
"Clearly, hot spot deployment is in its infancy. This translates into a significant opportunity for enterprising hot spot operators. Itís a land grab. However, so long as uncertainties about the economics and characteristics of the hot spot industry linger, significant investment capital will remain on the sidelines."
Compared to ISP business
Sky Dayton, the founder of Boingo, also was the founder of Earthlink, and he's using his experience in developing Boingo. The white paper compares the formation of the ISP business -- and Earthlink's development -- to the WiFi business.
Earthlink was, in essence, an aggregator. It resold capacity from existing ISPs and focused on good customer support, branding, easy-to-use software and appropriate pricing. Sounds like what Boingo is trying to do in the WiFi business, which is what Boingo says.
In the WiFi business there are four market segments(see above): the brands (e.g.,T-Mobile, Earthlink, Sprint, AT&T Wireless), aggregators (e.g., Boingo, GRIC, iPASS), hotspot operators (e.g., Wayport, Surf and Sip, T-Mobile) and venues (e.g., Starbucks, Borders, Marriott, Shell).
A key point in the white paper is to stick with one segment and do a great job. Although some companies are in multiple layers, Earthlink is focusing on being an aggregator, just as Earthlink focused on its layer.
WiFi economics
The business case for a cafe assumes 180 monthly connections, an average of about six per day. My view is that, today, that figure might be appropriate for hotspots in high traffic areas, such as downtown San Francisco, but not for coffee shops and other businesses, which are averaging one or two connections.
Of course, Boingo's white paper notes that the business model doesn't take into account the most important aspect -- generating additional income from business' main product, such as selling more coffee or pastries.
Boingo also posts revenues for a top ten airport. The revenues would be $23,111, based upon 2 million visitors per month. I'm not an expert on the economics of airports so I don't know whether that would represent a significant amount of money to a major airport.
Sniffing WiFi and cellular locations
The last section of the white paper is Boingo's sales pitch. One of the interesting point is that some time this year Boingo client software will list not only all available WiFi locations but also cellular locations, such as GSM GPRS, CDMA 1xRTT and Nextel IDEN.
Although Windows XP and free sniffer programs such as NetStumbler already provide lists of hostspots, they don't include any cellular "sniffing." Boingo obviously wants to convince cellular operators to use its services. Users could configure the Boingo software to connect to a carrier's cellular data service when a hotspot isn't available. [Reiter's Wireless Data Web Log]
11:39:27 PM 
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