No free ride on Wi-Fi

Inside the PC Forum conference hall, like other
conferences I’ve attended recently, my cell phone
can’t get a good signal, although a Wi-Fi (802.11b)
wireless network is up and running. But who’s
running this network, and why?

by Rafe Needleman

Today’s Wi-Fi provider
is the startup Joltage, and while it’s
not charging PC Forum attendees
for access, it does have a clever
revenue model. Unlike the first
generation of wireless bandwidth
providers, Joltage doesn’t install
access points. Instead, it pitches
businesses to install and run Wi-Fi
hardware, and provides the software
to manage log-in and billing. It pays
location owners half of the revenue
wireless users generate at their "hot spots." And there’s a
multi-level marketing twist: If a user who first signed up at one
location uses another business’ Joltage hot spot, the owner of the
original location gets a cut of that revenue too. Users pay $24.99
a month for access to the network.

There is a legal problem with the model: bandwidth providers don’t
generally include permission to resell their capacity in the terms
of service. A direct relationship with an ISP, like Covad, is a way
around this. Also, Joltage doesn’t do much for free Wi-Fi access.
However, it is still a good thing for wireless users, since it gives
business owners (of cafes, hotels, airports) a strong financial
incentive to set up wireless access points. And the network effect
of the model is very strong: the more Joltage hot spots there are,
the more likely consumers are to sign up, generating revenue for
Joltage franchisees at all locations.

Another wireless hot spot aggregator, Sky Dayton’s Boingo, also
provides single sign-on and shares revenue with access point
owners. The difference is that Boingo aims to unify existing
wireless ISPs and has a stronger focus on security and corporate
access.

Boingo is a quicker business to get off the ground (its first group
of access points are already installed), but Joltage makes it
easier for any business to set up Wi-Fi access — and potentially
profit from it.

– Rafe Needleman
email me: [email protected]