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Hot Spots Start to Get Real

by Glenn Fleishman
03/06/2003

It sounds like a riddle only the sphinx would ask: "Why is San Jose better than San Francisco?" The unlikely answer: until Wednesday, March 5, 2003, San Jose's airport had full-terminal, wireless Wi-Fi coverage, while SFO (San Francisco's airport designation) had payphones, a few (very few) with modem ports.

On Wednesday, dignitaries including Intel's Andy Grove and the king--I mean, mayor!--of San Francisco Willie Brown joined SFO's airport director John Martin and T-Mobile USA's vice chairman Bob Stapleton to cut the cord at the airport. At the same time, T-Mobile rolled out its lower prices, which might have the effect of goosing for-fee Wi-Fi.

Although SFO had tried at least twice before to bring in wireless service during the heyday of the dotcom area, neither company that had originally committed to add Wi-Fi service was able to follow through. Something about money and investors, and how both had dried up between commitment and execution.

When I interviewed the information technology and telecommunications director at the airport in October 2001 for a New York Times article, he had said that they were watching and waiting, trying to find a partner stable enough to not burn them. T-Mobile was that partner.

T-Mobile HotSpot, the wireless ISP (wISP) division at the cellular telco, took over MobileStar's existing 1,200 Starbucks and few dozen other locations when it bought MobileStar's assets out of bankruptcy in early 2002. Since then, it's expanded to 2,200 Starbucks in dozens of municipalities, and has signed deals to bring HotSpots into all 400-plus Borders and 100 airport club lounges run by American, Delta, and United. They already have some service in American lounges, but they'll be expanding and branding it more clearly.

Starbucks seemed like a natural HotSpot participant as T-Mobile built momentum for its product, but now other retail hot spots are proliferating nearly as fast as Starbucks franchises themselves.

For-fee wISPs have finally taken hold in the U.S., and are starting to accelerate in Canada, Asia, Australia, and across certain European countries. The gating factor for users paying for service seemed to be a combination of ubiquity and price.

Free-access community networks have continued to grow as well, but few communities have seamless access all over; usually there are specific areas, such as Bryant Park in New York, or Pioneer Courthouse Square in Portland, Oregon, that have a "brand name" and good coverage. Ubiquity is thus an issue, but also quality: free hot spots run by community groups may be able to achieve commercial-quality uptime, but many groups are relying on connections of individuals who may have more priorities than consistent wireless service for their nodes.

Ubiquity

Ninety-seven percent coverage, or whatever would be closest to ubiquity, isn't quite here yet. It's clear that something on the order of 20,000 hot spots is needed to achieve a don't-think-about-it, cell-network level in the several hundred largest cities in the U.S.

T-Mobile is giving ubiquity a run for its money in the cities where it has pushed out dozens of Starbucks installations, literally--as no one is quite clear how they'll turn a buck with their deployment costs. For instance, in Miami alone, one of its more recent rollouts, 20 Starbucks within a few zip codes of one another have 1.544 Mbps T1 lines and T-Mobile service.

Yup, T1 lines: T-Mobile committed to T1 service with Starbucks, which means quite a lot of recurring monthly fees to pay.

T-Mobile has the largest U.S. footprint of any single wISP; the second largest is Wayport, with about 450 locations, mostly a few hotel chains and several airports, including San Jose, Austin, and Seattle-Tacoma. Several wISPs in the next tier have 50 to hundreds of locations, including Surf and Sip, which has expanded out of its San Francisco Bay base into Mexico and the U.K.

A few aggregation firms offer access to many networks through special software. Boingo Wireless is the most notable for its branding push and its founder, Earthlink's builder Sky Dayton. Boingo has over 1,200 hot spots across two dozen wISPs to which a single login provides access. Boingo requires a special client software package that works only with Windows and certain PocketPC computers. They expect a Mac OS X version out by mid-year.

Other wISPs and telcos have announced partnerships that could service hundreds or thousands of locations, but we'll have to wait and see. British Telecom originally said they'd have 400 hot spots operating by late last year, but only had a few dozen. They still plan 4,000 across the U.K., but the timetable is now several years. Likewise, Boingo's head promised 5,000 hot spots in its network by the end of 2002, but hit just about 1,000.

That burning sensation at the end of 2003 for ubiquity is Cometa, a company formed by Intel (with investments from Intel Capital's wireless fund), AT&T (with interest from AT&T's cell and data services), and IBM (focusing on IBM Global Services, which performs corporate wireless LAN or WLAN installs).

Cometa's goal is 5,000 hot spots within a year and 20,000 within a couple of years. They want hot spots within a five-minute walk or drive of most of the country. They plan to resell their service to aggregators--they announced a preliminary partnership with Boingo competitor iPass early this week--and cell telephone companies.

Cometa's head, Larry Brilliant, was also behind AerZone, a company you never heard of, as it was stillborn in December 2000. AerZone's business model was to unwire airports, starting with terminal waiting areas and club lounges and working up to entire airports. Unfortunately, they underestimated the capital and the bureaucracy involved, and shut down just before the real dotcom bubble burst.

Outside of the U.S., reports indicate over 10,000 hot spots in South Korea out of a plan to deploy 25,000 by the two major telcos; in Austria, one provider has put in several dozen and expects several hundred locations; several wISPs including Surf and Sip, T-Mobile, and British Telecom, as well as several independent retail chains and restaurants, are adding hot spots every day; and in Australia, Telstra, and Optus recently clarified their plans to compete by rolling out hundreds of outlets in McDonald's and other locations.

The Swedish cellular carrier Telia has its own hot spot division, HomeRun (homerun.telia.com, named in English, oddly). HomeRun has a few hundred hot spots across the Nordic world, mostly in Sweden, but some in Denmark and Norway. They just signed an agreement with Finnish cell operator Sonera, so that customers of either network can freely roam.

Competition in Canada might become fierce shortly, as the only player of any scale at the moment, FatPort, inked a deal to add several dozen hot spots nationwide, while Toshiba of Canada says they'll roll out hundreds. Other firms also predict hundreds, although the build-out is just beginning.

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