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To: paul_philp who wrote (51147)	4/26/2002 5:11:05 PM
From: Thomas Tam	Read Replies (1) \| Respond to of 54805

A couple points, but it's nice to have some action on this thread. Is fixed wireless or mobile wireless more important to consumers? I agree with you that 802.11X is the wireless LAN standard. No question there. Can you explain what type of service provider will pay Starbucks, etc to access customers who won't be paying the service provider for wireless internet access? Maybe I am getting mixed up here, or are you saying a service provider will provide consumers wireless internet at a certain cost, but is only available in certain facilities? Help me understand how a business model will be generated? Thomas

To: paul_philp who wrote (51147)	4/27/2002 4:33:35 PM
From: Eric L	Respond to of 54805

re: WLAN Mobile WAN Convergence << 802.11X is not a mobile technology. >> No, but in my mind GPRS/EDGE/CDMA mobile/portable technology will converge quickly with 802.11X portable/fixed technology (and both will be supplemented by Bluetooth PLAN). I think we are going to see the traditional mobile wireless carriers proacting (as VoiceStream, BT, et al) by staking out WLAN turf before others arrive, and I think that this will help accelerate Generally in the mobile world we are "waiting for devices". Here we are not. Nokia has already released the D211 (900/1800 MHz) & D311 (850/1900 MHz) tri-mode GPRS/HSCSD/WLAN (WiFi) Modem cards. By swapping SIM a business traveller has access to mobile (and WLAN) data worldwide on a single subscription if he uses both cards. Others vendors will quickly follow and we can expect 1xRTT models before long. For those that have not seen it, Andy Seybold commented on the business model this week and he has an interesting survey on his website: surveysolutions.com >> Wireless LAN "Hotspots"--Is There a Business Model Here? Andrew M. Seybold outlook4mobility Wireless Outlook Newsletter 22 April 2002 For weeks now I have been trying to figure out the business model for companies deploying Wi-Fi or 802.11B "hotspots" in airports, hotels and other public areas. A growing number of companies are entering this business: Wayport, MobileStar (now part of T-Mobile owned by VoiceStream) aggregator Boingo and several others. The "hotspot" concept has caught the attention of many, from those who want to deploy hotspots to those who want to use them. No matter how I work the numbers, I can't come up with a solid business case for companies whose prime business is deploying Wi-Fi access points in public locations. I can justify deployment of hotspots by companies such as VoiceStream (T-Mobile), which purchased MobileStar out of bankruptcy, since it will offer a combination of GSM/GPRS wide-area data access along with Wi-Fi hotspots. I can make a case that this combination will attract more users to the wide-area network and perhaps reduce customer churn. Each hotspot doesn't necessarily need to be cash positive. This isn't so for companies deploying Wi-Fi hotspots for profit. No matter how I run the numbers, I keep coming up with a business model that doesn't appear capable of reaching breakeven, let alone showing a profit. Unless I've really missing something here, I don't understand how such companies acquired funding and what they plan to do when they start running out of money. Perhaps a wide-area network provider will purchase them out of bankruptcy to augment its offerings. Sprint PCS, for example, invested in Boingo. Boingo's model is different from that of the Wayports and MobileStars of the world. Biongo aggregates Wi-Fi services deployed by others, pays a discounted price for the service and then charges its own customers a premium. It might not be too much of a stretch for Sprint PCS to pick up the Boingo pieces. The Business Model Let's say I want to install a hotspot in a coffee shop. The object is for the owner to attract more customers and for me to make money selling access to the Internet via a wireless access point. I would have to install at least one access point and provide a high-speed, persistent Internet connection, probably a DSL line with a download speed of 784 Kbps and an upload speed of 128 Kbps, which is far less than the 6 Mbps that users will get between their laptop and my wireless access point, but if there are only a couple of users they probably won't notice a difference. Or I could opt for a T1 (DS0) circuit that will provide data access of up to 1.5 Mbps, still less than the wireless speed but plenty fast. If I wanted to go top drawer and support multiple access points, I would opt for a T3 (DS3) circuit that provides up to 45 Mbps of access speed, which is overkill for a single access point. Let's take a look at the numbers: Item Initial Cost over two Cost years/Monthly Access Point $500.00 $21.00 per month DSL Line (business) $69.95 per month T1 (average cost) $600.00 per month T2 (average cost) $1500.00 per month These numbers don't include installation costs nor do they take into account the fee that the property owner would impose, any back-end services needed to run the system, user authentication and/or a billing engine to collect fees from users or marketing dollars. All of which would add to the monthly costs, most of which can be shared across multiple points of access. I have chosen to use a rather elementary cost/profit example here since these additional costs cannot be accurately determined. Here is how the "profit" picture has to work out. I will price my service at $5.00 per user per access. Most services charge more for a single access session and by the month for various levels of access, but I believe $5.00 per user per access is representative. Here are the breakeven models for the various options: Access Point Monthly Users and Connectivity Monthly Cost for breakeven DSL $91.00/month 18.2 T1 Line $621.00/month 124.2 T3 Line $1521.00/month 304.2 I doubt that this many users currently use any one hotspot. From personal experience as I travel throughout the U.S. using the MobileStar system at American Airlines Clubs, and Wayport where it's been installed, I find that I am usually the only one using the hotspots. The biggest problem is that most folks who travel don't know that wireless access points are available. I make a pest out of myself in the Admiral's Clubs going up to notebook users and asking them if 1) they know that fast wireless access is available and 2) if they would they use it. Ninety percent of those I ask don't know it's available. Once I explain wireless access and the pricing structure, most don't get very excited. I'm only occasionally asked how to get started. In order to get more people to use these hotspots, someone will have to do a lot of advertisinglittle MobileStar signs on a few tables in airline clubs isn't enough and advertising expense isn't included in my cost models. The Bottom Line If I were a venture capitalist and ran numbers like those above, I would not be inclined to invest in companies whose entire business model is to provide WLAN hotspots, thinking they will make money doing so. There has to be another business model if WLAN hotspots are to remain viable and proliferate. Providing them in public conference rooms at hotels where the cost of the connection is already part of the overall infrastructure is one model that works. Installing them in places where there is already a high-speed connection also works. But having to provide both the high-speed back-end and the access point doesn't appear to be a model for making money. I am an enthusiastic user of WLAN hotspots, even though I strongly object to the existing pricing models. Boingo, for example, charges for each use. If I visited three airports on a given day (not at all unusual for me) and I accessed a WLAN connection at each one, my bill for the day would be $7.95 x 3 or a total of $23.85. I hope that there are some business models out there that will prove workable. In the meantime, I won't be investing in any company that thinks it can make a fortune installing standalone WLAN hotspots! << - Eric -

To: paul_philp who wrote (51147)	5/7/2002 12:27:06 PM
From: Eric L	Respond to of 54805

re: Wi-Fi WLAN Mobile WAN Convergence in 2.5G & 3G Andy Seybold just posted the results of the Wi-Fi Survey I mentioned a week back, and it is posted below for those that have interest in this arena. Converged Wi-Fi and 2.5G & 3G seems to be really heating up with more and more carriers in every region of the world (including pioneering Japan & Korea). The carriers seem to sense an opportunity and appear to want to get into the game before other types of providers do. I personally feel that converged Wi-Fi WLAN complementing purely mobile wireless can be a tremendous accelerator to next generation technologies. Seybold comments: Not surprisingly, most wanted a single point of contact (single bill) for all of their hotspot usage and, again, not surprising, the vast majority wanted their Wi-Fi services provided in conjunction with their wide-area data services--either 2.5 or 3G. This held true even if they couldn't receive a single bill for both services. I concur, and I am holding out for the "single bill". >> Wi-Fi Survey Highlights Andrew M. Seybold Wireless Outlook Newsletter 6 May 2002 First, I'd like to thank all of those who took the time and effort to complete our short Wi-Fi (Wireless LAN) Hotspots Survey. Those who took part were equally split between those who have used Wi-Fi hotspots and those who have not. However, use is not necessarily an indication of interest. More than 90% said that they are interested in using hotspots (again). Note to the industry: This means that 40% of those responding to our survey are potential new customers! Who took the survey? The survey was sent to our list of people who read our weekly commentary and news and analysis emails. This in itself indicates a high interest in the wireless industry. These folks are some of the best-informed people around when it comes to wireless (grin). When we looked at Wi-Fi hotspot usage by category of user we found the following: Category of User Yes I have No used hotspots I have not Wireless Data app developers 64% 46% Wireless Voice network operators 33% 67% Wireless Data network operators 42% 58% 42% 58% Consultants 48% 52% Non-Wireless related business 32% 68% Based on a total of 283 responses. As you can see, our readers are a diverse group--many have hands-on experience in this area. We learned how hot this topic really is from the high percentage of people on our list who responded, especially given the short period of time that the survey was live. I know that you would like to hear what everyone had to say so I will share some of the highlights with you. Note that with this type of survey it is important not only to look at each individual question but also to be able to cross-tab the answers by type of respondent. One thing that didn't surprise me at all was what respondents are willing to pay on a per-month/every-month basis and on a per-use basis. Based on the survey results, I can now back up what I have been saying all along--the existing Wi-Fi hotspot providers have priced their services well out of the range of what most people are willing to pay. This applies equally to those who would pay every month and to those who would pay on a per-use basis. The pricing points we included in the survey were not chosen to skew the answers; they were chosen to determine the value of this service to our readership. One of the reasons to cross-tab this type of survey is to be able to see the correlation between where the vast majority of "pay every month" users pegged the price they would be willing to pay and the large number of those who said they would be willing to pay every month even if they didn't travel. Not surprisingly, most wanted a single point of contact (single bill) for all of their hotspot usage and, again, not surprising, the vast majority wanted their Wi-Fi services provided in conjunction with their wide-area data services--either 2.5 or 3G. This held true even if they couldn't receive a single bill for both services. We also discovered that among our readership we seem to have a large number of "do-it-yourselfers" when it comes to installing the hardware and software required to get notebooks and/or PDAs up and running on Wi-Fi, even though many reported that they work for a company that had its own IT department. Further, many are using a combination of Wi-Fi with a Virtual Private Network to get to their corporate data, and almost 10% of them should be ashamed for using both the Wi-Fi and VPN connection without the knowledge of their IT departments! Even more are using Wi-Fi cards without their knowledge or permission--another thing that doesn't surprise me. For years, new technologies have been "snuck" into corporations by early adopters and others who have found that a specific technology makes their business life easier and are willing to pay for the device and the service to be more productive. This was true with the original PCs, including the Radio Shack TRS-80, the Apple II and others. Even after IBM entered the PC market in 1981, many of us still had to sneak these machines in. This was also true for laptops, one-way and two-way pagers, Palms, PDAs and, of course, BlackBerrys. Back To Last Week The commentary I released last week was based on the premise that it will be difficult, if not impossible, for anyone to make money deploying Wi-Fi hotspots if they have to pay for the back-end high-speed connectivity. If a high-speed circuit is already in place, then adding a Wi-Fi access point is not as big a deal. What I learned from this survey is that the price point I picked on a per-use basis is about right and the monthly fees being charged today will stifle hotspot usage. Wi-Fi hotspots are getting a lot of press and a lot of attention. It seems as though each week brings another announcement about yet another plan to deploy or aggregate already deployed hotspots. Based on our survey, it also appears that many of these companies have not taken the time and effort to fully understand the various economic models. Either that or they believe that users will be willing to pay a premium for high-speed connectivity. Could this be another situation where the folks deploying the services need a reality check? I won't pretend that our survey is the final answer or that it is a sufficiently large sampling that it is the be-all, end-all source of information about what will fly and what won't. However, because our readers are in the vanguard of wireless, and because of the healthy interest in the survey, I am confident that the information it provides is of great value. << - Eric -