Spotlight on: Boingo Wireless

It seems like a no-brainer today, but there was a time not too long ago when Wi-Fi was not a ubiquitous feature found in most homes, businesses or public venues. Along with that scarcity was frustration and complications for those looking to actually connect to those few and far-between locations.
That started to change in 2001 when companies like Boingo Wireless Inc. began installing wireless Internet connection points using the IEEE 802.11b standard in hotels, coffee shops and airport locations across the country.
At the time the then largest Wi-Fi provider, MobileStar Network Corp., was in the process of being acquired by VoiceStream Wireless Corp., which laid the foundation for the eventual launch of T-Mobile USA Inc.’s Hot Spot service.
Founded by Sky Dayton in 2001, Boingo Wireless quickly became one of the largest contenders in the rapidly growing mobile hot spot space. Analysts were skeptical from the beginning of the business models for the services.
“We said earlier this year that the hype around wireless LAN was way over the top,” said Richard Dineen, senior analyst at Ovum back in 2001. “Short-range wireless LAN technologies such as IEEE 802.11b cover everything that is needed to attach devices to each other, or even to connect temporarily stationary users to Internet or intranet services. But they don’t cover the service management elements that mobile users more or less take for granted.”
This prognostication proved true in the following years as a number of players fell out of the space nearly as quickly as they joined (Cometa Networks Inc. anyone?) or were gobbled up through consolidation.
The uptake of Wi-Fi services received a significant boost when chip giant Intel Corp. began pushing laptop chipset with embedded Wi-Fi connectivity. This lead to a proliferation of hot spots in public places where people could use their laptops like airports and restaurants.
Over the past several years, Wi-Fi enabled mobile devices have become the driving force behind public Wi-Fi adoption.
“Devices like the iPhone are big drivers for the recent growth we have seen in public Wi-Fi usage,” explained Dave Hagan, CEO at Boingo.
Through international and domestic roaming agreement, Boingo now claims its customers have access to more than 125,000 hot spot locations around the world. The company offers price plans beginning at $8 per day for unlimited worldwide usage on a smart phone; $10 per month for unlimited usage in the Americas on a laptop; $18 per month for unlimited laptop usage in the Americas and unlimited usage for smart phones worldwide; or $60 per month for 2,000 minutes of usage worldwide from a laptop.
While the space has gone through some turbulence, Hagan said the sector has found its legs despite a rough economic climate.
“We did not have a hiccup in the business over the past several years driven by a focus from laptops to other Wi-Fi enabled devices,” Hagan said. “It was a macrotrend that more than compensated for the downturn in the economy.”
Hagan added that what also helped the company survive the economic uncertainty was its focus on building out locations beyond airports, which was driven by increased usage by devices other than personal computers.
“Going beyond airports did not make sense for us in a laptop world, but in a world where people are using mobile devices it makes sense for us to expand to areas like stadiums, arenas and shopping malls,” Hagan said.
Hagan also noted the differences the company has seen between domestic public Wi-Fi offerings and those overseas.
“North America has always been aggressive on pricing and going for volume,” Hagan noted. “While Europe was more about maximizing margins.”
This is evident in most domestic public Wi-Fi services offering services for between $10 and $15 per day, while European locations often charge in excess of $20 for access.
Prosperity in the face of 4G
Despite all the talk of increased network speeds and efficiencies being proffered by 4G proponents, Hagan said consumer uptake of mobile data services will prove those solutions are not quite up to the task.
“4G migration is a four times solution to a 30 times problem,” Hagan said.
Traditional wireless carriers took very different paths in dealing with these new entrants. Some, like T-Mobile USA quickly jumped on the bandwagon with its Hot Spot service that was offered through Starbucks locations. Verizon Wireless through parent company Verizon Communications Inc. began placing hot spots in payphone locations throughout New York City.
“I think we are past those friend or foe days,” Hagan said. “Most carriers realize and understand that consumers are increasing their data usage on smart phones and are looking at ways to offload some of that traffic.”
Hagan added that recent pricing shifts by some carriers to metered data offers makes Wi-Fi even more valuable as customers will be looking to offload their usage to stay below the new caps.
Hagan noted that while about 80% of Boingo’s deployments use the 802.11g standard, more recent Boingo deployments have used the 802.11n standard, which thanks to the standards work done by the IEEE is backward compatible with past versions of the .11 standard.
“One thing helping to drive adoption is that there is not a technology fragmentation in the market like there is in the cellular market,” Hagan said. “If someone has a Wi-Fi chip in their devices, it will work on just about any Wi-Fi network.”
Free lunch?
With the increased consumer awareness of Wi-Fi has come changes to business models for public Wi-Fi providers. Most public Wi-Fi deployments depend on either a customer pay model in which the user pays for each session, or a venue pay model where a location offers free Wi-Fi connectivity to customers.
Hagan noted that on a consumer-pay model, which is Boingo’s main business, it’s driven by $10 monthly subscribers or its $8 day pass users. On a venue-pay service, like most restaurants or coffee shops, the venue is shifting what it’s paying to operate the Wi-Fi network to attract people who are then expected to purchase items from that venue.
“There is really no such thing as free Wi-Fi,” Hagan explained. “It’s just a matter of cost shifting.”