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Free consumer Wi-Fi hot spots: Retail fad or enterprise business tool?

Free Wi-Fi in coffee shops and other retail outlets was a simple marketing tool for attracting and retaining customers. But some enterprises see broader possibilities for free customer access, such as providing localized services and better communications between consumers and businesses.

The free municipal Wi-Fi movement may be dying on the vine, but some enterprises are seeing real business value in offering free Wi-Fi to their customers.

Simply providing a free wireless hot spot in a coffee shop to attract and retain customers was a good marketing fad in its time, but forward-looking enterprises are going a step further. They want to use the technology to communicate better with their customers, to understand their needs, and to automate and personalize customer interactions.

"If we go back a couple of years, free Wi-Fi in coffee shops was seen as a marketing tool, and to a certain degree it still is," said Abner Germanow, senior research director for IDC. "The big change that's occurred is that very few people look at putting in Wi-Fi networks just for the use of their customers. In most cases now, when you deploy Wi-Fi in a particular area where you allow guest access, there's usually a business reason for it, and guest access is a nice-to-have and can push cost justification over the top."

For instance, the Massachusetts Bay Transportation Authority recently announced plans to offer free Wi-Fi on all of its commuter trains by 2010. In a statement, MBTA General Manager Daniel Grabauskas said that the free Wi-Fi service would help the MBTA retain customers.

Germanow said the MBTA probably sees future applications for the in-train wireless LAN infrastructure that will improve its bottom line, not just customer satisfaction.

"When we look at healthcare, transportation and other types of facilities, the ability to enhance workflow and payments processing is important," he said. "The long-term gain for the MBTA might be for payments processing, for buying tickets on the train."

In a much higher-scale example, British Petroleum (BP) yesterday announced plans to install wireless hot spots at up to 9,000 of its BP-branded gas stations, convenience stores and restaurants throughout North America.

BP will work with HarborLink Network, a national provider of hot spot Wi-Fi access, to deliver the service to BP's properties and its franchisers. HarborLink will use access points from Ruckus Wireless to provide the network connectivity through a satellite backhaul network that BP has already installed throughout most of its locations. HarborLink monetizes the free Wi-Fi service by charging a small fee to the retail outlets. However, most of the deployment is paid for through localized advertising revenue.

BP can promote products and events and provide localized content to customers through the wireless network, according to Rick Tangeman, president of HarborLink. Some might wonder why customers would bother bringing a laptop into a gas station, he said, but that isn't the target market for these deployments. More and more mobile phones and other handheld handsets are Wi-Fi enabled, Tangeman said. For instance, 14% of all devices that access HarborLink's nationwide Wi-Fi network are iPhones.

Tangeman said his company chose Ruckus' ZoneFlex Smart Wi-Fi system access points for this deployment because of their plug-and-play appeal and their ability to run video and voice traffic. Gas station owners can take a Ruckus access point and plug it into the corporate network. It immediately connects to a central management system controlled by HarborLink, which can manage and maintain the access points and client connectivity remotely.

Paul DeBeasi, senior analyst with the Burton Group, said the capital cost for such an arrangement is low for BP, and the Ruckus gear is very intelligent and designed for service providers.

"The big thing from the retail point of view is you want operational costs to be really low -- because who in a gas station is going to be able to fix an access point?" DeBeasi said. "And it provides a centralized management system that manages all this stuff. It provides a way to enable new sources of revenue, too."

Germanow said BP probably has its eye on finding other ways to get business value out of the technology, such as using sensor networks to align people entering and leaving a store with receipts. It might also enable new video surveillance techniques and provide a way for the company to standardize network access for the gas stations.

"I would be stunned if there wasn't [an eye to future applications]," Germanow said. "You can't justify the costs of network access for guests otherwise."

Tangeman was mindful of future applications, as well. "There are some brands of cars that already have Wi-Fi embedded in them," he said. "Cars could start speaking to the network. Then you have things like movie downloads, mapping and telemetry services. So devices aren't just what's in hand. It could be the automobile as well."

Let us know what you think about the story; email: Shamus McGillicuddy, News Editor

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