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Wi-Fi: You can take it with you

Telecom service providers are rolling out new Wi-Fi service options ranging from Verizon's MiFi private cloud to Qwest's free hotspots for existing broadband customers. Site Editor Kate Gerwig brands the evolving Wi-Fi market cool but confused in the ARPU department.

Kate Gerwig, Site Editor
Kate Gerwig
Being neither 3G nor 4G, Wi-Fi, with its "no G" status, is much in the news these days, which goes to show that beyond the next-gen hype, there's life (and competition) in Wi-Fi yet.

First let's look at Qwest, which is offering its high-speed Internet customers a good deal -- free Qwest Wi-Fi access at 17,000 hot spots nationwide. Qwest Wi-Fi is actually rebranded AT&T Wi-Fi, so there's no doubt a wholesale deal in place. Some years ago, this deal would have been unthinkably anti-competitive, but both of the former Baby Bells operate in completely separate wireline territories, and Qwest doesn't own any wireless assets. So why not?

This means untethered Qwest broadband business or residential customers can now leave their Ethernet cords behind and can get online for free at places like Starbucks, Barnes & Noble and McDonald's without buying an additional wireless broadband plan or paying for access by the day. Has anyone done a study yet on how many Big Macs the average Wi-Fi user might eat while taking advantage of those free connections and compared that to the resulting health care costs? Someone get Michael Moore on the phone...

But I digress. Qwest says it's acting on the results of a study it commissioned by Impulse Research Corporation, in which half of the respondents said they liked Wi-Fi because it gives them the freedom and flexibility to be connected when not at home or the office. Brian Osborne at gave me a good laugh when he wrote:

I must admit that I was a little surprised that the study commissioned by Qwest only found that half of the respondents valued Wi-Fi. I mean, what's wrong with the other half in the study? Do they prefer to walk around connected via a cord all the time?

Maybe the other half never travel. Maybe they have desktops. Maybe 50% of Qwest's broadband customers are shut-ins. Still, free is always a good deal for customers. For service providers -- not so much.

I called my wireless guru analyst friend Mike Jude, program director of Consumer Communications Services at Stratecast, to ask him why Qwest should offer hotspots for free. Haven't we talked until we're blue in the face about how service providers need to increase average revenue per user (ARPU)? Well, yes, Mike said. "Maybe Qwest's deal will be free for now, but not in the long term." Maybe offering free hotspots can stem the tide of customers churning to cable? "The people who are typically broadband consumers are likely to want to access broadband services on the move, and this gives them the capability of doing that," Jude said.

Now let's move on to Verizon's MiFi, the battery powered EVDO modem the size of a credit card that turns incoming 3G radio waves into a moveable feast of a Wi-Fi network. What a great device for a Jetson's type of user. I'd love to travel in my own little cloud (and often do), and Verizon's MiFi can even include up to five people in the personal-cloud club.

To get any serious bandwidth, users would probably opt for the $60 a month plan for 5 GB, which means they'd likely decide to cut out another type of access they're already paying for. Let's ARPU that! The private hot spot, kind of like a battery-operated femtocell, is the Novatel MiFi 2200, which will be available from Verizon in mid-May for $100 with two-year contract, after rebate).

The New York Times' David Pogue raves about MiFi, but our more jaded Mike Jude called it a "cool technology looking for a purpose." Maybe if MiFi were bundled with WiMax, it could create a mobile-mobile-convergence play rather than a fixed-mobile convergence play. The possibilities are endless, as well as unclear. It's one mixed up, but cool market.

This was last published in May 2009

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