Mittwoch
Jul022003
Providing Hotspots for free, while still being profitable !?
02.Jul.2003 | 12:00
I love to sit in a cafe and sip a cappuccino, while writing something for my weblog. It really gets my creative juices flowing. But I don't like to be ripped off at the same time !! So I probably wouldn't enjoy staying at one of the places The Economist wrote about recently:
So why does it cost "several hundred dollars a month" to connect a small hotspot, like a Starbucks, to the Internet ? After the initial investment for the router, the running costs shouldn't be much higher than the price for a normal DSL-Line.
Here in Hamburg, for example, we have a service called Hotspot-Hamburg, which is free to use for everyone. Every owner of a cafe or restaurant can get there a hotspot installed for just 50 Euro per month - which means 1,6 Euro per day. So he breaks even, if he sells 1 additional cappuccino every other day.
At these rates, the Internet access becomes part of the normal infrastructure of a cafe, which you use, while you are there - just like a chair or a table (Ever got asked if you want a chair with your latte ?). And providing the service for free, also saves the costs for things like billing or customer service.
So if there is a business model for Wi-Fi services in public places, like cafes, that's probably it: keep the running costs as low as possible, provide the service for free, tell everyone about it and recoup the investment with additional sales. Jupiter's Joseph Laszlo talked about a very good example for this on his weblog yesterday.
But there is still one problem left: who will pay for the large overhead of something like T-Mobile ? Well, I definitely won't...
"Perhaps the best-known network of hotspots is that operated by T-Mobile, a wireless operator, in over 2,000 Starbucks coffee shops in America. Around 25,000 people access the hotspots each week, which works out at an average of less than two users per day per hotspot. But the cost of connecting each hotspot to the internet is several hundred dollars a month. The Wi-Fi hotspot at Amsterdam's Schiphol airport is used by only a dozen people each day. (...)Excuse me ? 130 euro per month ?? That's about three times what I pay for my DSL-line at home... No wonder that they are desperate for customers. Looks a little bit like the problem with GPRS I wrote about a couple of weeks ago.
Users may be deterred by high prices. Even after a recent round of price cuts, using T-Mobile's network of hotspots costs $6 per hour, $40 per month, or $360 per year. Other operators in America charge $40-70 per month. Prices in Europe are as high as euro 130 ($150) per month. (...)"
So why does it cost "several hundred dollars a month" to connect a small hotspot, like a Starbucks, to the Internet ? After the initial investment for the router, the running costs shouldn't be much higher than the price for a normal DSL-Line.
Here in Hamburg, for example, we have a service called Hotspot-Hamburg, which is free to use for everyone. Every owner of a cafe or restaurant can get there a hotspot installed for just 50 Euro per month - which means 1,6 Euro per day. So he breaks even, if he sells 1 additional cappuccino every other day.
At these rates, the Internet access becomes part of the normal infrastructure of a cafe, which you use, while you are there - just like a chair or a table (Ever got asked if you want a chair with your latte ?). And providing the service for free, also saves the costs for things like billing or customer service.
So if there is a business model for Wi-Fi services in public places, like cafes, that's probably it: keep the running costs as low as possible, provide the service for free, tell everyone about it and recoup the investment with additional sales. Jupiter's Joseph Laszlo talked about a very good example for this on his weblog yesterday.
But there is still one problem left: who will pay for the large overhead of something like T-Mobile ? Well, I definitely won't...
Reader Comments (1)
This blog is enlightening. I do wonder if you or someone else has put this thought into an email or snail-mail and sent it to both Starbucks and T-mobile. I should like to think that we are not only complaining, but acting. I would happily take that action if it has not been done. The internet access should not be that expensive and I have had the pleasure of coffee and free access in Diedrich Coffee in California. The shame is they didn't advertise it, yet the network was labeled as "Diedrich" and required no password. That is one place I will miss in CA.