hotspot business model

Filed in archive Venture Capital on December 21, 2003

I've been pondering with the hotspot business model in 2002 as well. It seemed always quite difficult to convince on-the-spot users to pay for access (i.e. hotels, airports etc.). It's not only fee but more the opportunity costs of handling so many different payment schemes. There might be help under way with ipass and Greenspot but it still seems a major flaw for the hotspot business model. Wired is nicely summing up several recent study about the unbroken trend for wifi adoption, but the difficulty to make users pay for this service.

"Press reports of Starbucks usage in April said that of the 22 million people who visit one of the coffee outlets in North America in an average week, just 25,000 were taking advantage of the service. Wireless phone service provider T-Mobile has deployed Wi-Fi in more than 2,600 Starbucks locations in North America, as well as in other chain stores, including Borders and Kinko's. Currently, its network consists of 3,900 North American hotspots; that number is poised to grow Tuesday, when T-Mobile plans to announce another Wi-Fi partner."

"Still, analysts continue to predict heavy growth in the number of hotspots.

For instance, one research firm, Baskerville, predicts that there will be 135,000 hotspots by 2007, up from 14,242 in 2002. Another, Allied Business Intelligence, projects that within five years there will be 200,000 hotspots in existence, up from 28,000 this year. Allied predicts that revenues from Wi-Fi services will reach $3.1 billion in 2008, up from $59 million this year. "