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BT faces stiff challenge on wireless services
Enter the WLAN Clan...

By Ben King

Published: Wednesday 17 July 2002

With wireless internet hot-spots set to launch next month, BT seems to have the market sewn up already - but a brave group of wireless players believe they can compete with the telco giant by giving their services away for free.

BT sees WLAN (wireless LAN) access as a service it can charge significant sums for - up to £100 a month. But some companies want to give wireless access away for free.

The wireless internet service providers(WISPs) are hoping to build a business offering wireless internet access in cafés, hotels, airports and conference centres using the increasingly popular 802.11b wireless networking standard, also known as WLAN or Wi-Fi.

One such company is Wialess.com, which installs and connects wireless access points for bars and clubs. It costs a few hundred pounds to install and a relatively cheap ADSL subscription (around £30 a month) to run.

Wialess.com already has some customers in St Albans, and it is targeting central London and other commuter towns for more installations.

As Brian Parker, marketing director of Wialess.com, said: "Wireless internet access is so cheap to provide that we think people can offer it as a free amenity, like the lighting in the toilets.

"Internet users will be drawn to a café where wireless access is free, and they'll spend more time there - so you provide the internet access for free and make your money on the extra drinks they buy."

The company even has an idea for a business model where it would install a wireless LAN for free if a bar would let it build in a plasma screen displaying paid-for advertising.

However, KPMG analyst Patrick Bossert said: "I think people are prepared to pay quite a lot of money for wireless internet access. So I think a lot of hotels will decide that it makes sense to charge for it."

Currently, few internet cafés or hotels provide free wired internet access. However, wireless internet access will be much cheaper to provide, as the users bring their own computers - so perhaps some cafés and hotels will decide that it's cheap enough to give it away for free.

UK-based EuroNet is betting that hotels will see it as a service they can charge for.

EuroNet's Peter Herbert sees his clients charging around £6 for an hour or £18 for a 24-hour period, of which the hotel keeps 25 per cent.

It's part of a global alliance of 50 WISPs, called Pass-One, which is hoping to enable its subscribers to roam seamlessly across all of its networks.

Another company, Megabeam, is hoping to make a lucrative business out of WLAN operating as a wholesale player, installing its infrastructure in train stations, hotel chains and airports.
It then signs deals with telecoms companies to let their corporate customers use their access points. So Megabeam is more likely to be a partner of BT than a rival.

In restricted areas such as airports and train stations, any WLAN operator is likely to have an effective monopoly that it will be able to charge a hefty sum for - and the property owners will make sure that they do.

It's only in cafes and hotels, which compete more actively for customers, that the free-to-use model may well take off.

In fact, Bossert believes that the biggest threat to BT's WLAN business could come from private individuals who allow the public to share their broadband internet connections through open wireless access points.

However, most of the broadband connections that wireless networks depend on are supplied by BT itself - and it's not likely to encourage the growth of widespread public WLANs if they start to undercut its own business.

Free internet access services have proved notoriously unsustainable in the past, and there seems little reason that the wireless world will be different.