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Free Wi-Fi won't take paid access offline

Even with governments looking to subsidize telcos to avail free wireless broadband connectivity, paid access will remain due to demand and need to recover investment costs.
Written by Tyler Thia, Contributor

With an increasingly Internet-savvy global population and more public Wi-Fi hotspots around the world, paid Wi-Fi access remains a viable revenue model for operators and will continue to exist, industry watchers said.

According to Christian Gunning, director of communications at global Wi-Fi provider Boingo Wireless, "Wi-Fi will be essential to fulfilling the rich digital experience we've all come to expect", particularly in locations where there are a large number of users engaged in "high-intensity data activities".

These means of access can be from commercial network providers and chargeable, some are provided free-of-charge by municipal or city governments. Both free and paid models will exist in the Wi-Fi ecosystem, Gunning said in an e-mail, noting that Wi-Fi is about free and fee, private and public, as operators seek to maximize revenue in different sectors of the market.

When it comes to free access, Bryan Wang, principal analyst at Forrester Research, observed that governments worldwide are working with telcos to provide free connectivity, such as by subsidizing their network investments. This is because Wi-Fi is increasingly considered a part of national infrastructure, he explained.

Cities such as Hong Kong, Seoul, Singapore and Beijing are already providing government-funded free Wi-Fi in the city areas. In Sydney, free access is made available on trains and buses, on a trial basis. At the same time, it is not uncommon to have to purchase access, either by usage period or data amount, in many cities around the world.

Craig Skinner, senior consultant at Ovum, added that the most common reason for provision of free Wi-Fi is to help those who cannot afford subscriptions "overcome the digital divide", and the free access can often be found in libraries, town halls or community centers.

Another common reason is to allow tourists to enjoy their holiday experience without having to incur data roaming charges, he said in an e-mail.

But Wang noted that the decision to offer free or paid Wi-Fi is a purely a business one, adding that "some telcos do not expect much revenue from tourists".

"There is limited business opportunity for charging travelers, except for airports," he explained, adding that by offering it as a bundle with subscription plans, existing customers can enjoy a higher connection speed in the high density areas, and telcos can "reduce the chum rate and enjoy financial benefits from it".

Similarly, Skinner said: "Wi-Fi as a retail service is not likely to add much in the way of incremental revenue for telcos, but can be used to manage capacity constraints and costs."

Willing buyers of paid access
One factor that affects the decision to offer free or paid Wi-Fi is the size and type of venue, Boingo's Gunning shared.

In locations where business users require highly reliable high-speed connection, vendors will most likely offer a premium service, but in the case of restaurants and cafés, where the cost of providing a connection is simple and inexpensive, free access will likely prevail, he said.

"Wi-Fi is never free, it costs someone money," he pointed out. "It's a question of who funds it. Is it paid for by users or is it paid for by the venue?"

Citing a report by USA Today, Gunning noted that while free Wi-Fi are provided major U.S. airports, many travelers complained of laggy access during peak hours, and airport operators have been creative in offering fixed-period log-ins to prevent overburdening of bandwidth.

In that article, users also expressed willingness to pay for stable access with a higher bandwidth.

According to Gunning, revenue generated from private operators can help to subsidize the high costs of network investment.

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