The economics of in-flight Wi-Fi

Here are the costs for GoGo.  Data on other providers are in the article.

GoGo: The top provider in the U.S. (American Airlines and Delta are GoGo customers) has built a ground-based network that provides capacity up to planes, as opposed to beaming signals from a satellite. Tim Farrar, a satellite analyst, estimates that it costs GoGo roughly 20 cents to deliver a megabyte of data on a plane. That’s about $200 for a gigabyte, which makes AT&T’s and Verizon’s $10 per gigabyte charges for wireless data look reasonable by comparison.

Why your in-flight Wi-Fi is slow and expensive: It’s all about the pipe — Tech News and Analysis.

Starbucks’ Free Wi-Fi Strategy

How Starbucks Plans to Capitalize on Free Wi-Fi.

It’s been over four years since I quoted this piece about Starbucks:

Howard Shultz spoke about, among other things, digital media. He said that the company has the largest Wi-Fi footprint of Internet hotspots in its stores, but it has yet to adequately leverage the service.

While he said the CD business “has a very long life,” having Wi-Fi gives Starbucks a “unique proprietary competitive advantage…We understand the cultural relevancy of digital fill-up. I can’t say when, but it’s in our future.”

And I wrote:

We’ve seen this idea floated before, where wifi connections wouldn’t necessarily connect you to the internet, but a proprietary network. A free wifi initiative up in Boston was exploring a way to connect users to local resources and bulletin boards instead of a fully operational internet connection.

The whole free wifi idea gives providers a lot more flexibility with regards to doing things like tiered services.

nearly 68 percent of 3,000 people surveyed said they’d watch ads in exchange for free Wi-Fi.

Here we go again.  About 4 years ago, as a side project, I looked at ad supported wifi.  The issue was that there wasn’t enough scale for the economics to work.  The issue is not demand, it’s cost.  That said, the willingness to pay data does sound pretty interesting though.

About 16 percent, however, want nothing to do with ads and are happy to pay for their access. Nearly 25 percent said that they are willing to pay up to $3 an hour for Wi-Fi.

via Would You Watch Ads in Exchange for Free Wi-Fi? – GigaOM.

Ad Supported Wifi didn’t work before, but it may if search wars continue

I’ve written a lot about previous experiments in ad supported wifi.  That bubble died down but now we’re seeing free wifi sponsorships from the big online companies- Microsoft, Yahoo, and Google.

The economics of ad supported wifi didn’t work but depending on the persistence of this search battle, we might free wifi for a very long time, especially because Microsoft is convinced that search at this point is a marketing/branding game.

Competition is good for the consumer.

Free Wi-Fi the Latest Battleground in Search Wars? – ClickZ – News and expert advice for the digital marketer since 1997.

Iran And Deep Packet Inspection – WSJ.com

Interesting article about how Iran is using deep packet inspection and the kind of gear they are using.  The center is located within the government controlled telecom business.  Can we blame the companies that sold them the gear?

The sale of the equipment to Iran by the joint venture, called Nokia Siemens Networks, was previously reported last year by the editor of an Austrian information-technology Web site called Futurezone.

The Iranian government had experimented with the equipment for brief periods in recent months, but it had not been used extensively, and therefore its capabilities weren’t fully displayed — until during the recent unrest, the Internet experts interviewed said.

“We didn’t know they could do this much,” said a network engineer in Tehran. “Now we know they have powerful things that allow them to do very complex tracking on the network.”

DPI is much easier when telecom is centralized and smaller in scale:

In Iran’s case, this is done for the entire country at a single choke point, according to networking engineers familiar with the country’s system.

Users in the country report the Internet having slowed to less than a tenth of normal speeds. Deep-packet inspection delays the transmission of online data unless it is offset by a huge increase in processing power, according to Internet experts.

Iran is “now drilling into what the population is trying to say,” said Bradley Anstis, director of technical strategy with Marshal8e6 Inc.,

via Iran’s Web Spying Aided By Western Technology – WSJ.com.

Virgin Mobile USA launches prepaid Broadband2Go 3G service

This could really come in handy.  At these rates, it looks like they are trying to make margins on the hardware and give the data away at cost.  I actually don’t know what market rates for wholesale data are so I don’t know for sure.  I wonder if they are offering it for below wholesale by modeling in the expiration…

Virgin Mobile’s just announced a prepaid 3G service under the Broadband2Go moniker, which will offer customers a contract-free internet option. The Novatel MC760 USB dongle — which will be available exclusively at Best Buy — will run $150, with fixed data rates of $10 for 100MB, $20 for 250MB, $40 for 600MB and $60 for 1GB.

via Virgin Mobile USA launches prepaid Broadband2Go 3G service.

Lesson Learned: Software Scales, Access Doesn’t

AnchorFree used to be a wireless internet service provider but now if you go to their website, you’ll see that they are focused on HotSpot Shield, their VPN software client.  I’ve written plenty about the Muni/free wifi movement here, but that whole fad has gone the way of the dodo.

As for the VPN client, I think it’s a powerful product because it has access to data and ability to show ad at the right time and place. If you have both these things (Google does), you’re in a good position. The big downside here is that the userbase skews international. Also, as with all digital media, you really have to be careful how you monetize it. If you get too crazy with ads, users will leave and flock to the next best VPN client.

Links:

AnchorFree at Crunchbase: AnchorFree offers a presence-based, out-of-home digital advertising and marketing platform at Wi-Fi broadband venues.

AdAge: Hotspot Shield: Destroyer of Google, Yahoo and NBC?

Anchorfree launches a free wifi business.

NYC Parks WiFi Deal Collapse Shows These Networks Are Not Self Sustaining

Wi-Fi Salon agreed to pay the city’s Department of Parks and Recreation $90,000 over three years for the right to wire 10 parks in four boroughs, including Central Park. (The deal was extended once, for an additional $30,000 for a fourth year.) The fairly tiny concession fee was a fraction of the larger costs needed to make the networks operable. Without sponsorships to sustain those costs, the company’s founder, Marshall W. Brown, said he had no choice but to shut it down.

Link.