A product that should exist

http://wisewifi.net/files/u1/computer_wifi.pngI was staying in an FAQ hotel in Adelaide last week and was asked to pay for WiFi access. Fortunately I’d brought my own wireless broadband connection (which is much more expensive using as it does the mobile telephony infrastructure rather than wires and WiFi) so I didn’t have to worry. But I’ve been banging on about the cheapness of WiFi and wires for a while and wondering why it isn’t more ubiquitous. I’m still wondering.

The prices for access were a bit silly – $3 minimum for 15 minutes and then $5 per hour. Nothing to get too worried about I guess, but way over cost – when the next door neighbour could set things up to give you WiFi access for next to nothing. For that reason, as part of a tourism and business friendly initiative city or state governments should give some thought to funding open WiFi access throughout the CBD. Perhaps Starbucks or someone might like to come on board as sponsors, though I can imagine pushback from the hotel industry and we couldn’t have that could we.

But this is easy to get around. Some decent sized telco funds a system whereby locals can sign up using their own WiFi to sell it into a network. Let’s say company ABC does it. So some house or flat near the hotel can get broadband access and a WiFi router. Software is then loaded onto the WiFi system so that it is accessible by me the traveller. I identify myself so that ABC charges me – say a fixed facility fee and maybe $1 per hour – or some charge for bandwidth used – a good deal lower than the hotel is charging. The WiFi host I use gets a cut of this.

And Bob’s your uncle. This is so simple I presume something like this exists elsewhere. Then again if it doesn’t, I think I can figure out one possible reason it doesn’t. Sometimes the threat of competition is enough to constrain monopoly prices – one doesn’t need the actual presence of competition. The converse also applies – and the converse of contestability is retailiability. Once hotels have WiFi systems in place, if they run into competition they can cut their prices aggressively. Still, I expect that would happen slowly and what I’m suggesting shouldn’t cost a lot to set up. Perhaps marketing costs are holding it back – but then it’s pretty easy to get a fair few customers with word of mouth – well word of text actually – on the net.

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Kieran
13 years ago
HeathG
HeathG
13 years ago

It’s aready available, but never really taken off. Tomizone is the product, and in Australia their partner is iiNet.

http://www.iinet.net.au/about/media/releases/iiNet%20and%20Tomizone%20to%20offer%20free%20Wi-Fi%20to%20iiNet%20Customers.pdf

Ken Parish
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Ken Parish(@ken-parish)
13 years ago

That press release is only just 5 months old and announces the signing of an agreement rather than the availability of the service itself. It’s surely a bt premature to say that it has “never really taken off” (although perhaps that’s the case elsewhere). However unreasonably, I think I’d be fairly cautious about security aspects before subletting my bandwidth to persons unknown.

joni
13 years ago

I used to use a hotel in London where I would ask for a room in a certain corner of the hotel as there was an unprotected Wifi spot that I could connect to. Now I know that it is technically stealing to use it, but for some emails I thought it was better than paying excessive charges. And over the last two weeks I have been using the free Wifi that the Starbucks in Manila supplied as part of their arrangement with the bank that was owner of the building.

Singapore is introducing a country wide Wifi network, which has a restricted speed and download usage per connection. It works well for email and quick browsing which is what you mostly do when away from home. But then again – it does require the Singaporeans to use their ID number so that the state knows everything about their internet habits.

It can work, and one day I am sure that most cities here will have a free (limited by bandwidth and download amount) Wifi service.

Joshua Gans
13 years ago

Big hotels have lots of walls and such. Let me not get too technical but that is going to mean WiFi points inside the hotel and there is the issue right there.

What you are experiencing is a lack of competition in the hotel market. Where there is such competition (say, throughout the US) and this is combined with adequate competition in broadband, what do you know: broadband is bundled with the hotel cost.

Fleeced
13 years ago

“…as part of a tourism and business friendly initiative city or state governments should give some thought to funding open WiFi access throughout the CBD.”

Sounds reasonable on the surface, but this would simply crowd out private investment.

Fleeced
13 years ago

Theres spatial monopoly within hotels, so for instance phone calls cost much more than cost plus profit. I think thats true in US hotels as well as ours isnt it? Likewise minibar prices are way above cost plus profit.

How can the price be more than cost plus profit? Or do you mean that the price is more than cost plus the profit which you think would be reasonable?

Regional monopolies have issues, but every storeowner has a “spatial monopoly” within the confines of their shop.

I agree that minibar and hotel phone charges are expensive – more expensive than I’m willing to pay… but I would hardly say this demonstrates market failure in the provision of minibars. I can’t say that I’ve every checked the price of either of these things before booking, so that could explain the lack of discounting in these areas.

As far as WiFi access in general goes – I’d love to see Starbacks and Macca’s provide access like they do overseas… I can only assume that the reason they don’t, is because they do not deem it profitable for them to do so – either because of smaller population, higher wholesale/infrastructure costs, or something else. But costs will come down over time…

Blair
Blair
13 years ago

For what it’s worth, I’m just back from two weeks in the US and free wireless appears to be just about universal in mid- and lower-end hotels there (all seven I stayed in had it, and one even lent an external wireless kit for people like me with ancient laptops that don’t have a wireless card). Apparently some top-end places still charge, but not many.

thrust
thrust
13 years ago

FON, a spanish group, are running a service that is almost identical to what you’ve described. Spain is the centre, but it’s world wide.

http://en.wikipedia.org/wiki/FON

There are difficulties with doing it in Australia. The low housing density means the radio waves have to travel further. But distributed, open networks would definitely be a way to get around the monopolised networks that the telcos have.