ABI: Retailers Move Toward Free Service Model with Wi-Fi (IEEE 802.11x) Hotspots
August 5, 2008 // Published as a news service by IHS
Europe continues to have the greatest growth and the largest number of hotspots, with marked growth also occurring in France, Germany and Russia.
Electronics & Telecom Standards Collections IEC Standards News Electronics & Telecom Standards The dynamics of a fast-changing business model are what's most remarkable about the hotspot market, said ABI Research vice president and research director Stan Schatt.
"Starbucks' decision to go to a virtually free Wi-Fi hotspot model is having a profound impact. Hotspot owners are beginning to see Wi-Fi as a cost of doing business and an operational expense, rather than as a profit center."
Schatt said major retailers should move toward a free service model in phases. "The first phase is likely to be a free or almost free service for good customers - those who have signed up for loyalty cards."
One reason hotspot owners are willing to move toward such a business model is the realization that charging for service is counter-productive in the long run because the real money will be in value-added content downloads, Schatt said.
In the near future, hotspots are likely to encourage users to pay to download the latest music and TV shows, analysts said. Airport clubs are likely to offer hotspot users the chance to download movies for their upcoming trips. Starbucks has already begun selling music CDs in its stores with the next logical step being to move to sell music downloads.
The proliferation of devices that support Wi-Fi also makes charging for such services more complex for hotspot owners. If a person is on a third-generation (3G) connection on a dual-band phone and then moves into a Wi-Fi hotspot, how does the Wi-Fi billing take place? How many separate accounts must a customer, who has both a dual-band phone and a Wi-Fi-enabled laptop, have in order to use a Wi-Fi network? Analysts said collecting money for downloads is a much more straightforward matter.
Source: ABI Research.