By Elizabeth Woyke, Forbes.com
Nationwide, more and more businesses are luring customers with free internet access
In his quest to locate cheap wi-fi, Trent Hamm has loitered in the aisles of Office Depot, lingered outside Apple stores and traveled to McDonald's with no intention of eating a burger.
For Hamm, an Iowan who runs a personal finance blog for debt-ridden "ordinary people" called The Simple Dollar, free wi-fi is a lifeline to his work and a mainstay of his penny-pinching lifestyle. He stumbled upon Office Depot's wi-fi network while trying to compare prices on office supplies online. He has even traveled with a list of wi-fi providers in his wallet.
Fortunately for Hamm, that list is getting longer. Across the country, consumers can find hot spots at an ever-growing array of coffee shops, fast food restaurants, bookstores and even gas stations. "It's become a very popular amenity," says Daryl Schoolar, a senior analyst at In-Stat. "My mechanic now has one, and [so does] my kid's swim school."
By 2009, North America will be home to nearly 83,000 wi-fi access points, estimates In-Stat — a 15 percent increase year-over-year. Analysts say there is plenty of room for growth. Europe currently has about 60 percent more hot spots than North America. As access points and broadband connections get cheaper, companies are finding it easier to get in the game. And manufacturers are releasing a growing number of wi-fi devices, from laptops to cellphones to portable Internet devices, further boosting use.
The most reliable and free place to find a line into the Internet in the U.S. has got to be public libraries. Just about every library now has a few PCs connected to the Internet, in many cases thanks to grants from the Bill and Melinda Gates Foundation. Librarians may limit the time any one person can spend on those machines.
Increasingly libraries are also turning on wireless routers that let laptop-toting patrons surf to their hearts' content. The only restrictions: limited library hours and, of course, no food or beverages allowed.
The quest for a connection and a cup of joe might well lead you to the granddaddy of wi-fi providers in the U.S. — Starbucks. The coffee chain offers wi-fi in more than 7,000 locations domestically. Regular customers with Starbucks loyalty cards can get complimentary access. So can AT&T DSL subscribers, since AT&T runs Starbucks' wi-fi network. Other users are charged $3.99 every two hours.
Though less closely associated with wi-fi, McDonald's has actually become the country's biggest wi-fi booster. Since 2004, it has turned on hot spots in nearly 10,000 restaurants. The company views the technology as another way to lure consumers who will, hopefully, buy more and linger longer while accessing wi-fi, says director of information technology, Rick Rigley. Most users are students, moms and business customers away from home, who want to check e-mail, surf the Web and do research.
With the help of Wayport, a firm that manages wi-fi services, McDonald's has established alliances with electronics manufacturers and wireless Internet providers. Under them, owners of Nikon cameras, Sony Mylos and Zipits, and subscribers to Boingo and iPass get complimentary wi-fi. Regular customers pay $2.95 for two hours.
The various ways of logging on reflect a growing trend: using wi-fi to reward faithful customers. Eventually, retailers will use wi-fi and their customers' contact information to publicize special offers, says Stan Schatt, research director of wireless connectivity at ABI Research. Some companies have experimented with music promotions. In the future, says Schatt, they will probably push video. "If you reach them in-store, your chances of getting them to buy something are much higher," he points out.
There's another reason to package wi-fi this way: People are increasingly reluctant to pay for the service. Nearly 50 percent of respondents to a 2008 In-Stat survey said they would only use free hot spots, despite the fact that more than 60 percent said they expect to increase their use of hot spots in the future. In-Stat's Schoolar says the results initially surprised him. "People are usually willing to pay for a technology once they're exposed to it and see its value," he says. "But the more people give it away, the more people expect to get it for free."
For those like Hamm, free trumps all other factors. "I would rather go to McDonald's and drink a cup of water than a place with a better atmosphere that charges $2.95 an hour," he declares.
Some retailers do offer free wi-fi to all customers. Bakery-café chain Panera Bread does, in more than 1,220 locations. So does Schlotzsky's, an Austin, Texas-based sandwich chain, which has shops in 35 states, and Minneapolis-based Caribou Coffee, which runs nearly 500 locations in 16 states. Franchisees of popular brands, including Krispy Kreme, Baja Fresh, Dairy Queen and Subway, are increasingly offering free wi-fi, too.
Retailers like Apple and Office Depot, which outfit their stores with wireless Internet to support their employees and showcase their electronics, are another resource for wi-fi seekers. Most don't block shoppers from surfing onto their public hot spots. Hamm has logged on to Apple's wi-fi for up to an hour once while sitting on a bench outside the San Diego store.
Security is, of course, an issue. Wi-fi surfers say they simply adjust their activities while on free, unsecured hot spots. Web browsing and personal e-mail get the nod; business e-mail, e-shopping and online banking do not. Some retailers, such as McDonald's and the International House of Pancakes, hire companies like Wayport to manage and monitor their networks. From its 24-hour, Austin, Texas, "Network Operation Center" Wayport can sense when a network goes down, says Dan Lowden, vice president of marketing and business development. It can also detect users who are slowing down networks — through file-sharing, for instance — or disrupting them with spam or viruses, and can remotely shut off their access.
Not all the schemes make sense. Josh Knowles, who runs a community listing of hot spots called Ilovefreewifi is passionate about free wi-fi. But he frowns on businesses that offer wi-fi for publicity: "There's really no way you'd ever go there and hang out to use the Internet," he says. Knowles also disapproves of places that provide free wi-fi, but skimp on related services, like free power outlets, or limit wi-fi to certain times of day. The New York City resident is nostalgic for his college days in Austin, Texas — a city he says is "at the forefront of the free public wi-fi revolution."
The wi-fi boom may eventually subside. ABI's Schatt expects wi-fi growth to start slowing in 2012. WiMax, a fast, wide-ranging form of wireless broadband often described as "wi-fi on steroids" may steal some wi-fi fans, particularly in rural areas, which are more difficult to cover with hot spots.
Hamm says he'll stay loyal. He recently ditched his wallet list after memorizing most of the names and finding new places with ease. Says Hamm, "Wi-fi is shifting from something desirable to something that's expected."
Comments