We continue to see more of what I am calling the sponsored model of public WiFi. After all the municipal models failed, with city and county governments in many places buying into a very flawed model that was heavily overplayed by Earthlink and a group of advisors to cities, plus an over dependence on a previously failed approach to technology, mesh networking. Metricom had failed with that, with a service called Ricochet in the late 90's and early 2000s.
For some time I have felt that the whole concept of "MuniWireless" is wrong, and that what we really have the need for is a concept I have shared with Ms. MuniWireless, Esme Vos, some time ago. That concept is "Public Wireless" and is based upon the concept of WiFi being available, regardless of who pays for the access pipe and connectivity.
We saw Google work with Boingo, JiWire and other members of the WiFi ecosystem join hands and provide "sponsored" WiFi at airports. We have seen the subsidized model at airports, where some of the passenger facility charges are used to underwrite the services availability, and in the sky via GoGo and Google, while others have experimented (and failed) with ad supported access. Recently, CableVision launched free WiFi in MacArthur Airport in Long Island.
This is one more example of the "sponsored" model, but goes a step further, as Cablevision, being the local cable company in the market gets to leverage and take a major lead in mind share over the the local incumbent telco, Verizon, which for many years has opposed the concept of both WiFi, largely due to Verizon Wireless protectionist like thinking that killed good ideas such as turning New York City phone booths into WiFi hot spots and their own territorial mindset in prior eras. Now, Verizon and Verizon Wireless, recognizing that 3G and 4G just won't be here, there and everywhere are beginning to see the light and are very gingerly embracing WiFi, starting first with providing their high speed landline customers with roaming access via Boingo, which is one more example of "sponsored" access.
All this points to the model of "sponsored" or third party paid access, whereby the consumer or business user is granted access by a third party who pays the bill for access. This is the first step towards what pal Martin Geddes once elaborated to me over a dinner in London early in 2008, where he clearly explained the model of "sending party pays" to me. By that, the access is provided to or paid for by the receiver, but the data being sent to them is much like a letter, where the party "sending the letter" pays for the postage. This means all the content sites will eventually either need to be advertiser supported (which is why Google bought AdMob) or charge enough for the content to be delivered using the HBO premium content model where the receiver pays "extra" over their basic service costs.
By being the "sponsor" companies like Google, Cablevision and others use the perceived concept of "free" WiFi as their way to build market share, mind share and dress it all up at being "good for you." It speaks to reputation, but what it really is all about is the subtle takeaway from the territory the incumbent landline telcos have owned, and through their own protectionist moves over time, gave away to the cable operators what they could have easily owned and operated. What they gave away was the access to the wired grid that now connects to the WiFi world in both private and public places. This philosophy was largely spawned by their high income producing mobile subsidiaries, or sister companies, which argued against WiFi as they needed to protect their investment in 3G spectrum, a commodity that is now running out (just ask any iPhone user in New York or San Francisco) who can't do on their iPhone what someone can do in Naples, Florida, where the bandwidth is less precious. Instead, the telcos stood by in idle as the cable operators used their in ground fiber to pretty much win the connection to the home business, and are now racing to not lose the small business segment to the same sprawling giants, as just about every major market MSO (multiple system operator) in cable has begun to target the @Work market, selling data, voice and of course cable TV to them. Already in Las Vegas Cox Communications has won the bulk of the casino hotel business, and Covad is winning the business market with their WiMax like solution. Cheetah Wireless (whom I am a small shareholder in) is gaining customers at the street level using a paid model, leaving Emabrq wondering what's left, as former parent Sprint and Clearwire goes in to the market heavily with 4G Mobile WiMax coverage.
My prediction is that "Public Wireless" really takes hold, not from the telcos, or even the cable companies, but from the likes of Google, who understand how to monetize "free" better than anyone, and who also have the delivery billing system in place to bill back to a "sender" the same way they can bill back a click to an advertiser. Google, will then work with their "partners" in Clearwire, not to promote 4G WiMax as the pipe, but to use real WiMax in consort with companies like Comcast, Covad and TowerStream to deliver super fast Gigabit wireless to a series of access points around the country, where it then is distributed using WiFi. This is more than a likely scenario as Google has been a pioneer in Public Sponsored WiFi access for sometime, with their Mountain View WiFi network which has been up and running for a few years, surviving the failed Earthlink, MetroFi and other third party operator networks.
By blending the "sponsored" public access model as Google has done with "sending party pays" the end user sees little or no cost. Basic services will be Web surfing, browser based content such as Flash video, email, IM and VoIP calling such as Skype to Skype, SIP ala GoogleVoice + Gizmo, personal or business SIP based video ala Skype, SightSpeed/VID, as long as they remain on net. Once a "session" goes off net, someone will have to pay the network operator-either the sender or the receiver, or both. Premium services will be iTunes downloads (and streaming), Rhapsody, Pandora and yes, YouTube, but that will be via a revenue sharing model, as by now, Google can identify easily, just what each download/stream of a YouTube video costs to host, manage and deliver. That is why Comcast today, is so anxious to buy NBC/Universal. For the content. They know the future is not so much in only the delivery of the content, but in the ownership of it, for delivery, as it gives them licensed leverage, as the delivery pipe becomes more and more commoditized.
This then goes back to sponsored access, something NBC/Universal is already doing with Hulu. NBC/Universal, like PBS, knows how to sell "sponsored" programming. Sponsored is far broader in nature than "advertiser supported" as the model usually involves more than just running an ad spot or a commercial, as it touches on more than just an "impression" but is all about being a significant part of the carrier network's universe beyond the spot, and being more intimate with the audience. Once again, Google's insight about people, learned by where they surf and what they look for (Google.com), where they go geographically via Latitude, who they call via GoogleVoice, what kind of content they watch via YouTube. Now, add all that up, and Google will be the first of all the major media companies to be able to deliver a very geo-targeted, content relevant, personalized offer that is sponsored. Marry Comcast and Google together, toss in a variety of access options (WiFi, WiMax, Mobile WiMax, Broadband) and tie together the models of sending party pays, sponsored content, sponsored access, and low cost subscriptions to access, with high speeds, and you have the future of how media is both delivered and consumed.
I say this because it is exactly how the media that is being eliminated first and second by the Internet was built also, and since we know history always repeats, all one needs to do is look at print media, magazines and newspapers, the first media to be basically put to rest by the online world. There advertisers plus subscription or pay as you go models underwrote your readership. Readers paid a subscription fee (which was supposed to cover postage or delivery) and the advertisers or a sponsor underwrote the publishing costs. The second media which is seeing erosion, is radio, which is losing audience to streamed content and personalized portable content that is streamed or downloaded. Radio required the purchase of a receiver but the delivery was ad supported, so in essence we had "sending party pays" with the receiver paying for access to both print and broadcast. The same applied to over the air television, and even to cable - pay for basic, get local TV stations. Pay for more, get the cable channels. Pay even more get the premium content. Pay even more, get the on demand content. Pay even more, have a PVR (personal video recorder) and so forth. That all leads to what Cablevision is doing, and why their move is so smart.
Cablevision is insuring connection to their customers, and only their customers first, in the metro New York area. Basically, if you're a Cablevision subscriber you can get your content anywhere their footprint is. Compare that to AT&T's uVerse which only goes to your house (and eventually to their WiFi hotspots) but not everywhere they have local loop. I fully expect that to change one day, but AT&T is so far behind and their Mobile group at odds with their WiFI group and wholesale teams that the battles there are much like what Verizon and Verizon Wireless waged earlier in the decade.
Toss in gap fillers like FON and Meraki, both of which are shared access for "community members" and all of a sudden you have access for everyone, everywhere, without the need for muniwireless. Esme Vos once shared a simple idea to make the city of San Francisco wireless. Her idea was simple. Make it a tax base item. Have the cafes, restaurants and beauty shops all offer WiFi-on one city wide network, and pretty much you would have coverage once you add in schools, libraries and business towers and office parks. The cable and telcos would sell the access, and for the most part, we would have a democratized network, where bandwidth on demand solutions would insure a steady high quality connection. Now, layer in the sponsored, paid or subscription access model and you have everyone making money, something that is far different from the failed concept of what was called Municipal Wireless which Earthlink undertook.
So, at the end of the day, when I look at the sponsored access model, I see history repeating itself once again. Only this time, the players aren't the incumbents in either telecom or media. This time its a whole new group of players.