“Wi-Fi Net News reports”:1 that “MetroFi”:2, a Bay Area wireless ISP that covers Sunnyvale, Cupertino, and Santa Clara, recently switched to an all free model for wireless access (they used to charge monthly fees for access). Last year, they deployed a test network in Sunnyvale to test out free, advertiser supported wireless service, and found that it was a resounding success.
bq. CEO Chuck Haas said last week, “Most communications business — and MetroFi is no different — is a high fixed cost, low incremental cost business. Your denominator, how many subscribers you have to amortize that cost, is one of the big drivers of that business.” Haas said that his top three per-user costs were customer acquisition, support (mostly to do with billing), and Internet bandwidth. By removing the first two major factors, it’s cheaper for him to offer free service.
I have been saying this for years: billing is one of the most expensive parts of running an ISP. This is one of the reasons why NYCwireless offers free service. Without billing costs the network is much cheaper to operate.
Unfortunately, many people new to providing internet service (like restaurants, coffee shops, and hotels) just see dollar signs ($$$$). In a food establishment, internet service could cost less than $100 a month to provide, whereas creating and supporting a billing system might cost as much as 10 times that amount. How many more users would be needed to cover this additional expense? Its unlikely that any location will derive that much revenue from their users. Especially when you consider that a free network might draw as many as 10 times the number of users.
[1]http://wifinetnews.com/archives/006249.html
[2]http://www.metrofi.com/
Filed under: Community Wireless, News, NYCwireless, Urban Wireless
