Not enough demand for city WiFi?

Posted on June 27, 2006 / 4 Comments

What if They Built an Urban Wireless Network and Hardly Anyone Used It? – New York Times

“Despite WiFly’s ubiquity — with 4,100 hot spot access points reaching 90 percent of the population — just 40,000 of Taipei’s 2.6 million residents have agreed to pay for the service since January. Q-Ware, the local Internet provider that built and runs the network, once expected to have 250,000 subscribers by the end of the year, but it has lowered that target to 200,000.

That such a vast and reasonably priced wireless network has attracted so few users in an otherwise tech-hungry metropolis should give pause to civic leaders in Chicago, Philadelphia and dozens of other American cities that are building wireless networks of their own.

Like Taipei, these cities hope to use their new networks to help less affluent people get online and to make their cities more business-friendly. Yet as Taipei has found out, just building a citywide network does not guarantee that people will use it. Most people already have plenty of access to the Internet in their offices and at home, while wireless data services let them get online anywhere using phones, laptops and P.D.A.’s.”

4 Comments

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Abu Saeed Khan
June 28, 2006, 12:49 pm
It’s a demand vs.supply issue. Deploying metro Wi-Fi in an already highly conected city doesn’t make sense. Moreover, if the mobile operators offer good deals through GPRS/EDGE, IXEVDO or HSPA packages, Metro Wi-Fi will business case will not fly. Wi-Fi in campus or hot zones in such cities will be lot more viable initiaves. The colcos may also deploy own WiFi neteorks over the existing infrastructure. Technology-based services are no different than FMCG like shampoo, toothpaste, soaps etc. One size, certainly, doesn’t fit all.
Divakar Goswami
June 28, 2006, 1:20 pm
I don’t think Taipei’s experience can be generalised to other cities, per se. When free Wi-Fi is widely available in Taipei why am I not surprised that nobody wants to pay a monthly fee of $12.50 for WiFly’s service? If Chicago, Philadelphia etc have free WiFi ubiquitously available AND they choose the same business model as WiFly, then they are in trouble. However, in cities where free access to the Internet isn’t widely available, low-cost Wi-Fi service may work. Some of the cities are planning to provide free Wi-Fi service that is ad-supported and ad-free service is available at a low cost.

But the point that Craig Settles makes is a good one, which is that municipalities need to figure out people’s willingness to pay for wireless Internet service to determine its viability and for pricing the service.

I think Rohan’s LBO column on toll highways for Sri Lanka raises some issues that are conceptually similar. The article is available here. He argues that setting prices for toll roads is crucial for the success of the venture especially when toll roads compete with roads that are accessible for free. If toll roads are priced too low, they will attract traffic and users but road owner will not be able to recoup the costs , if prices are set too high, users will prefer using the free roads and the issues with congestion will remain and road owner will also not be able to recoup its costs.

Unless WiFly is able to provide added value to its wireless Internet service, like congestion free toll roads, i.e., super high-bandwidth services in the 100Mbps range (may be possible with the new 802.11N standard) that is greater than even DSL speeds or even low cost IP telephony (as it is planning to do), Taipei users will prefer the plain vanilla but free Wi-Fi access that is widely available.

The people at WiFly also understand the problem quite clearly:

“The problem is not the technology, but the business model,” Mayor Ma said in an interview. “If they charge too much, people won’t sign up. But Q-Ware needs to recoup their investment.”
Anonymous
June 30, 2006, 11:55 am
Just inquisitive. Divakar, there was a picture of Divakar Goswamy in Sunday Times fashion/events page a week or two ago. Is it you? Very smart indeed. May be off the topic but just interested to know.