Parks Associates Blog

Thursday, November 02, 2006

Let the Masses have Wi-Fi

A ruling announced yesterday by the FCC may have flown under the radar, but it emphasizes the success of a technology such as Wi-Fi as a differentiating broadband offering, and it also speaks to the law of unintended consequences. The title of the ruling is awkward ("Petition for Declaratory Ruling Regarding the Over-the-Air Reception Devices [OTARD]Rules"), but the premise is simple. At Boston's Logan Airport, Continental Airlines installed in its President's Lounge (frequent-flier club) a wireless access point that allows club members to access the Internet free of charge. At the same time, Massport (the Massachusetts Port Authority), which owns Logan, has a fee-based hot spot system installed. Massport challenged the installation of the Contential access points on the grounds that it violated the airline's lease at the airport, among other concerns.

While the FCC's Memorandium Opinion and Order ( is full of lots of technical language and legalese (which basically say that Continental has the right the have its private and free Wi-Fi network on the same property as a fee-based Wi-Fi network without interference from the landlord), the comments from FCC commissioners Michael Copps and Jonathan Adelstein make it clear that the FCC tends to be very hands-off in regard to the open spectrum afforded to Wi-Fi operators. Copps, in particular, speaks about the ability of travelers to freely choose "from among multiple providers, including members-only airport lounges as well as coffee shops or businesses that may choose to attract customers by offering Wi-Fi service at lower prices than the airport authority offers."

And that's the law of unintended consequences - the role that free Wi-Fi services in particular have had in helping businesses differentiate themselves, particularly in catering to the needs of active business travelers. In a study conducted last year by Parks Associates (Mobile Entertainment Platforms & Services), 12% of Internet users indicated that they have used free Wi-Fi hot spot services, whereas only 3% said that they had paid for them, either as a subscription or for a one-time use. One would expect that a hotel or coffee shop offering such services as complimentary has gained more than a few loyal customers over the years. Whereas many early predictions about the Wi-Fi hot spot market were predicated mainly on how much revenue could be attained through the fee-based services, it's clear that free Wi-Fi is here to stay, and the current FCC leadership will continue to support it.


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