Monetizing (monetising for the Brits) WiFi is a rapidly changing landscape. It also has to be looked at from two perspectives, one from the venue where the WiFi is available and the other from the operator who is providing the WiFi service.
It wasn’t very long ago that wherever you saw public WiFi you could expect to pay for it. And for hotels, cafe’s and any other venue offering it this was a great revenue stream and was typically done on a revenue share with the WiFi operator. This was a simple world with a very simple business model.
There has been a considerable shift change in consumer attitude towards WiFi and in particular their willingness to pay for it. There are many articles that name and shame hotels for charging, survey that show consumers will go where there is WiFi and examples of a whole Formula 1 race team moving because of poor WiFi. People are more and more seeing Wireless availability as just another service like water, electricity and toilets. They expect it there, they expect it free and they expect it to work well.
So this poses a problem, in particular for the venues, because they now have a cost where there was previously a revenue stream. So what are the options for monetizing WiFi without the direct exchange of cash and how does this affect the business models of operators?
One of the trends that we are starting to see more of, particularly in Hotels, is a two tier provision. A limited but complimentary service, and then if you would like higher bandwidth for video streaming, web conferencing or other data hungry applications then you pay an upgrade fee. I do think this is a sensible model and is certainly simple as it is very similar to the old model of just paying. The venue and operator can come to some arrangement on revenue share and the user has a choice, similar to that between a standard room and a suite.
That said, making sure this works is a fine balance which could explode if badly implemented. I have experienced this first hand where the free service is so cripplingly slow that basic email and browsing is painful and brings me back to my rant on when is no internet better than free internet. What is even worse is when I did upgrade at this particular hotel where we were demonstrating our Social WiFi system the enhanced service was little, if at all better.
So for venues embarking down this route you need to:
- Make sure there is considerable bandwidth availability
- Have the complimentary service perform extremely well on email and browsing
- Have an appropriate system to give bandwidth prioritisation to premium users
Another trend that’s emerging, particularly in broad public WiFi such as town/city centres, train stations and airports, is to give a limited time usage for free, usually 15-30 minutes after which you pay to play. Very similar to the above, the model is quite simple in that you are creating a revenue stream which could be a revenue share between operator and venue. From an end user perspective, the same applies – If I am paying for the service, it had better be good.
It gets a little bit more interesting where there is no exchange of cash from the end user to the WiFi provider. A simple view would be, if I’m providing a service that my customers demand I will get more of them because of it and they will stay longer, so it is worth the cost. The monetization of WiFi here is simple for the operator, whereby I charge for the service and although difficult to measure the venue gets additional revenue through more and higher spending customers.
The model we mainly focus on is very similar to this. The main difference is that when the end user is accessing WiFi, rather than filling out a long form (which everybody hates) they authenticate using their social media channel which makes a great user experience for them, but most importantly for the venue they get something in return. Not cash, they get Likes/Followers and Posts/Tweets, driving social media exposure and probably much more importantly, gaining a wealth of data that allows them to understand and interact with their customers in new and exciting ways.
There is an annual report that puts a value on a Facebook Like which is currently $174. Now whether you think that is too high or too low I think everybody would agree there is a value. Add onto this the analytics and remarketing to email addresses and Facebook pages and the venue is getting a lot back. With all this value and the fact they are offering free (in the cash sense) WiFi to their users, venues are happy to pay for the service, so again this is a very simple model for both parties.
It is worth noting here that although free to the user, in that they don’t pay cash, they are paying through a social media transaction and also by giving access to their data. Something people are overwhelmingly happy to do. The other main model is around ad supported WiFi where the operator will put the WiFi in free and sell sponsorship or advertising to the users. Similar to paying with data you are paying with time, and the same can be said for survey based access which is akin to this.
What will be interesting over the next couple of years, particularly with the rollout of Hotspot2.0/Passpoint/NGH is how some of these models change. As access becomes much more seamless and less reliant on the end user interacting with captive portals, roaming agreements between MNO’s, Broadband and other subscription services will play a key part in the eco structure. This will probably be predominantly in the form of payments for the amount of time or data used or a flat fee per Access Point but what could also be quite interesting is sharing of user data as a form of payment.
All that said, in some circumstances good old fashioned pay to play still works and is appropriate.