There is a joke that the only reason why customers visit a well-known coffee chain is for the free WiFi and toilets. Certainly not for the terrible coffee.
For many mobile users, being able to access the internet wirelessly has become a public convenience, in particular in city centres where industry experts say there is an increasingly fierce “land grab” for WiFi hotspot ownership.
New venues are being added all the time by WiFi providers such as O2 and Virgin Media as well as the Cloud, which was acquired by BSkyB two years ago, and BT.
BSkyB says the Cloud is adding more than 1,000 hotspots per month, while BT now offers about 4.8m hotspots, an increase of 40 per cent year-on-year. This is bolstered considerably by BT’s tie-up with Fon, a business that adopts home broadband as WiFi hotspots for others to use. BT says that almost 4bn minutes of WiFi were used by customers last quarter, a trebling of access over the year.
It is not just private property owners that are doing deals with telecoms operators. Last week, transport company FirstGroup revealed plans for WiFi access on its buses, while London Underground has already fitted stations with WiFi under a deal with Virgin Media that has now been used by more than one million people. Westminster city council in London has also sold access to its street equipment for O2to wire up a free WiFi network.
“There is a feeling that there is a land grab [for WiFi]”, says Andy Baker, chief executive of BT’s WiFi business.
But for BT, which offers access to WiFi hotspots as part of its broadband tariffs, and its competitors such services are an aid to their retention and customer acquisition strategies.
“WiFi is often not a business model in itself but a means to the end,” says Mr Baker. “It could be about content distribution or customer retention. Every new iPad or phone drives the need for WiFi.”
Dougal Scott, director of strategy at Sky, says since the acquisition of the Cloud, the company has launched the Sky Go remote viewing service, which was mostly accessed over public WiFi. “It has been about increasing the value of our subscriptions,” he says.
Technology groups are also increasingly reliant on WiFi. Apple’s iMessage can be routed over WiFi networks – free for the user and the company – while voice calls can be made over the internet on WiFi data connections using services such as Skype.
BT has recently launched its own voice over internet service and Virgin is planning one called SmartCall.
Mobile operators regard WiFi as a complement to cellular broadband coverage and something that helps “offload” the rapidly increasing use of data on their overloaded metropolitan networks. Juniper Research predicts that service providers will help transfer nearly 60 per cent of data traffic by 2016 to WiFi and similar networks.
WiFi allows fast mobile internet access but only at a limited range using free unlicensed spectrum, which means it cannot compete directly with mobile signals that can be broadcast over a much wider area. The speed and reliability vary enormously, depending, for example, on how many people are using the service and whether the WiFi is rooted to a fibre network.
Andrew Barron, chief operating office at Virgin Media, says the company’s strategy is to work alongside and augment existing mobile services. It has opened its Tube network to other mobile operators, which means that Virgin generates a wholesale fee alongside the benefits for its own customers. It is also rolling out local networks of “small cells” that provide a WiFi experience in town centres that will also be opened to mobile groups.
There are other ways for companies to make money out of WiFi, including using a customer’s sign-in and location details to target them with adverts.
However, the provision of WiFi has mostly a more benign objective for internet service providers. For most it is a useful additional service to offer customers, even if users themselves take for granted the little antenna signal alongside their lattes.