Verizon and Wi-Fi

See Also

Broadband, Verizon, Wireless

There’s been much discussion over the past year related to the viability of new wireless operators trying to implement national networks for Wi-Fi. The issue is one of cost and return on investment. As we learned during the dotcom boom, it is easy to build new infrastructures but it is much harder to build new infrastructures that are not only scalable but also profitable. With the introduction of free Wi-Fi to existing broadband customers, Verizon is changing the model again.

On one side, you have smaller operators like Boingo that are trying to make a go of it without anything else. My bet is that the future of such operators lies in being acquired, either by a telephone company (in that particular case, I would bet on Sprint acquiring them since Boingo already has a relationship with their PCS division).

On another side are existing large mobile operators like T-mobile who are trying to create a bundle that includes mobile phone service and data service all in one package. Those will probably continue to move successfully but will be forced to lower prices as time goes on.

Now, with the Verizon offer, I expect to see not only DSL operators (a market which has gone through a lot of consolidation, leaving mostly the incumbent telcos in charge) but also cable companies looking into bundling this type of solution. As a result, Wi-Fi may actually become a loss leader in a battle that includes a much wider range of services. What this will mean for new business betting the future on a Wi-Fi only revenue strategy will need to change their message if they hope to survive.

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