& cplSiteName &

Can Towerstream Make $$ With Free Wi-Fi?

Kaps Korner
Kaps Korner
Kaps Korner
11/4/2011
50%
50%

11:00 AM -- SAN FRANCISCO -- Open Mobile Summit 2011 -- Now that Towerstream Corp. (Nasdaq: TWER) has built the world's biggest hot spot, how can the company tap the heat to generate profits?

That's the chicken-and-egg question facing the wireless supplier, which is looking for a way to increase its potential beyond its historic practice of providing low-cost broadband to businesses as a T-1 replacement. At the Open Mobile Summit on Wednesday, Towerstream CEO Jeff Thompson gave a presentation on the public Wi-Fi network Towerstream launched in New York City this summer, which has eye-popping stats like being able to deliver downstream data rates of almost 80 Mbit/s to a laptop right outside the entrance to Penn Station. He also chatted with Light Reading Mobile's Sarah Reedy:

Using its WiMax-based technology -- the same technology Towerstream uses to deliver fixed-wireless broadband services to businesses in 12 large metro markets around the country -- Towerstream first built a backbone "ring" around Manhattan's man-made canyons and then linked its microwave antennas to more than 1,000 Wi-Fi access points to deliver Internet service to ground level. Through an advertising partner this summer Towerstream traded four hours of free service to users who would agree to a marketing transaction -- downloading an app, using a "daily deal" coupon or watching some ads on their phone.

Though Thompson wouldn't divulge exact performance numbers -- we may learn more on Towerstream's quarterly earnings call next week -- Towerstream is already moving ahead with plans to launch similar networks in San Francisco and Chicago sometime soon. According to Thompson the Wi-Fi strategy is targeted at a desirable if not exactly affluent demographic -- the 18-to-34-year-old user who may not have a lot of disposable income, but is Internet-savvy and knows how to find the best deals when it comes to connectivity.

"There are a lot of people between 18 and 34 who know how to get online for cheap," Thompson said. While big carriers don't like to talk about low-end pricing, Thompson sees the bottom part of the wireless market as a place that is ripe for growth -- and it won't come from so-called "4G" plans from the big carriers, especially since almost all those plans now come with a data-use cap.

"Frankly, a lot of those plans are just too expensive for a lot of people to use," Thompson said. "These are people who will walk a half an hour to use free Wi-Fi, or walk a half hour to a retail outlet where they can pay cash for their cellular phone."

Yet that same demographic, along with the rest of the world, is hungry for more mobile data -- a need users are increasingly satisfying via a Wi-Fi connection, either at a business that offers the hookup for free or via a subscription plan through a service like Boingo or iPass. Towerstream's plan is to allow advertisers to pay Towerstream so that users can access the Wi-Fi for free, simply by doing a quick transaction at the log-in screen. In addition to being able to reach a large audience quickly -- Towerstream had one day this summer with more than 500,000 sessions on its network -- Towerstream can offer advertisers extremely granular location-based control due to the proximity of user to an access point.

"You can have a daily deal ad that only reaches someone who is 300 feet away from the store," Thompson said. On the other end of the scale, Towerstream is also a potential partner for large service providers like AT&T or Verizon, who are now building their own public Wi-Fi hot spots to alleviate cellular coverage pressure, both in urban areas and in high-congestion spots like sports stadiums. Though Towerstream hasn't announced any big-carrier deals, the potential for a bigger revenue stream has been one potential reason why Wall Street players have juiced the company's stock price over the past year or so, moving from around a dollar a share for most of 2009 to a $3-to-$5 range throughout 2011.

If it fails to nab a big-name partner, Towerstream might also just start branding the service under its own name, bringing a new twist to the business that Thompson and his team started way back in 2001, well before the current mobile data craze could have been imagined. But with low costs of entry -- Thompson said it cost Towerstream less than $10 million to build its New York network, and with just about every device having a Wi-Fi chip these days Towerstream doesn't have to supply users with any new hardware or devices -- it's an experiment that's worth at least trying, and could be worth a lot more if Towerstream can attract both advertisers and users to the "data oases" it is building.

— Paul Kapustka is editor and founder of Sidecut Reports, an independent research firm that specializes in wireless technologies. Special to Light Reading. He is also the editor of Mobile Sports Report, a new site that lives at the intersection of mobile-social technologies and sports.

(5)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
shygye75
50%
50%
shygye75,
User Rank: Light Sabre
12/5/2012 | 4:49:37 PM
re: Can Towerstream Make $$ With Free Wi-Fi?


OK, it's Friday afternoon. The coffee pot has been drained. Leftover Baby Ruths consumed. But I'm having some trouble following the money here. So the idea is to get advertisers to spend money to attract people who either can't or won't pay for mobile data service, and are frugal and time-rich enough to "walk a half-hour to use free Wi-Fi"?

kaps
50%
50%
kaps,
User Rank: Light Beer
12/5/2012 | 4:49:37 PM
re: Can Towerstream Make $$ With Free Wi-Fi?


Is that such a bad idea? Frugal doesn't mean broke. Why not a daily deal ad from Old Navy, or from other discount retailers?


I think Thompson (and other providers like MetroPCS) is wise to go after the part of the market the Verizons of the world are leaving behind. Each deal may not be worth a lot of ARPU but Walmart makes a lot of money selling stuff for cheap.


Hell, why not have Walmart step up and advertise? It would go hand in hand with their cheap cellphone plans.

kaps
50%
50%
kaps,
User Rank: Light Beer
12/5/2012 | 4:49:37 PM
re: Can Towerstream Make $$ With Free Wi-Fi?


Is that such a bad idea? Frugal doesn't mean broke. Why not a daily deal ad from Old Navy, or from other discount retailers?


I think Thompson (and other providers like MetroPCS) is wise to go after the part of the market the Verizons of the world are leaving behind. Each deal may not be worth a lot of ARPU but Walmart makes a lot of money selling stuff for cheap.


Hell, why not have Walmart step up and advertise? It would go hand in hand with their cheap cellphone plans.

shygye75
50%
50%
shygye75,
User Rank: Light Sabre
12/5/2012 | 4:49:36 PM
re: Can Towerstream Make $$ With Free Wi-Fi?


Given today's run-up on Groupon shares, it's obvious that any idea can be made to seem attractive to some "savvy" investors for a certain period of time. Plying cheap people with loss-leader deals does sound like a winner in that context.

techstocker
50%
50%
techstocker,
User Rank: Light Beer
12/5/2012 | 4:49:26 PM
re: Can Towerstream Make $$ With Free Wi-Fi?


Good analysis PK. Stock number has hovered BELOW 3 (2.80 close 11/9) rather than the 3-5 that it has been. It's shaky. Towerstream spent a lot of money on the Wi-Fi network in NYC and it certainly remains to be seen if any money can be made on it. With LTE and AT&T and Verizon building their OWN WiFi with deep pockets, it seems tenuous. Maybe some money can be made in the concrete canyons but enough to make it profitable?......Not as it stands.

CraigPlunkett
50%
50%
CraigPlunkett,
User Rank: Moderator
12/5/2012 | 4:46:50 PM
re: Can Towerstream Make $$ With Free Wi-Fi?


I took the network for a spin at the corner of Broadway and Canal last week.  I have a data plan, but use Wi-Fi alot.  I connected to the Blis NY Wi-Fi SSID, and opened a web browser.  I was asked to download either of two apps.  I chose the Audible.com app, and downloaded a sample chapter of Farewell to Arms.  I then had a couple hours of free Wi-Fi.  I only used a couple of minutes worth to download the app and check out the network performance.  But the audible.com app is now on my phone, and every once in a while I think about buying something from them. 


Performance was pretty good, much better than the HSPA network for my phone.


The trouble is is that you have to know to open a browser to use the network.  I'm not sure what the conversion is between attachment to the SSID and actual logins, AKA tryers vs. buyers.

More Blogs from Kaps Korner
7:00 AM What prevents more companies from building seamless networks made of stitched-together hot spots?
6:00 AM With nearly ubiquitous Wi-Fi, industry folks and academics are looking to unlicensed spectrum to expand broadband's reach and cut down on its costs
10:30 AM Mobile video isn't the next big thing; it's the big thing that's happening right here, right now
12:30 PM Here's what you need to know if you have a mobile device or a connected laptop
11:15 AM Gig.U says it has received replies to its RFI from major vendors and service providers. Are university-led gigabit networks sounding less far-fetched?
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Interviews
ETSI's CTO Talks NFV, 5G & NGP

12|5|16   |   09:45   |   (0) comments


Adrian Scrase, CTO at standards body ETSI, talks about the various initiatives and specifications developments related to NFV, 5G and NGP (next-generation protocols) that will underpin next-gen networks.
Women in Comms Introduction Videos
Korn Ferry Consultant: How to Find, Cultivate & Be the Best Talent

11|30|16   |   4:10   |   (1) comment


Erin Callaghan, a managing consultant for Korn Ferry Futurestep, shares strategies for companies to improve how they recruit and for women to ensure they don't get lost in the pipeline.
LRTV Custom TV
We Can Make the World More Sustainable

11|29|16   |     |   (0) comments


GeSI is a global e-Sustainability Initiative organization bringing together 40 big multinational companies around the world. According to GeSI's report, information and communication technology can make the world more sustainable. Luis Neves, chairman of GeSI, shared with us his opinion at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
Finding a New Way to Engage Customers & Drive Revenue

11|29|16   |     |   (0) comments


Mobile revenues are declining. Digicel, a player in the Caribbean telecommunications/entertainment space, has found a new way to engage customers and drive revenue. John Quinn, CTO of Digicel, shared with us its story at Ultra-broadband Forum (UBBF2016)
LRTV Custom TV
Do You Really Need Gigabit Infrastructure?

11|29|16   |     |   (0) comments


Altibox is the biggest fiber-to-the-home (FTTH) player and the largest provider of video and TV in Norway. They started out with zero customers in 2002. Now they have close to half a million households and companies attached to their FTTH business. Nils Arne, CEO of Altibox shared with us their story and insight on 5G at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
BTís Openreach Strategy & Its Updates in 2016

11|29|16   |     |   (0) comments


A lot of developments at Openreach this year in terms of strategy and planned investments. Peter Bell, CIO of Openreach BT, shared with us the updates of Openreach at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
ITU: The Broadband Is Our Future

11|29|16   |     |   (0) comments


At Ultra-broadband Forum, Houlin Zhao, Secretary General of ITU, discussed how important it is for countries, companies and everybody to be working together to help to build the broadband and digital economies (UBBF2016).
LRTV Custom TV
Tackling 5G in Dallas

11|28|16   |     |   (0) comments


Here are our highlights of the 5G North America show in Dallas, Texas with Light Reading's Dan Jones.
LRTV Interviews
Cox Prepping for Virtualization Trials

11|14|16   |     |   (0) comments


In this video interview, Cox's Jeff Finkelstein discusses MSO's plans to test managed business services in early 2017 and tackle Distributed Access Architectures.
LRTV Custom TV
Drivers & Potential of NGP

11|11|16   |     |   (0) comments


ETSI has created an Industry Specification Group to work on Next Generation Protocols (NGP ISG), looking at evolving communications and networking protocols to provide the scale, security, mobility and ease of deployment required for the connected society of the 21st century. The NGP ISG will identify the requirements for next generation protocols and network ...
LRTV Custom TV
Huawei IP 2020 for Future Networks

11|11|16   |     |   (0) comments


Future Networks should satisfy many requirements such as high throughput, extremely low latency, flexible mobility, intrinsic security, networking automation, and so forth. The Chief Architect of Huawei Future Networks addresses a holistic solution, i.e., IP 2020, to achieve these requirements for various future life scenarios (e.g., autonomous driving, tactile ...
LRTV Custom TV
Digital Object Architecture

11|11|16   |     |   (0) comments


Digital Object Architecture provides a basic information infrastructure that can facilitate interoperability between or among different systems, processes, and other information resources, including different identity management systems. Digital objects are networked objects that are named by digital object identifiers and instantiated by an infrastructure service ...
Upcoming Live Events
December 6-8, 2016, The Westin Excelsior, Rome
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Hot Topics
Cable Nodes Becoming a Choke Point
Brian Santo, Senior editor, Test & Measurement / Components, Light Reading, 12/5/2016
Apple Seeds 5G? Seeks 'Multi-Gigabit' Chip Designer
Dan Jones, Mobile Editor, 11/30/2016
Altice Plans FTTH for Entire US Footprint
Iain Morris, News Editor, 11/30/2016
Altice FTTH Bill Could Hit Almost $9.6B in US
Iain Morris, News Editor, 12/1/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Eyal Waldman, CEO of Mellanox Technologies, speaks to Steve Saunders, CEO of Light Reading, for an exclusive interview about the 100 GB cable challenge, cybersecurity and much more.
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Live Digital Audio

Even when there's a strong pipeline of female talent in the comms industry, it tends to leak all the way to the top. McKinsey & Company says women experience pipeline leakage at three primary points: being unable to enter, being stuck in the middle or being locked out of the top. Each pipeline pain point presents its own challenges, but also opportunities to stop the leak. Wireless operator Sprint is making a conscious effort to improve its own pipeline from new recruits to the C-suite, and it wants the rest of the industry to do the same. In this Women in Comms radio show, WiC Board Member and Sprint Vice President of Enterprise Sales Nelly Pitocco will give us her take on the industry's pipeline challenges. Pitocco, who joined Sprint in May and has spent 20 years in the comms industry, will also offer solutions, share how Sprint is tackling the challenge within its own organization and take your questions live on air.