& 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
Download our complete guide to de-risking NFV deployment in 2016, including:
  • An eight-step strategy to deploying NFV safely, based on input from the companies that have already started virtualizing their production networks.
  • Interviews with leading executives at Colt, AT&T, Deutsche Telekom, Cisco, Nokia, ZTE, Ericsson and Heavy Reading.
  • Flash Poll
    Live Streaming Video
    Prepping for the Future: Upskill U Explained
    During this short kick-off video, Doug Webster, Vice President of Service Provider Marketing, Cisco, and Light Reading’s CEO & Founder Steve Saunders give an overview of Upskill U.
    LRTV Interviews
    Demand Surges for On-Demand Ads

    5|5|16   |     |   (0) comments


    Ed Knudson, VP, Product and Strategy at Canoe Ventures, discusses the rising appeal of VoD ads and the challenges on inserting ads dynamically in live TV programming.
    LRTV Custom TV
    Exclusive: Video Interview With Sckipio CEO David Baum

    5|5|16   |     |   (0) comments


    At his headquarters in Tel Aviv, G.fast visionary David Baum, CEO of Sckipio, provided an exclusive interview to Light Reading and showed how innovations in rate and reach, vector densities, fast reconnecting times and SFP-based residential gateways are expanding the potential of G.fast.
    Telecom Innovators Video Showcase
    Atrinet's NetACE – Migration to NFV & SDN With NetOps-Driven LSO

    5|4|16   |     |   (0) comments


    At Atrinet's headquarters, Ray Le Maistre sits down with Roy Silon to get an in-depth look into the company's focus and the secret recipe for their success.
    LRTV Huawei Video Resource Center
    Amsterdam ArenA, Powered by Huawei

    5|4|16   |     |   (0) comments


    Huawei's ICT solutions power the state-of-the-art Amsterdam ArenA, turning it into a smart stadium.
    LRTV Interviews
    Testing When There's No 'There' There

    5|4|16   |     |   (1) comment


    The benefits of SDN/NFV are well known, but the transition comes with some challenges, prominent among them is: how do you test a network that has been abstracted and has the potential to be endlessly reconfigurable? Light Reading was at NFV World Congress in Santa Clara, Calif., where we bumped into Mats Nordlund, CEO and co-founder of Netrounds, a Swedish ...
    LRTV Interviews
    Ditching the Slash & the Orchestration Wars

    5|3|16   |     |   (2) comments


    SDN and NFV have been inextricably bound with each other for so long that on a conceptual level, smooshing them together into one catch-all phrase – SDNFV – is now justifiable, according to Dan Pitt, executive director of the Open Networking Foundation (ONF). Light Reading spoke to Pitt at the NFV World Congress, where he explained that the next ...
    LRTV Custom TV
    ZTE TV Connect Highlights

    5|3|16   |     |   (0) comments


    ZTE gives us a tour of its booth and new products at TV Connect in London.
    LRTV Custom TV
    Deluxe's Unified Delivery Solution

    5|3|16   |     |   (0) comments


    Join Alan Breznick of Light Reading and visit the Deluxe booth at NAB! Here you'll find Deluxe's Unified Delivery Solution, OTT video, virtual reality, HDR, 4K and much more!
    LRTV Interviews
    Verizon Puts Gray Boxes in the Shade

    5|2|16   |   04:33   |   (1) comment


    When it comes to the white box trend, "gray" boxes, which have a slight proprietary twist, don't give service providers and end users the advantages they're seeking, according to Verizon's Vice President of Product and New Business Innovation Shawn Hakl.
    LRTV Custom TV
    Dealing With a Disrupted Video Market

    5|2|16   |     |   (0) comments


    Ericsson's Simon Frost discusses how traditional pay-TV providers can cope with the big changes wrought by the rise of OTT video and IP technology.
    LRTV Custom TV
    The VNF Responsibility of Red Hat

    5|2|16   |     |   (0) comments


    At MWC, Caroline Chappell of Heavy Reading visits the Red Hat booth and sits down with Chris Wright to talk about the responsibility the VNF needs to take on in order to ensure the operators get the carrier-grade performance they expect for their network.
    LRTV Interviews
    AT&T Expert on the Key Pillars of UC

    4|29|16   |   03:58   |   (0) comments


    Vishy Gopalakrishnan, AVP of product marketing at AT&T, talks about the three developments that are making unified communications and collaboration secure and reliable for enterprise users.
    Upcoming Live Events
    May 23, 2016, Austin, TX
    May 23, 2016, Austin Convention Center
    May 24-25, 2016, Austin Convention Center, Austin, TX
    September 13-14, 2016, The Curtis Hotel, Denver, CO
    December 6-8, 2016,
    June 16-18, 2017, Austin Convention Center, Austin, TX
    All Upcoming Live Events
    Infographics
    A new survey conducted by Heavy Reading and TM Forum shows that CSPs around the world see the move to digital operations as a necessary part of their overall virtualization strategies.
    Hot Topics
    WiCipedia: Woman Cards & Bitch Switches
    Sarah Thomas, Director, Women in Comms, 4/29/2016
    Sprint CEO: Our Spectrum Is for 5G
    Dan Jones, Mobile Editor, 5/3/2016
    Amazon & Other 'Big 4' Cloud Providers Crushing Competitors
    Mitch Wagner, West Coast Bureau Chief, Light Reading, 4/29/2016
    Rovi Reels in TiVo for $1.1B
    Mari Silbey, Senior Editor, Cable/Video, 4/29/2016
    Showdown at the OpenStack Corral
    Carol Wilson, Editor-at-large, 5/3/2016
    Like Us on Facebook
    Twitter Feed
    BETWEEN THE CEOs - Executive Interviews
    In this latest installment of the CEO Chat series, Craig Labovitz, co-founder and CEO of Deepfield, sits down with Light Reading's Steve Saunders in Light Reading's New York City office to discuss how Deepfield fits in with the big data trend and more.
    Grant van Rooyen, president and CEO of Cologix, sits down with Steve Saunders, founder and CEO of Light Reading, in the vendor's New Jersey facility to offer an inside look at the company's success story and discuss the importance of security in the telecom industry.
    Animals with Phones
    Sloth Mail Click Here
    Sloth mail -- somehow even slower than snail mail.
    Live Digital Audio

    Of all the tech companies in the Valley, Intel has made the most aggressive commitment to building a diverse and inclusive workplace culture. It's doing so by taking concrete, measurable steps, making a large financial investment and through a commitment to complete transparency about its progress. In this radio show, WiC Director Sarah Thomas will be joined by Shlomit Weiss, Intel's Vice President, Data Center Group, and General Manager of Networking Engineering, who will share with us why Intel is tackling this huge challenge, how and to what effect. She will also discuss her unique experiences leading development of Client SOC development in the past and today leading development of all of the chipmaker's silicon hardware for networking IPs and discrete devices and managing a team of 600 engineers across Israel, Europe and the US.