Building the Wi-Fi Roaming System Oh, and We LOVE 3 G Telecosm 25 August 2003 Sky Dayton CEO, Boingo Wireless © 2003 Boingo Wireless, Inc.
Why all the fuss about Wi-Fi? w Fast, short range networks • 11 Mb + on air link (actual speed depends on back-haul) • 100 -500 feet w Free spectrum • 83. 5 MHz in 802. 11 b/g • 300 MHz in 802. 11 a w Standard • Innovation not bifurcated between CDMA and GSM • Massive competition and rapid commoditization of components 2 © 2003 Boingo Wireless, Inc.
Wi-Fi chip commoditization w 2002: $16, 2003: $8, 2004: $4, 2006: $2? Worldwide Hot Spot Growth Source: Tech. Knowledge Strategies, June, 2003. 3 © 2003 Boingo Wireless, Inc.
More why Wi-Fi w Cheap • Wi-Fi cards are nearly free • Wi-Fi access points under $50 w 10 MM’s user devices before networks even built • First time in wireless history – no subsidy w Millions of Wi-Fi networks being set up • Private networks in homes and offices • Emerging -- commercial “hot spots” in public spaces w Pent-up demand for fast access on the road • 36 MM business travelers in the US, 27 MM of which carry laptops • Access outside the office today is awful 4 © 2003 Boingo Wireless, Inc.
Wi-Fi devices drive hot spot demand w w PDAs: HP, Toshiba, Palm w Cell phones w Cars w Gameboys w 5 Dell: all laptops by end of 2003 Consumer electronics… © 2003 Boingo Wireless, Inc.
Hot spots appearing worldwide w Wi-Fi Hot Spot Operators appearing worldwide • Wayport, STSN, Surf and Sip, T-Mobile, Swisscom Eurospot, Monzoon, Attingo, Toshiba/Accenture, Cometa, Azure, Kast, Picopoint, Pronto, Net. Near. U, AT&T, SBC, Sprint, Verizon… w w Low barrier to entry, intense competition w Driven by adoption of Wi-Fi in home and business w Capital markets are closed – no problem! w 6 Airports, hotels, cafes, campuses, convention centers Speed and price per bit that 3 G can’t touch © 2003 Boingo Wireless, Inc.
Hot spot projections Worldwide Hot Spot Growth 2, 000 hot spots in 2001 growing to 300, 000 in 2005 according to Tele. Analytics/Wall Street Journal 10 March 2003 7 © 2003 Boingo Wireless, Inc.
User projections Worldwide Hot Spot Growth Source: Gartner Dataquest (April 2003) 8 © 2003 Boingo Wireless, Inc.
On the air in busy cities today 9 © 2003 Boingo Wireless, Inc.
Barriers to adoption 1. Lack of ubiquity • • Not yet in all the right places 5, 000 US hot spot locations are live • 2. Fragmentation – Need for roaming • • Users need multiple accounts Low barrier to entry & short range • 3. Still too hard to find and connect to Wi-Fi networks Lack of control • 10 Unlike cellular, no one hot spot operator will own more than 10% of the ultimate footprint Ease of use • 4. Tipping point at 10, 000 hot spots in the right places Carriers can’t brand control the user experience © 2003 Boingo Wireless, Inc.
Hot Spot industry segmentation Brands - End users Roaming Hot Spot Operators - Networks Venues - Locations 11 © 2003 Boingo Wireless, Inc.
Boingo roaming system w Over 2600 hot spots under contract • 17 countries • 30 airports with full or partial coverage • 1300 hotels • Over 700 cafés Largest aggregated network Over 2600 hot spots w w Rapid growth: +100% so far this year w 12 40 hot spot operators Targeting 5, 000 by end of 2003 © 2003 Boingo Wireless, Inc.
Myth: “Hot spots can’t make money” Reality: Hot spots can make money quite easily w Economics of a small café hot spot w • Costs: $150 per month to operate hot spot = $5 per day • $100 for business-class DSL • $50 for capex/opex • • • w 13 Revenues: Boingo settles $2. 00 for each connect 300 people walk into café each day 2% utilization rate = 6 connects per day = $12 per day/$360 per month = 60% profit margin for hot spot operator Utilization rates will be much higher © 2003 Boingo Wireless, Inc.
Myth: “Wi-Fi will replace 3 G” w Reality: Wi-Fi will NOT replace cellular • Wi-Fi is a LAN, not a WAN • 3 G ubiquitous, medium speed (100 Kb), high cost • Wi-Fi in key high traffic hot spots, high speed (1 Mb), cheap w Reality: Wi-Fi challenges the 3 G business case • Highest traffic locations favor Wi-Fi • Where Wi-Fi shines • Where spectrum scarcest • Offload traffic to Wi-Fi 14 © 2003 Boingo Wireless, Inc.
What’s coming w Hot spots will cover highest traffic areas • • • w Homes & Offices Airports Hotels Convention centers Cafes Wi-Fi challenges the original business case for 3 G, but it doesn’t replace it • 3 G is critical for ubiquitous coverage BOTH will thrive w First to integrate both will be huge winners w 15 © 2003 Boingo Wireless, Inc.
© 2003 Boingo Wireless, Inc.
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