Fill er Up

Posted: 3/2004

Fill er Up
Prepayment Fuels Wi-Fis Journey
By Cara Polinski

The spread of Wi-Fi brings with it a
gamut of questions. How will networks handle roaming? What will be done about end
users in motion? What business models will work best? What billing methods will
users embrace?

On this last point, some are rallying behind prepayment as a
logical choice. After all, prepayment for Internet access of all types is
forecast to grow at a 45 percent compound annual growth rate between 2002 and
2007, according to data from Instat/MDR. Experts say prepaying for wireless
Internet in particular makes sense, especially in the services nascent

A recent report from The Hoffman Agency, a worldwide public
relations agency catering to high-tech clients, says prepaid WLAN services are
prevalent in the marketplace and hotspots may demand upfront payment especially
for unknown users who walk in off the street, such as travelers who come across
a lot of unrelated hotspots. The report emphasizes the pricing and billing
challenges facing WLAN providers, but goes on to say as a relatively new
service, customers may prefer to pay for what they use by either
per-connection or usage-based charging.

This research is backed up by a September 2003 report from Meta
Group that says as enterprises incorporate Wi-Fi into their remote access
strategies, they initially will lean toward a usage-based payment plan as
opposed to a subscription plan, with pricing generally running $6-$12 per 12- to
24-hour session.

Doug Fieldhouse

Doug Fieldhouse, president and CEO of Vesta Corp., a provider of
stored value sales, service and infrastructure, says subscription or
by-the-minute pricing structures may keep potential users out of the market.
Therefore, Fieldhouse says Vesta is strategically positioned to take advantage
of this convergence by offering prepaid universal [carrier agnostic] Wi-Fi
accounts that would allow Wi-Fi users to login to multiple carrier

With this type of offering, Wi-Fi operators can maintain the
relationship with their customers while at the same time providing them with a
wider net of hotspot access and a more flexible price/delivery alternative,
says Fieldhouse. This is a classic win-win-win scenario that will continue to
bring prepaid into the mainstream of consumer payment options in the United

Eleven Wireless’ prepaid Wi-Fi card

Josh Friedman, president and CEO of Eleven Wireless Inc., a
back-office software provider for Wi-Fi networks, says the majority of the
transactions that occur on the companys system already are prepaid. In fact,
Eleven Wireless can provide physical prepaid cards to its network operators to
private-label and pass onto their customers. The customers, whether hotels, coffee shops, airports, RV parks
or any similar venue, then sell these traditional cards to prepaid Wi-Fi users,
who use the username and password on the card to log on and begin to decrement
from the minutes they purchased.

We believe that prepaid will be a pretty strong, if not
dominant force for payment vehicles within Wi-Fi, says Friedman. And part of
the reason, very much like the reason that prepaid is taking off in mobile
carriers now, is because its a way to manage finances. Its a way to manage

Some telecom executives, including Nandu Desai, director of
business development at Pronto Networks Inc., say prepaid Wi-Fi will remain
popular until there is a global, or even national, Wi-Fi footprint. Right now,
it does not make much sense for a user to sign up for a monthly subscription
plan, as there are not enough locations currently to warrant such a plan, says
Desai. Thus, we are seeing heavy usage of 24-hour passes and prepaid
by-the-hour plans. As soon as there is ubiquitous Wi-Fi coverage and
multilateral roaming agreements in place, we will probably see a shift back
towards subscription plans. Until then, the economics heavily support prepaid
Wi-Fi usage.

This is in keeping with the conclusions of Frost & Sullivan
as indicated in a December statement that showed some carriers are using prepaid
wireless services to introduce their customers to new offerings, in hopes the
customers increasing familiarity and usage will cause them to switch to
postpaid services most of the time guaranteeing future revenue through service

However, even as Wi-Fi becomes ubiquitous and the footprint
increases, users still may choose prepaid services to escape the network
limitations of their chosen service providers. The cost of multiple
subscriptions is prohibitive to the end consumer for all but the most extensive
users, says Jim DeMarco, CTO for new market solutions at CSG Systems.
Consumers find it far easier to pay as they go than to sign up with multiple

Because of their anticipation of prepaid/postpaid convergence,
CSG Systems, which is a customer care and billing solutions provider, has
crafted a transaction processing solution to fulfill the needs of Wi-Fi network
management. DeMarco adds the company is working with technology providers in
the Wi-Fi space to deliver focused solutions for prepaid

CSG Systems
Eleven Wireless Inc.
Frost & Sullivan Inc.
Pronto Networks Inc.
Meta Group
The Hoffman Agency
Vesta Corp.

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