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WiFi Hotspots: offer a free service or charge a fee?

Posted on February 4, 2011 by John
Free or Fee?

The decision that a business makes to charge for Internet services or provide them for free depends on the customers expectations. For example, customers expect hotels to provide free Internet and yet are accustomed to pay for Internet at airports. Another example is marinas vs. restaurants: boaters expect a marina to charge for the Internet and yet restaurant guests expect to get free Internet.

The problem for hotels and restaurants that charge for Internet is that customers are dissatisfied when they have to pay for Internet, even though the quality of the service they receive is 5-star.

Read a few travel blogs and the reader will see that the main complaint is how much the hotel charged for the Internet service.

The decision to charge for Internet or give it free can be boiled down to a few simple rules:

  • Will an Internet service charge alienate customers and cause them to look elsewhere in future?
  • Can the cost of the Internet service be minimized to facilitate giving free Internet?
  • Can the Internet service make a profit without charging customers for the service?

It is already too late for some business segments; hotel and restaurant guests expect free Internet.

Today all low to medium priced hotels give free Internet. High priced hotels still charge for the Internet. The high priced hotels are ‘shooting themselves in the foot’, they can afford to provide free Internet and yet they put themselves in the position that the guest will forget about the great service and remember the Internet rip-off.

The only hospitality business that can justifiably charge for Internet services are resorts in far flung places, islands in the Caribbean or Pacific. Guests might grumble but they also have to pay for the phone service too as cell phones do not work.

Generally, it is a good thing to provide free Internet for guests and visitors; the business will get more ‘brownie points’ for this service that they will for the clean sheets, the tasty food or the air conditioning.

So what should a business do about WiFi for guests? The answer is to consider points 2 and 3 above: how to reduce costs of the free guest wifi, and how generate income from the free guest WiFi.

Reduce the cost of providing free WiFi Internet

It is very easy to spend thousands of dollars to Install a WiFi Hotspot as there are many business ready to install the best products that money can buy and then charge a monthly fee in addition to ‘maintain’ the service. Firms can charge the big bucks because most people don’t understand the technology. There are plug and play products like the GIS-K1 however that are designed for non-technical people: if you can switch on a computer then you can install a GIS-K1. The most important feature is that the GIS-K1 retails for less than $150.

It is also important to minimize the monthly cost of the DSL or cable service. All telecom companies offer a range of services, from the $30 medium speed service to a $100 fast business service. The $30 service can be used with the GIS-K1 because it has something called bandwidth control which prevent on guest swamping the service and making it slow for everyone else. The range of the GIS-K1 might be limited for some business however wireless range extenders can be used with the GIS-K1 to cover a much larger area and they cost less then $50 each.

Diagram

Make money providing free WiFi Internet

Surprisingly, money can me made providing free WiFi. The question is how! Well for each business that provides free Internet the money making options are a little different.

Take hotels as an example. A hotel is surrounded by small businesses that make a living from the hotel guests. These small firms run taxi cabs, car rentals, deliver pizza or provide a laundry service. The businesses are already paying to advertise in the hotel lobby, by providing business cards and brochures for the lobby area. It is a simple step to create a login page with advertising for the GIS-K1 and the business website can be used as the login page background.

Advertising charge per banner off $50/month is reasonable charge. Six banners will pay $300 per month. The DSL cost of $30/month is easily covered, and the equipment cost and cost of the login page can be recovered in the first two to three month of operations. The free WiFi Hotspot is actually generating a profit!

Login page with advertising

Login page with advertising.



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