Public WLANs slowly taking shape, Cometa CEO says

Public wireless LANs, or hotspots, have yet to coalesce into a real marketplace, partly because market requirements are still in flux. But changes witnessed in 2003 suggest what the market will eventually look like and what opportunities it will offer for enterprise road warriors, says Gary Weis, president and CEO of Cometa Networks, speaking Wednesday at the Next Generation Networks conference in Boston.

Cometa was created 11 months ago, by Intel, AT&T, and IBM, to build and run the hotspots - in restaurants, coffee shops, office buildings and golf courses - that its carrier and service provider customers could then use to offer WLAN services to both visitors to these sites and the site owners. In September, Cometa launched its first hotspot project in Seattle, where it plans to roll out 250 hotspots by year-end at McDonald’s restaurants, Barnes & Noble bookshops, and other locations.

Cometa has been adapting to a market that’s still in development. The original plan was for Cometa to work with service providers that would market WLAN services directly to enterprises, creating corporatewide contracts similar to those for voice and data services. But when Weis become Cometa’s first permanent chief executive seven months ago, he realized that an “enterprise sale” would be lengthy and complicated.

Plus, for now, it’s unnecessary. Weis says that current hotspot customers are “individual users” that use a credit card to pay weekly or monthly for WLAN service. These customers seem to be mostly corporate employees using the hotspots for broadband access, secured by a VPN, to applications and data on a corporate net. These users file the carrier charges in regular corporate expense accounts.

That’s the same model of usage Weis saw when he arrived at IBM several years ago, just as cellular phones were taking hold among corporate employees. Eventually, both users and corporate bean counters began demanding service improvements, better pricing, corporate customer support and other hallmarks of enterprise contracts with suppliers such as carriers. Weis says he expects the same thing to happen with carrier-based hotspot services.

“Enterprise users won’t tolerate the chaos of trying to find free hotspot sites,” he says. That’s because these users are working with mission-critical applications that require reliable and secure broadband connections.

Weis predicts the hotspot will actually be many markets, reflecting the varied motivations of end users, service providers and venue owners. Some hotspots will be entirely free, but with little in the way of quality-of-service guarantees or security. These may be as simple as an access point linked to an available onsite DSL connection.

Others will be offered as customer benefit, but one from which the venue owner expects to receive revenue, either through a user fee or a revenue-sharing arrangement. Weis says a class of integrators is emerging to handle these.

In still other cases, venue owners will want to have carriers or other service providers involved to handle billing and customer support, amortize costs over a large customer base, manage the security issues, and support future wireless data services. Typically, these are companies that also will be relying on the WLAN infrastructure to facilitate other services, both to customers and to employees at the site. Weis displayed a slide provided by McDonald’s, an early Cometa partner. McDonald’s sees WLANs as a step toward a fully digital retail environment, including such functions as cashless transactions, wireless kiosks with content and services, online employee training, and sales data reporting.