The domino effect of Centrino

It’s no coincidence that the Intel Centrino launch happened in the same month that Intel made investments in other wireless LAN companies and formed partnerships with several “hot spot” service providers/integrators, including T-Mobile and hot-spot newcomer Toshiba. It’s also doing some co-branding with hot spot venues such as McDonalds and Marriott.

Once users gain Wi-Fi access by default in Centrino-enabled laptops (much in the way 56K modems at some point became a standard shipping feature in PCs) service providers will have a bigger financial justification to deploy hot-spot networks. In other words, more people can use the networks, so they are more likely to use them and to pay a fee to do so.

And now that the “big names” in microcomputing are getting involved in the hot-spot market, confidence should rise that hot spots are sound businesses. Toshiba, for example, recently announced a $199 package for “all the equipment you need in a coffee shop to provide Wi-Fi access,” says John Marston, vice president of business development at Toshiba America Information Systems.

The package, sold through Toshiba value-added resellers (VAR), includes Toshiba WRC1000HS access points, which were specially designed for hot spots with “baked-in access control that is Toshiba’s intellectual capital,” says Marston. The package doesn’t include the cost of a broadband network access connection. So in addition to the access points, each location will need some sort of access modem (DSL or cable, for example) plus the monthly recurring cost of a broadband service.

“We hope to port our firmware to the DOSCSIS standard for cable modem service later this year,” Marston says. Unlike DOCSIS, DSL modems need to be tuned to individual services, he notes.

How does the business model break down? Toshiba runs a network operations center (NOC) and takes 50% of the revenue, Marston says, leaving 30% for the hot spot operator and 20% for the venue (coffee shop, restaurant, etc.).

Here’s how it plays out:

Say I’m a user with a subscription to the Wayport Wi-Fi service. Wayport, in turn, has contracted to buy wholesale access on the Toshiba network. To deliver this, Toshiba has integrated its back-end system with Wayport’s.

I go to a coffee shop enabled for Wi-Fi access with Toshiba gear, and log on by providing my wireless ISP’s name (Wayport), my username and password. The Toshiba NOC forwards this information to Wayport for authorization. Once the Wayport system OKs my access, Toshiba lets me on the network and sends a “stop” record to Wayport to signify the time I logged off (a way to track usage minutes).

Toshiba takes 50%, Wayport takes 30%, and the coffee shop takes 20% of my fee.

Toshiba says it plans to have up to ten thousand hot spots deployed by the end of 2003. For example, one VAR, WorkingWild, has begun installing Toshiba hot spots in 18,000 gas stations, Marston says.

Toshiba has partnered with management consulting and technology services company Accenture to provide help desk support for end users. The partnership includes network operations, billing and settlements processing.