Consulting » IT strategy: Free lunch

One of my pet hates is paying for stuff I don’t think I should have to pay
for and several things fit into this rather broad bracket, water being one of
them. Why, in a country where water is literally everywhere, should I be
expected to pay the best part of two pounds for a bottle of water? And don’t
even get me started on water metering.

Like air, water should be one of society’s givens. Without it we would die,
so we shouldn’t be expected to have to pay for it. We don’t have to pay for air
so why should we be expected to pay for water?
Well actually, it turns out that we do have to pay for air. At least, that’s
what some of the UK’s mobile phone operators believe, which are now looking to
wireless hotspots based on WiFi as an extra revenue stream.

I was staggered when I learned that the much publicised deal that Starbucks
had struck with T-Mobile to offer WiFi access in its coffee shops would be a
charged service. After all, the 2.4GHz spectrum that WiFi runs over is a
licence-free band of the airwaves.

Service providers had no initial outlay to make with WiFi offerings. The fact
that mobile phone operators made some of the most monumental errors in business
judgement by agreeing to pay £22.5bn between them for the right to offer 3G
services does not mean that every other wireless access service should cost the
consumer an arm and a leg as well.

Wireless internet access via WiFi should be a value-add service that
Starbucks and its like offers to tempt customers into its coffee shops. It would
cost Starbucks next to nothing to offer it and the fact that it threatens 3G
revenue is, to them at least, irrelevant.

So I was pleased to read that Google is entering into a joint venture with
US-based internet service provider, Earthlink, to kit out the entire city of San
Francisco with free wireless internet access. It is, of course, early days, but
the vision is that they will cover a 46.7 square-mile area of the city with
wireless broadband. People will then have the choice of either using a free
Google service to log on wirelessly (at near broadband speeds, but which
requires the use of a Google account), or to pay $20 a month for access through
Earthlink at greater speeds of about 1Mbits/sec.

Of course, nothing in life comes free (another thing I find deeply annoying),
it’s more about who bears the cost. To make the free service pay, advertisers
will stump up for the right to have their logos beamed to consumers, which
Google will be able to pinpoint to within a couple of hundred metres. This
brings its own privacy concerns, but at least a service that should be free will
be free.

In my opinion, access alone isn’t enough to charge consumers. Service
providers should look to content providers for their revenues, a kind of virtual
ground rent, if you wish. An analogy would be that you wouldn’t expect to pay to
get into your local shopping centre – the shops themselves pay for the right to
be there. This model can, and should, be mirrored on the internet.

Thankfully, I don’t think this is a long way off – and some recent activity
on this side of the pond backs me up. First, the City of London is the latest
urban area to enter into an agreement with a service provider, this time The
Cloud, to cover the entire Square Mile with wireless internet access. While this
will not be free, how long service providers can realistically expect to charge
consumers a premium to access the internet is highly questionable.

Second, unless you’ve been living in a cave for the past couple of weeks you
will have heard that Carphone Warehouse is to offer free broadband. Well,
almost. For £20.99 customers get unlimited local and national calls as well as
unlimited calls to 28 countries worldwide and on top of this, a broadband
connection. To put this into perspective, some service providers currently
charge £20 for broadband access alone.

And finally, last year, BT committed £10bn to invest in what it calls its
21st Century Network (21CN) – a service that will initially be rolled out in
Cardiff in the latter half of this year and then across the entire country by
the end of the decade. 21CN is a new generation backbone network that will allow
far more feature-rich content to be provided over the internet.

One should be careful not to underestimate the impact these changes will have
on the UK’s e-economy. It is fair to say that if finance directors and chief
executives are not currently investing heavily in their online strategies, or
investigating how this second internet boom could impact on their business, then
they had better have an extremely good reason why not.

Because, while having to pay for air is a severe irritation, the thought of
being unprepared for the revolution in internet behaviour we are likely to see
in the next five years or so could prove fatal.