Still no WiFi profits

A few months ago I posted about Wireless Business Models Prove Elusive, and I said:

I think that wireless networks are inherently community oriented. Good will and a few bucks here and there will have much more impact than rollouts of massive for-profit networks. Random people in neighborhoods of the cities will take it upon themselves to provide network access for the people in the streets below, much in the same way that the Open Source community loves hacking on code without getting paid for it. And as Napster has shown, FREE is hard to compete with.

This Wired News article "Wi-Fi Grows, but Profits Don't" shows that not much has changed in the past few months.

The article asserts that the number of WiFi networks is on the rise throughout the world and expects this trend to continue. But business users of these so called visitor-based networks aren't spending bucks on them. Wired says:

In-Stat/MDR's findings concur with those of other analysts. Earlier this month, Jupiter Research published a report finding that 70 percent of online consumers are aware that Wi-Fi is available in public places, but just 15 percent have used it at all, with only 6 percent having done so in a public space. Furthermore, only 1 percent have paid for the service directly, with an additional 3 percent having paid indirectly (for instance, as part of their hotel bill).

Plus T-Mobile and Wayport (WiFi at airports) aren't willing to talk about usage numbers, which I think is a sign that the numbers are not what they had hoped they would be. If they were, we'd be hearing updates much like the constant announcements from Apple on how many million songs have been sold through iTunes.

Even though things don't seem to be going well for the wireless operators, there does seem to be one threat to community oriented open networks. A few weeks ago at some party I spoke to a friend who mentioned that wireless companies are now going to small businesses like coffee houses and the like and are offering Wi-Fi service packages that require them to do nothing. They earn money from the wireless services that these companies install and manage on the behalf of the business owner. This is probably the biggest threat to a mesh of open networks in urban areas -- small business owners are not likely to be clued in enough about wireless or why it would be better for their business to offer free wireless in order to attract more customers. To the business owner the proposition makes sense: "I do nothing and you send me money every month? Where do I sign?"

It remains to be seen if this tactic will pan out. So, what do we make of all this?? Commercial WiFi access isn't going so hot right now, which is fine by me. The writing on the wall points to Clay Shirky being right about his ZapMail analogies. I'm just curious how the commercial operators will change the wireless network landscape. At best they will quietly go away, and at worst they will fragment the space and interfere with the natural evolution of wireless networks.

In either case, it's too early to tell for sure.

What are your thoughts on commercial wireless networks?