Building Your Brand Through Community Hotspots

By Rachel Brown

When a newcomer rolls into town and asks where the local hot spot is, chances are he doesn’t want directions to the bingo hall. Instead, it’s likely that he’s looking for a Wi-Fi network, which translates literally into "wireless fidelity " and refers to a system that allows multiple users with wireless-enabled devices—like smartphones and laptops—to get online simultaneously and share a high-speed Internet connection. Coverage can be the size of a room or two, a building or extend out a few miles.

Wi-Fi first appeared on the scene in 1999, and throughout the new century, it has rapidly spread across the country. According to OpenWiFiSpots, an online directory of free Wi-Fi networks, there are 62,280 hot spots in the United States, with 120 of those coming online within the week this article was written (assuming a steady growth rate, that would extrapolate to nearly another 2,000 added to that total by the time this issue goes to press).

The type of devices that can access Wi-Fi networks include smartphones, laptops, personal computers, video game consoles, MP3 players, printers, digital cameras and even digital picture frames. According to the latest statistics from In-Stat, a market research firm, there are currently more than 500 million Wi-Fi-enabled devices worldwide, and that number is expected to increase to 2 billion by 2014.

Some Wi-Fi users pay for their connections; others get them for free (the term "hot spot" itself implies "free access"). According to JiWire, a mobile media company, Wi-Fi usage grows more than 17% a quarter, and more than half of all Wi-Fi locations in the United States are free.

Crunch these numbers and analyses and it’s enough to make a traditional accountant shudder when thinking about this phenomenon as a business model. But talk to folks at small telephone companies and cooperatives around the country, and many will report that they’re embracing Wi-Fi and finding it a boon for business.

"We’re Not in Kansas Anymore"

Maybe the folks in Lenora, Kan., have gotten sick of that famous line from "The Wizard of Oz," which implies that the Sunflower State is not a happening place. Nex-Tech, a subsidiary of Rural Telephone Service (Lenora, Kan.), has been offering free Wi-Fi networks for several years. "We’re spread across our entire footprint of 19 communities with about 100 hot spots," explained Justin McClung, Nex-Tech’s Internet solutions manager, adding that the bulk of these are in coffee shops, libraries and restaurants. Some of the telco’s more unusual hot spot venues also include baseball parks, a stock car racetrack, a laundromat, and even some hair salons.

"It’s free in that anyone off the street can use this," McClung said, adding that even though the Wi-Fi users don’t have to be telco subscribers, the service has filled its purpose in terms of branding. "It gets our name out there for branding because users have to log on to an agreement page and see our marketing message."

McClung said the telco gets positive feedback from people who use it on a regular basis. "It’s definitely a quality-of-life issue," he said. "If you go to any big city, you expect it in coffee shops and public areas. It’s not a necessity, but adults like to go to a coffee shop and get a little work done and surf the Web."

Charles Golvin—an analyst with Forrester Research, a market research firm—agreed. "The Internet is becoming like air," he said. "More and more people view it not as an optional dalliance but as a basic element of their lives. Wi-Fi is a good, inexpensive solution, especially in areas where it’s not economically viable to use cellular service."

While Nex-Tech’s McClung said it’s hard to put an actual dollar figure on the returns, he also said it doesn’t cost a tremendous amount to put in a wireless network. "It doesn’t make sense not to do it," he said. "Everybody should be doing this."

Vince Tyson—senior vice president of solutions design and implementation for CHR Solutions, a telecommunications consulting company—said, "It’s such a small investment, and it’s such a high value to the community. This helps communities. It’s a convenience issue."

Tyson said telcos would be smart to give some thought as to where it makes the most sense to install a hot spot. "If you have a regional airport in your area, that’s a good area," he said, adding that the local hospital is another high-value choice.

It’s All About Branding

Tyson pointed out that if a telco offers this service for free, it should figure out how to capitalize on the goodwill and brand the service accordingly. "So maybe when users sign on, they’re redirected to a page that says something like, ‘This service being brought to you free of charge from ABC Telco,’" he said. "You also want to make sure that the venue is aligned with your values and corporate image."

Nex-Tech’s McClung agreed, explaining that as requests for hot spots have poured in, the telco has had to become more discriminating. "It doesn’t make sense to link our name to every establishment," he said. "So if there’s a shady bar that wants to be a hot spot, we’re gracious but we say things like, ‘We’re not looking to expand.’"

When Nex-Tech first began setting up hot spots, McClung said the telco relied solely on oral agreements about marketing materials. "We’d put up a few posters and some table tents, but over time, the marketing material would get lost or torn up—that can be a pain in the neck," he said. "Now, we create a specific contract that spells out everything: ‘You will maintain two posters, "X" number of table tents, business cards, etc.,’ And we go back every month or so to make sure that they’re following their end of the bargain."

CHR’s Tyson noted that if users are paying for their Wi-Fi connections, telcos can be less selective. "You could set it up so it appears as if the bar is providing the service," he said, but added that the pay model for Wi-Fi is one that many telcos find troublesome. "People do want mobile data, but it’s hard to charge for it, especially as 4G [fourth generation] wireless comes online. If people are paying for 4G coverage, why would they pay for Wi-Fi use? People want to limit their dollars."

Making Money on Wi-Fi?

Kyle Randleman, marketing manager for Star Membership Corp. (Clinton, N.C.), noted that his co-op has been offering Wi-Fi for many years and is turning a profit. "We’re helping our community and making money as well," he said.

For Star, it began as a way of helping companies backhaul their data. "They were crossing LATA [local access and transport area] boundaries, and we were helping with point-to-point wireless solutions," Randleman explained. "This evolved into offering broadband to residential users in the area. It made sense to do this because there’s not a lot of cost associated with this, and it allowed us to offer broadband access in places where it wasn’t available before."

One of Star’s most popular Wi-Fi locations is at White Lake, a camping resort in the area. "We surrounded the lake with towers, and people come out and spend two weeks at their cabin or trailer," Randleman said. "People can sign up for service by the day, the week or the month. They don’t have to make a long-term commitment. We’re taking the hotel approach and giving them what they want."

But Scott Everett, chief executive–plant operations for Horry Telephone Cooperative (HTC; Conway, S.C.), agreed with CHR’s Tyson that as wireless coverage has expanded, it seems less realistic to view Wi-Fi as a moneymaking proposition. "Before 3G, that might have been an option, but that window has closed," he said. "With 3G, you can get 2 Mb, and that’s enough for most people’s needs."

Everett explained that his company currently offers hot spots in all of its telco business offices and is now considering expanding its Wi-Fi connections to other locations in its service area, such as shopping complexes, rec centers and parks. "But we’re not going to offer it free for everyone. We’re just looking into offering it to our own HTC broadband customers," he said, adding that this may prove tricky when it comes to the shopping areas. "The stores may require us to offer it to everyone, so they can do mass advertising."

As HTC ponders its Wi-Fi expansion, Everett said the telco is zeroing in on high-traffic areas. "During football season, we’ve got 40 teams with 10 to 20 kids on a team, and then you add all the parents and relatives," he said. "That’s a lot of people every night out there for an hour or two of practice. In a week, that adds up to 2,000 to 3,000 people." The telco is also considering putting in a Wi-Fi network at a local amusement park. "On one hand, are people there to go on the rides versus sitting on a bench with a laptop?" Everett said. "On the other hand, is this a good way to kill time if you’re standing in line for a ride?"

While HTC isn’t planning to charge its customers for its Wi-Fi offerings, Everett said the telco views it as a "sticky" feature. "This could be one more reason people go with us or stay with us," he said, but added it’s still not a good business move to offer it for free to non-HTC customers. "You don’t want to cannibalize your own market. Why sign up for DSL or cable modems if you can get free Wi-Fi? Also, if too many people are on the network, it slows down to the point it’s not even worth doing."

Technical Issues

Nex-Tech’s McClung agreed it’s important to design the system so that others cannot piggyback a hot spot. "That’s happened to us around apartments where college students live," he said. "They’re using a ton of bandwidth, not paying for it and decreasing service to others. To prevent this, try using low-powered antennas. Even so, sometimes it’s unavoidable."

Star’s Randleman pointed out that telcos should engineer their Wi-Fi network for worst-case scenarios. "Beef up your equipment for the busiest months of the year," he said. "The system we have is overkill during winter at the lake, but it works on July 4th weekend when everyone is there."

In addition, Randleman said it’s not uncommon for vendors to oversell the performance of their equipment. "A vendor might say the signal will carry a mile, and it’s more like half a mile," he said. "What works in a lab situation doesn’t always translate to the real world."

One real-world problem for Star has been fog. "Fog can really mess up signals," Randleman said.

But Jeff Evans, principal research engineer and deputy director for the Information Communications Lab at the Georgia Institute of Technology, pointed out that the FCC’s decision to allow telcos to use blank television channels is a real boon. "This white space is great for Wi-Fi," he said. "These low frequencies are better able to penetrate trees, leaves and buildings. It’s perfect for rural areas. In urban areas, there would be too much interference."

Forrester’s Golvin concluded that whether people live in urban areas or rural environments, they want Internet access and services in more and more places. And much like the bingo halls of days past, Wi-Fi hot spots are an inexpensive but high-value addition to the community.

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Rachel Brown is a freelance writer. She can be reached at rachelsb@aol.com.