Create Your Own Hotspot

If you decide to charge for your service, the easiest way to go may be to partner with a hotspot operator that will install the equipment, manage the service and billing, and even help you get a broadband connection if you don't already have one. Of course, you will also split the resulting fees with the provider, but this can still be an attractive alternative to doing it yourself.

Other important advantages to partnering include marketing support (such as listing with online directories and in-store signage), technical support for your customers (usually toll-free), credit card processing for payments, and membership in national or international service networks, like Boingo, GRIC or iPass. New customers are much more likely to find you if your location is a part of a larger network. Boingo and Trustive, for example, provide end-user software that includes directory listings, so users can find you even if they aren't online. The JiWire directory is also available on- and offline, and you should be sure to list your hotspot there if you are not part of a larger network already covered by JiWire.

However, you often can't partner directly with one of the larger networks, such as T-Mobile or iPass (Boingo is a notable exception). Instead, partner with one of the service providers who feed the larger nets, such as Surf and Sip, WayPort, Deep Blue Wireless, and FatPort. Look for an operator with a track record in locations like yours, as well as local hotspots and customers you can visit or speak to as references. Be wary of entering into long-term contracts.

Here are a few issues you will want to consider when deciding on a potential partner:

Setup Costs and Recurring Fees: Startup fees cover the cost of the access point, gateway, management software, and physical installation. These costs range widely by provider, from nothing at all to $1,000 and up, and normally do not include broadband connection fees for the DSL, cable or digital line service. However, hotspot operators often have special discounts with broadband providers that they can pass on to you so your costs are as low as possible.

The rule of thumb seems to be that the more you pay upfront, the bigger your split of the revenues, and vice-versa. However, considering you almost certainly won't be grossing large amounts in Wi-Fi fees in the near term, saving money upfront seems like a good idea. These arrangements are very fluid; providers frequently change their pricing and service models.

Roaming Agreements: Ideally, you would like customers from other operators to be able to use your service as well, just as bank customers can use ATMs from a different bank. While the biggest operator, T-Mobile (which runs hotspots in thousands of Starbucks, Borders, airline clubs and other locations), won't accept individual hotpots into its network, plenty of other nets are eager to work with you.

For instance, Boingo offers unlimited monthly Wi-Fi access for $21.95 to a few dozen hotspot networks that include thousands of locations among them. Each venue is paid a small fee for each connection by a Boingo user, as well as a bounty for new users who sign up for Boingo service. Companies like Boingo are called aggregators, and the best hotspot networks to join are those that have the most resale relationships to ensure that the greatest number of Wi-Fi subscribers and users have direct access to your location. Other major networks include WayPort, Surf and Sip, and FatPort. WayPort focuses on hotels, airports and convention centers, however, rather than cafes or small businesses. FatPort is a Canadian network.

Revenue Sharing Plans: Most hotspot operators offer some form of fee split. But these revenue-sharing agreements vary by operator and sometimes seem byzantine in their complexity. Surf and Sip, for instance, lets you keep 75 percent of Internet-Cafe-In-a-Box revenues, with a minimum fee of $50 per month. Cafe.com sends a monthly commission check of between 25 and 50 percent of hotspot revenues. And FatPort has two tiers of sharing plans, 25 or 50 percent, depending on who pays the setup fees.

Ask the operator what the split will be both for customers using vouchers or passcodes in your business and for subscribers to your operator's network. You typically won't get as much from subscribers using your hotspot as you will from someone buying vouchers.

Management & Technical Support: This is the key reason to partner with a service provider, rather than doing it yourself. Make sure the company has 24/7 toll-free technical support for your customers, as well as rapid response to any problems that might occur with your network. Will they monitor it remotely to head off problems without your having to call them after a customer complains? Do they provide convenient and secure billing choices for your customers (for example, can they pay cash for a prepaid card, instead of having to use a credit card)? Will they accept liability for abuse of your network?

Marketing & Promotion: Ask what marketing support the provider offers to help you get the word out to your customers. Look for things like in-store signage, tent cards, leaflets with connection and technical support information, logos for use in advertising, and inclusion in nationwide directories. Some providers even let you customize the log-in screen for your location, and provide local information like nearby restaurants and weather (a great service for hotels).

Advanced Technology: Another reason to partner with a large networks is that they are more likely to keep on top of changing technology, such as 802.11g service, new security protocols, VPN support, and other thorny technical issues. Make sure that they will upgrade your equipment for free over time, and perform regular maintenance operations like firmware updates.

Free But Managed: If you want to offer free service but have someone else manage it, Surf and Sip offers an attractive option. For a $300 setup fee (the same as their for-fee offering) plus a $50 monthly management fee, they handle the operations of your Wi-Fi hotspot. Subscribers who use for-fee locations elsewhere will see your location in their directory. As with fee-based services, you'll also need to pay for the broadband connection.

The hotspot market is still in the land-grab phase, with operators frantically trying to establish critical mass in anticipation of market consolidation. Business models, fees, revenue shares and roaming agreements are all in flux, so remain flexible and don't get locked into long-term binding agreements.

Hotspot Provider Networks:

Boingo	You can get into the Boingo network through one of the other providers, or use their WISP in a Box service directly. Boingo pays $1 per connect day per user, or $4 for single-day connects. There's also a $20 bounty for new user signups.
Cafe.com	Large operator partnered with Boingo, GRIC and iPass. Offers monthly payment of commissions depending on traffic, and high quality of service, including prepaid cards and promotional materials. Now part of ICOA.
Deep Blue Wireless	Partnered with Boingo and other aggregators. Claims to offer some of the largest revenue sharing plans.
FatPort	Primarily Canadian provider with plans for small and large hotspots. For small locations, the FatPort Hotspot starter package costs $495, with prepaid access codes at 50 percent off. You also get 30 percent of credit card sales over $300 per quarter.
Surf and Sip	Large operator partnered with Boingo, iPass, FatPort, Trustive and Excilan. $300 setup fee, with both revenue sharing and free hotspot plans. 90-day trial period with 100 percent refund.