Telcos look to public WiFi services to boost brand, showcase technology

Telcos are increasingly competing for public WiFi contracts to showcase their network technology and boost their brands, an industry insider and analyst say. Last week, Tim Hortons Inc. said it is partnering with BCE Inc. to put WiFi in most of its 3,300 coffee shops across Canada. Bell says on its website it operates the largest WiFi network in Canada, with McDonald’s and Indigo and Chapters bookstores among the chains using Bell WiFi. Until recently, WiFi access at Starbucks shops in Canada were also managed by Bell. Asked why Bell no longer provides WiFi at Starbucks, Bell spokesman Jason Laszlo said in an emailed statement: “The value proposition wasn’t right for us. It was a business decision.” Bell also provides WiFi over a 1.6-kilometre stretch of Saint-Laurent Boulevard in Montreal, which it says is its largest hotspot in the country. The WiFi is available to anyone free for 30 minutes per day. Alexandra Cygal, Tim Hortons’ public affairs manager, said the company tested several service providers over a six-month period before selecting Bell for its “fast and reliable” WiFi service. She would not disclose the other companies tested. The financial details of Bell's agreement with Tim Hortons were not disclosed. Nauby Jacob, Bell Mobility’s vice-president of products, services and content, said in a phone interview that the financial significance of WiFi services for the public is “huge,” noting that Bell will equip about 2,000 Tim Hortons stores across the country with WiFi between now and September. He said competition is increasing for the provision of public WiFi services. “When you think about it, it’s a network capability, so everybody would like to get into it,” Jacob said. “So there are lots of players in it, and we expect that competition only to intensify.” Jacob said the revenue Bell derives from WiFi networks in restaurants or stores is based on a combination of charges for installation, network management and data usage. He said the arrangements vary from business to business. Jacob said corporate customers using Bell’s public WiFi—including Tim Hortons—are usually existing customers of the company's business Internet services. “Businesses very quickly find that when they have a Bell network for WiFi and for the DSL lines, they get a far easier experience in working with and calling and talking to one party to make sure everything goes as planned,” he said. Jacob said WiFi connections perform better if the company is also a wireline Internet subscriber with Bell. “If you have a continuation of the same network, the business’ experience with the product itself is much better,” he said. Maher Yaghi, a Montreal-based telecommunications analyst with Desjardins Securities, said he does not think Bell earns significant revenues from such arrangements but that there are other reasons to be in the WiFi business. One is that it conditions customers to want Internet access outside their homes and offices, which can ultimately translate into higher demand for mobile broadband. “As you get people more accustomed to using these services, they’ll want to have them on full-time,” Yaghi said. Jacob said WiFi users tend to be heavier data users. “We actually find people, when they use Wi-Fi, they tend to use more data over a period of time,” he said. “People are information hungry. They get the information and now want to use it more and more.” Yaghi said public WiFi is also a way for a telco like Bell to boost its brand in wireless and Internet access. “When you go in and you want to get connected to a WiFi access point, it always shows you who is the supplier of this access, so it’s kind of free advertising,” Yaghi said. Jacob said one of Bell’s motivations in offering public WiFi is the chance to showcase its technology. “It is about the network, really,” Jacob said. “It’s about deploying the largest and the fastest network. We think it’s the best network. We want to make sure that people have access to that network, and Canadians have access to the best technology ... WiFi is really one more point of how to get consumers to use and benefit from our network.” Telus Corp. said last week that, over the summer in Montreal, it will send out promotional teams on Bixi bicycles equipped with WiFi to provide people with free wireless Internet access. “The innovation behind this pilot project highlights Telus’ desire to fully exploit the power of the Internet in order to offer the best technological solutions for households and offices and, now, on streets citywide,” Telus said in a release. Major Canadian telecom providers, including Shaw Communications Inc., Rogers Communications Inc. and Telus, declined interview requests to discuss their plans and operations for public WiFi offerings. Rogers spokeswoman Kaili Lupp said in an emailed statement that the company is “in the early stages of revising our Wi-Fi strategy, and unfortunately it’s too early to provide details on our plans. We’ll be better set to comment later this year on the Wi-Fi opportunity and the work we are doing in this space.” Shaw has Wi-Fi networks that cover parts of Calgary, Edmonton, Vancouver, Winnipeg and Victoria. Shaw’s WiFi network serves its home Internet subscribers rather than the general public. Shaw said last fall that its WiFi alternative allows the company to extend its reach beyond customers' homes without spending more than $1 billion in capital expenditures, which would be necessary for a mobile wireless buildout. Cisco Systems Inc., the company hired to build Shaw's WiFi network, told The Wire Report last year it would be initially deployed in shopping malls, sports arenas and transit systems in Vancouver, Edmonton, and Calgary. “For Shaw, it has more to do with competing against Telus and offering their Internet customers something Telus can’t offer, which is free WiFi outside the house,” Yaghi said. news@thewirereport.ca

Telcos look to public WiFi services to boost brand, showcase technology

News | July 11, 2012

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