Spotnik Mobile to deploy 500 hotspots by year-end, top $3.5 million in revenue

Emerging Wi-Fi operator Spotnik Mobile plans to deploy approximately 500 hotspots by the end of the year with a substantial portion of those going in Timothy’s World Coffee locations across Canada. The two companies announced an agreement on July 18 to begin deploying next month hotspots in all 134 Timothy’s locations nationwide. The deal mirrors a similar agreement between T-Mobile and Starbucks in the United States where T-Mobile has a network of hotspots covering 2,000 of the coffee shop’s locations. Spotnik co-CEO Mark Wolinsky says the company is aggressively securing the rights to many more locations than will be deployed by year-end. "We’ll have secured the rights to well over 1,000 by the end of the year, but you’ll likely see around 500 deployed," he tells Report on Wireless. Revenue Calculation for Spotnik Mobile• Beginning with 80 hotspots already deployed and adding a new one every day, Spotnik would have 254 by the end of the year.• Spotnik says it gets 10 users per day per location.• Half of users pay $9/hr and the other half pay $15/day (RoW estimate).• $120/day in revenue multiplied by number of hotspots each day (growing from 80 to 254), and then add each day’s revenue together to come up with year-end service revenue of $3.5 million.Wolinsky says Spotnik will be able to achieve its goal through a combination of different sales tactics and location targets. "We have both a direct channel and an indirect channel. We have full-time sales folks in the firm and secondarily we work through partnerships as well," he explains. The company targets four key vertical markets: transportation-oriented locations such as airports and train stations, the property vertical such as office towers, hospitality businesses including hotels and conference centres, and food service venues. Recent deals with ClubLink Corp. and Westmont Hospitality illustrate the company’s hospitality vertical. Spotnik is also looking to close several significant deals with major players that provide broadband services. It already has a close relationship with Telus Mobility and last November received an injection of $6 million from Telus Ventures. Wolinsky says the company isn’t stopping there and is in discussions with a number of carriers and some of the bigger ISPs. The channel partners will also be able to use Spotnik’s hotspot service to add value for their customers. "What they’ll do is they’ll use their trusted relationship that they already have with customers and provide them with another product, which, indirectly or directly depending on how you view it, will drive traffic to our network," Wolinsky explains. Industry players appear to be quite optimistic on the hotspot deployment front. Not only does Spotnik believe it can reach 500 hotspots in the near future, BOLDstreet Wireless Internet says it will have deployed 1,000 by its fiscal year-end in March 2004. These two figures added together don’t jive with analysts’ estimates, though. A recent IDC Canada research report predicts the total number of hotspots in Canada by the end of the year would hit 450. It also forecasts that from 2002 to 2007, hotspot growth will exceed 143% annually and will hit the 4,200-mark by 2007. On the revenue front, the predictions are equally dissimilar. IDC notes in its report, Hot Off the Wire: Canadian Wireless LAN and Hotspot Market Forecast, 2003-2007, that entire hotspot service revenue for 2003 will be about $1.3 million. It will grow to $64.3 million in 2007, IDC predicts. Report on Wireless calculated that Spotnik’s second-half 2003 service revenue would be approximately $3.5 million, based on statements Spotnik has already made public. That’s more than double that of IDC’s estimate for the entire industry. Wolinsky wouldn’t comment on the revenue calculation, saying only that it was "conservative."

Spotnik Mobile to deploy 500 hotspots by year-end, top $3.5 million in revenue

News | July 22, 2003

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