Companies bet on finding profits in free public WiFi

Local authorities in some of Canada’s major cities are arranging to have communications infrastructure installed for use by their citizens, and these projects have something in common — public money is not part of the deal. Ottawa is a recent example. This month, the municipality announced a deal for EION Inc., an Ottawa-based maker of wireless technology, to install WiFi in 25 public buildings, including city hall and several recreation and community centres. The city is not paying for this. In fact, its deal with EION guarantees the city at least $63,000 a year in advertising revenue from this arrangement, or $315,000 over the five-year term of the contract. What EION hopes to get out of this is a share of advertising dollars that meets or beats what the city is getting. “Our revenue comes from monetizing the advertising,” Anand Srinivasan, EION’s vice-president of technology and product management, said in a phone interview. Ads will be broadcast in two different forms. Users will see some of them on their devices when they initially log into the public WiFi system, which is expected to be operational by summer, while EION will also install monitors throughout the high-traffic areas of WiFi-equipped facilities, which will show local and national advertisements. “We don’t know which one is going to bring in more money,” Srinivasan said. He said when you consider the number of visits these public facilities in Ottawa get — six to eight million a year — the prospects for advertising there look promising. “If you see the amount of people who attend hockey in the Bell Centre or the Air Canada Centre or even the Canadian Tire Centre here, it is nowhere near six to eight million,” he said. Srinivasan added that he expects the audience for such advertisements to be receptive due to what he called “the power of waiting.” “When a person is there in a hall, when the person is sitting in an airport, etc., for that time the person is waiting to accomplish something — for example, waiting to board an airplane or waiting for their kids to finish swimming — that amount of time that they are waiting is very important for advertisers,” he said. He said EION WiFi capabilities have been deployed in several communities in Newfoundland and Labrador, but at least some local governments paid for the service. He explained there are differences between Ottawa and Newfoundland, such as the added expense in setting up networks in the latter, which has involved more equipment in outdoor areas and connections to more remote locations. Tim Tierney, an Ottawa city councillor who chairs the city’s IT subcommittee, said he feels the city is breaking new ground with this deal. He recalled attending a conference in New York City about a year ago, where he heard about the experiences other municipalities had with getting public WiFi systems installed. He said almost all of them had to pay for the technology to be installed, and then had to deal with hefty bills for data usage and maintenance afterward. “We’re washing our hands of all that and we’re saying, ‘Hey, if you guys want to continue to make money, it’s to your benefit this stays up and running, and in return, you get access to our buildings,’ ” Tierney said in a phone interview. Tierney said the city will be looking into whether such an arrangement can be replicated to provide WiFi access on city buses. BAI Canada is paying the Toronto Transit Commission $25 million over 20 years for the right to install and operate a wireless communications system in the subway system’s stations. The first part of the project saw WiFi capability launched at the city’s two busiest stations — Bloor-Yonge and St. George — in December. Ken Ranger, chief operating officer at BAI Canada, said advertising is where his company hopes to make back the money it’s putting into this system, and then some. “Everybody’s trying to get to eyeballs,” he said in a phone interview, adding that BAI has an exclusive arrangement to provide ad-supported connections to people taking 1.3 million rides per day on Toronto’s subway system. Ranger said users, upon logging on to the subway’s communication system, will see one still advertisement plus a 15-second video ad, after which uninterrupted service will be available. He added that people riding the subway are a lucrative market for this kind of advertising. “You have some time on your hands while you’re waiting , so it’s a captive audience,” Ranger said. Ranger said his parent company, BAI Group, is involved in a similar project connecting stations throughout the New York subway system, and provides maintenance and services for the rail transit system in Hong Kong. “These are rare deals to come up, but if a similar one came along, we’d be very interested in it,” he said of the type of exclusive arrangement BAI has in Toronto and New York. A somewhat different situation is happening in Montreal. Though it still involves companies installing a communications system on public properties, with the private-sector participants picking up the bill, the business plan doesn’t involve any advertising. Telus Corp., BCE Inc., Rogers Communications Inc. and Quebecor Inc. are cooperating on a five- to seven-year plan to install cellular connectivity throughout Montreal’s subway system — in every station and through the rail tunnels for access to commuters while in transit. In this arrangement with the Société de transport de Montréal (STM), the four telecom companies are splitting $50 million in costs to build the network. Jacques Garceau, Telus’ senior vice-president of broadband networks planning and engineering, said this is about improving service to wireless users. “Really, it’s about providing service to our respective customers, to our respective clients,” Garceau said in a phone interview. A Telus press release issued in September said this will make Montreal one of the few cities in the world to have an underground LTE network for its transit system. Garceau said the hope is that making wireless services more available in this way will encourage more subscriptions and prompt people to access data services to a greater degree. He said it makes sense that people who are waiting for something — such as to get on or off of a train — are an ideal group for which to offer expanded wireless service. “The data usage is really increasing and people seem to be using their smartphones more and more, and any null time for them or idle time for them is an opportunity for them to make use of their smartphone,” he said. — With reporting by Derek Abma at dabma@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Companies bet on finding profits in free public WiFi

News | February 24, 2014

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Companies bet on finding profits in free public WiFi

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