Leading the Wi-Fi way

1 Sep 2003

Mobile operator O2 Ireland is adding five more locations to its national network of wireless hotspots. The announcement brings to 17 the number of WLAN (wireless local area networks) or Wi-Fi locations operated by O2 and secures its position as the leading Wi-Fi provider in the country.

The new locations are Bewleys Hotel in Leopardstown, Co Dublin, Fitzpatrick’s Bunratty Hotel in Co Clare, Buswell’s Hotel in Dublin City, Finnstown House in Co Dublin and Westport Urban District Council Offices in Co Mayo.

So far, O2 has invested €1.9m in its Wireless Zone service launched in January this year. The rollout strategy to date has been centred on upmarket business hotels in Dublin, Cork, Limerick and Galway. In fact, all but two of the hotspots are located in leading hotels such as Dublin’s Westbury, Burlington, Jury’s and Shelbourne hotels and Cork’s Maryborough House Hotel. The exceptions are Heuston Train Station in the capital and one of the new locations – the District Council offices in Westport.

Orlagh Nevin (pictured), head of business solutions at O2 Ireland, explains that business hotels were chosen because they are most likely to experience demand for the service from guests and visitors. The five new sites will require a minimum investment of €10,000 per site, a sum that covers technical aspects such as the installation of access points but also marketing costs to ensure visitors are aware of the service.

According to Nevin, the company is very satisfied with the demand levels it is seeing in its existing network, which she compares to the early days of text messaging. She will not give exact figures except to say that the company has reached its revenue targets – “which is making us very happy”. She reasons: “If the figures weren’t good I certainly wouldn’t be in a position to deploy any more sites; I’d be having a fierce battle with the finance department.”

She openly admits, however, that the company has still much to learn about this still-young market. “The demand in some hotels is higher than others and there is the whole thing about understanding what is driving that; what sort of people are visiting those hotels, why are they using it and what are they using it for,” she notes. The recent staging of the Special Olympics for example caused a sudden large spike in usage that was attributed to the large number of foreign, particularly US visitors, using the service.

Despite the initial success of the service, O2’s Wi-Fi strategy remains cautious rather than gung-ho. Nevin points out that the company has experienced “phenomenal demand” from site owners to have WLAN installed but it has remained highly selective. She adds, however, that O2 is currently in discussions with a variety of site owners with the aim of broadening the range of locations.

“We are very careful in the locations that we choose to ensure that they complement the locations that we already have and that it’s not a kind of a land grab. It’s got to be a place where people meet, it’s got to have the right usage patterns and then also the right partners we might work with as well,” she explains.

Elaborating on the partner issue, Nevin explains that O2 is in the latter stages of discussions with several service providers both in mainland Europe and in Ireland about roaming agreements that would allow O2 customers to use non-O2 hotspots, but still be billed to their O2 account and vice-versa. “We wouldn’t own them, we wouldn’t deploy them but we’d partner with them,” notes Nevin. “I think national and international roaming through partnership agreements will ultimately be a critical to the success of WLANs. It will drive up and promote the whole usage of the service.”

Another factor that will drive demand, she feels, is being able to offer multiple payment methods. O2 already has both pre-pay and post-pay options in that customers can either buy a scratch card (€10 per hour, €20 per 24-hour period) or they can charge the service to their existing O2 account. A third option of credit card payment will shortly be introduced on the service. In addition, as part of the impending partnership agreements with other service providers, technical preparations are being made to allow non-O2 customers to use an O2 hotspot yet be billed to their own account. Credit card payment and roaming capabilities in particular are seen as essential if US travellers are to be accommodated. The last piece of the payment jigsaw currently being devised is flexible payment methods to allow hotels to offer an all-inclusive package when hiring out conference centre facilities.

In the US, several WLAN providers have decided to offer the service for free and to recoup the investment in other ways. The best example is the cafe chain Starbucks, which is using to service to lure customers inside and sell them pastries and coffee while they surf the net. Unsurprisingly Nevin is sceptical about the ‘free’ model. “The question is whether Starbucks is recouping any value. The stories are that people are coming in and buying one coffee and staying a couple of hours. It’s certainly not something O2 is looking at. We’re trying to build the service around locations that suit the inbound roamer and business customer.”

In contrast to its main competitor, Vodafone, which has adopted more of a wait-and-see approach to WLANs, O2 has taken the lead and quickly built up the largest Wi-Fi network in the country. Yet Nevin remains decidedly realistic about the prospects for this new and unproven market. “It would be stupid to say that O2 is going to make buckets of money out of this in the first couple of years because it’s not. It will develop and it’s developing very nicely, but the right way to think about it is that it is something extra for our business customers.”

By Brian Skelly