September 7, 2008 in Business

HOT ZONE HANGS ON

Company plans to begin charging for public Wi-Fi
By The Spokesman-Review
 
Staff illustration by Molly Quinn photo

Staff illustration by Molly Quinn
(Full-size photo)

Wi-Fi at rest areas

Wireless Internet access is flickering out at highway rest areas across Washington state.

The service was established two years ago at 28 of the state’s 42 rest areas, but the state Transportation Department says not enough people were using it to pay for the cost.

As a result, the two companies that set up the system, Parsons Transportation Group and Road Connect Inc., pulled the plug recently.

State transportation officials and company representatives set up Wi-Fi at rest areas so travelers could check road conditions, e-mail and just take a break from driving.

Instead, rest area maintenance manager Douglas L. Pierce says many motorists use cellular telephones and other devices with Internet access.

- Associated Press

Wi-Fi equipment

 Closed in 2005 after it failed to turn a profit, Spokane Valley-based Vivato introduced panels designed to provide wireless data to neighborhoods, campuses or large offices, boasting its equipment could cover two miles or more. A handful of aging panels positioned on top of Spokane buildings provide service for 2 to 3 kilometers, said Garv Brakel, who runs the city’s computer network.

 OneEighty Networks also is testing equipment from two manufacturers – who OneEighty representative  Derrick Green would not name – to replace the Vivato panels if necessary, he said.

 A new technology, WiMax, which has a longer range, could enable wider city coverage – if it became more affordable, Brakel said.

Age and wear have faded the spray-painted logos touting the Spokane Hot Zone on downtown street corners.

The wireless Internet café in River Park Square is long gone.

And with cellular wireless cards in the hands of more computer users, it is no longer safe to assume someone surfing the Web on a laptop outside a downtown coffee shop is using the city’s free Wi-Fi network.

Four years after the city partnered with local businesses in a much-ballyhooed effort to cover 100 city blocks with wireless Internet, has interest in the Hot Zone cooled?

Not according to representatives of Spokane telecom company OneEighty Networks, which administers the system with help from the city. In fact, the company plans this month to begin charging users a fee for the service after the first 30 minutes of free surfing.

City police and firefighters also use the system, which currently offers unlimited free coverage after a proposed pay-per-use plan never materialized.

Similar to other urban areas that tried blanketing city blocks with wireless signals as a development tool, however, the Spokane experiment has suffered from competition with other technologies and lack of a clear purpose beyond public safety. Paying for the service could turn off more users, some observers say.

“We certainly haven’t given up on it,” said Derrick Green, director of business development for OneEighty. “For the most part, there’s always somebody on it. … Truthfully, there are people who use it as their only business connectivity to the outside world.”

At noon on a recent weekday, roughly 100 people were using the service, said Shelly Mills, OneEighty’s director of sales. The system sees about 3 to 5 megabytes of sustained usage, though it has the capability to handle much more, she said.

With that use, however, comes the cost of maintaining aging equipment from a defunct manufacturer, and for providing customer service and Internet access.

“We want to keep it alive, but you’ve got to have a business model for that, and we really don’t have a good one at this point,” said Garv Brakel, the city’s director of management information services. “We made the initial investment, and thank God we haven’t had a lot of breakdowns or additional costs in the meantime.”

To recoup those costs, OneEighty intends to offer daily, weekly and monthly plans, with charges potentially starting at $4.95 for a day’s worth of service, following the 30 free minutes. A month of service will probably cost less than $10, Mills said. In comparison, Starbucks coffee shops charge $3.99 for two consecutive hours of Wi-Fi service, although customers who register their gift cards get two free hours daily.

But a pay model does not make sense to industry observer Chad Skidmore, who was president of OneEighty Networks when the Hot Zone rolled out. The Hot Zone’s service must compete with the iPhone and other cell phones that give users Internet access, and against cellular wireless cards that provide better coverage for a monthly fee, said Skidmore, who has since left the company.

“If I were still in that business, it would make me ask a whole lot of questions about how viable it was to keep maintaining” the Hot Zone, he said. Sioux Falls, S.D.-based OrbitCom Inc. bought OneEighty in a stock deal last year. The company continues to provide Wi-Fi as a public service, and wants fees to cover its staff and equipment costs, not to turn a profit, Green said. Access will remain free for major events, such as Pig Out in the Park, Bloomsday and Hoopfest.

Organizers had planned to charge for use beyond the first two hours starting in late 2004, even announcing prices early in 2005 — $6.95 for a day beyond the free period, or $49.95 a month.

But under that plan, it would have cost more to bill users than to continue providing free access, Skidmore said.

Green said OneEighty has owned the hardware needed to charge fees for the service for some time.

Part of the problem with the Hot Zone is that from its beginning in 2004 — when Time Magazine called Spokane a “sleepy metropolis that cut the cord” — it has lacked a “killer application” that makes the zone a compelling attraction. A proposal to use the Hot Zone to send real-time video feeds from a downtown surveillance network to a monitoring station, for example, did not pan out. A planned $150,000 expansion to take it northward last year also is off the table.

Though that killer application “really has not surfaced,” Brakel said, “fundamentally, the reason we set it up in the first place is still valid” — allowing people to check their e-mail or Web sites while they’re downtown.

“Of particular importance is supporting business folks from outside of town,” Brakel said.

Notable Wi-Fi experiments elsewhere have recently ended. In Portland, a free ad-supported wireless network run by private contractor MetroFi Inc. shut down this summer following financial problems. The Washington state Department of Transportation just shut off Wi-Fi access at 28 rest areas because not enough people used it.

“The big rollouts in some of the larger cities in Philadelphia and San Francisco and Portland, those things have kind of gone down,” Brakel said. “There are big problems in every location. I think a big part of the problem is many of them wanted to do them for free or low cost.”

The city initially spent about $70,000 on equipment, including long-range antennas from defunct Spokane Valley company Vivato, and ongoing city costs are minimal, Brakel said.

Green said surveys conducted by OneEighty show people would pay for the service. “I don’t think it will be met with any resistance,” he said.

While 30 free minutes may be all casual Web surfers need, the new model will not sit well with some loyal users. Independent financial adviser Mike Maehl estimated he logs on about two hours a day, using it to review investment opportunities with clients or check e-mails as if he were in his home office.

“It comes in handy to know that that’s there,” Maehl said. “I think it’s a selling point.”

But he balked at the idea of paying.

Likewise, businessman Steve Salvatori, who started a downtown business incubator last year, questioned the new approach.

“It’s not so much of a marketing tool for the city when you’re charging for it,” Salvatori said. “If it’s a citywide thing, my opinion would be to market the heck out of it and have it be free.”

Robert Fairfax said he has tried to log on several times, without success. He can get free Internet many places downtown, and already has it at home, he said.

“I don’t even try anymore and just assumed it didn’t work,” he said.

To raise the profile of the Hot Zone, organizers could consider another Hot Zone café, which closed more than a year ago, said Marty Dickinson, president of the Downtown Spokane Partnership. Another initial partner, the DSP had promoted the Hot Zone as a means of business development.

“It was very, very relevant at the time and something that we needed as a downtown to differentiate ourselves from other urban centers,” she said. “We continue to support it, we continue to promote it.”

Spokane Valley-based rugged computer maker Itronix had donated computers to the café. But like other aspects of the Hot Zone, good intentions yielded to reality: The computers had to be removed because of repeated vandalism.

“This is an effort that was put together based upon handshakes and mutual cooperation, not a business model,” Brakel said.

Contact Parker Howell at (509) 459-5491 or at parkerh@ spokesman.com.

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