=DJ NET STOCKS: Free WiFi Equals Targeted Advertisements
04 Oct 11:40
By Bambi Francisco
A Dow Jones Column
SAN FRANCISCO (Dow Jones)--Nothing is for free.
When Google (GOOG) said it wanted to offer WiFi Internet access for free in
the city of San Francisco, my immediate thought was: I feel like a testing
ground.
Google's grand ambition to get San Franciscans onto the Internet for free -
as altruistic as it sounds - is really about targeted advertisements.
"Unwiring San Francisco is a way for Google to support our local Bay Area
community," Google spokesman Nate Tyler said. "It is also an opportunity to
make San Francisco a test-ground for new location-based applications."
Before anyone in this city gets up in arms about privacy issues, here are
several reasons why the idea of these targeted ads isn't all that imposing or
threatening.
First, Google doesn't have the green light just yet. Google is among the 24
companies - including Cingular Wireless (jointly owned by BellSouth (BLS) and
SBC Communications (SBC)), EarthLink (ELNK), Motorola (MOT), Nortel Networks
(NT), Extreme Networks (EXTR), Symbol Technologies (SBL), and San
Francisco-based startup Feeva - that have put in an offer.
Chris Vein, who's heading up the effort for San Francisco Mayor Gavin
Newsom's office, said a committee of about seven people, representing
utilities, philanthropic offices, and privacy groups, will make recommendations
to the mayor in about a month. And, that's only if the mayor's office finalizes
the who's who on the list of committee members, which should be completed by
the end of this week.
Details. Details.
Just as it's only a matter of time before Google enters the S&P 500, it seems
that with the decline of infrastructure cost, it's only a matter of time before
we're all getting free access or the cost to us drops to practically zero. To
set up a wireless Internet access network, it would cost a third of the amount
it costs to build out a DSL or cable network, according to EarthLink's Bill
Tolpegin, vice president of development and planning.
Secondly, if Google does get the OK from the mayor's office, it will just be
testing out such a service. Google's Tyler said that Google is currently
developing the application and has yet to sign up any marketers/advertisers for
such a pilot location-based application.
Thirdly, location-based services can actually be a utility. Here's how it
would work: Say, I want to find a store that sells men's shoes around Union
Square in San Francisco. If I go to Union Square and turn on my laptop, I can
get access to the Internet via Google. By searching for men's stores in that
area, eventually, I can get targeted ads sent to me from stores in that
surrounding area. Some ads may say: "We're closing in 30 minutes, so better
walk a couple blocks north to Bob's shoes and get those brown leather loafers
you're looking for."
This might have sounded like an annoyance to me, before my recent experience.
Early last week, I was looking for stores that sold men's shoes in that area. I
was proactive about my search - asking my male colleagues and searching online.
It took some time to get all the information - location and closing time - as
part of my search. By the time I got to Union Square, there were many stores
that I didn't even think of.
Hence, targeted advertisements would have actually made my quest much easier.
Of course, I'd have to be located in Union Square, in theory. To be sure, there
are a number of kinks to work out.
For instance, I can't fit my laptop in my purse, so I wouldn't have turned on
the computer while I was there. Additionally, it's unclear whether privacy
groups would be up in arms about this invasive type of advertising.
Five-year-old San Francisco-based Feeva has developed location-based software
to target advertisements based on location.
Google is sponsoring some of Feeva's cost to provide free WiFi access in
Union Square and the San Francisco Library, I'm told by Nitin Shah, the CEO and
co-founder of Feeva. The project is designed to show the city that free access
can attract users, and usage, and ultimately advertising, Shah said.
The location-based advertising has yet to be turned on in Union Square,
because the goal is to first see if users want free access, according to Shah.
So far Feeva is serving thousands of users per month. Then when Feeva can show
the city that users have signed up, the next step is to test out the targeted
service.
(Watch for my interview with Shah later this week. And, for anyone curious to
know, Feeva is a pun on fever, said Shah. Feeva heats up the network.)
The free WiFi access isn't just a San Francisco initiative. It's a nationwide
effort by a number of municipalities. Philadelphia has settled on EarthLink and
Hewlett-Packard (HPQ) as the two finalists to offer the city WiFi access.
Minneapolis, Portland, Ore. and Denver are other cities considering a plan,
according to EarthLink's Tolpegin.
So, if all the cities in the nation are offering free access, why would
anyone pay for Internet access to EarthLink or Time Warner's (TWX) AOL, or
anyone, or to Yahoo's (YHOO) joint SBC Internet access service?
Here's what EarthLink had to say. "The free model from a historical
perspective is not a successful one," Tolpegin said, pointing to the beginnings
of NetZero and United Online. Both companies offered free service, but
eventually had to merge to survive. Now, they're charging, he said. "Is one
model set to dominate the nation? I think there are different models."
I agree with Tolpegin about the varying models. I'm sure there will be some
people who want the fastest speeds and no advertising at all. To that end,
access providers will have some value to add, and may be even be able to charge
for them. If EarthLink wins the project, or is selected as part of a
consortium, there will no doubt be opportunities to sell other services to
consumers.
But well before that time, they as well as other ISPs will have to say good
bye to $40 monthly high-speed Internet access fees.
- Contact: 415-733-0500
(END) Dow Jones Newswires
10-04-05 1140ET
Copyright (c) 2005 Dow Jones & Company, Inc
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