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SBC Plans Major Expansion of Wireless Internet Access Service

Posted on: Tuesday, 5 August 2003, 06:00 CDT

Aug. 6--Pushing to expand further beyond its core telephone business, SBC Communications Inc. today will announce an ambitious plan to establish a network of 20,000 Wi-Fi access points that would allow customers to connect wirelessly to the Internet.

The San Antonio-based company said it will build 1,000 such "hot spots" by the end of 2003, expanding that to 20,000 in 6,000 locations in its 13-state territory by 2006.

That initiative along with a Wi-Fi plan announced Tuesday by Verizon Wireless could help push the wireless technology more quickly into the mainstream, analysts said.

Such big players with extensive networks and an established customer base can attract new users to the technology, said Julie Ask, an analyst with Jupiter Research in San Francisco.

Wi-Fi, short for wireless fidelity, is a technology that beams data from computers to Internet access points within a range of about 300 feet.

Though its most widely used for wireless home networks, within businesses and on college campuses, Wi-Fi also is showing up in public places such as airports, hotels as well as retailers such as Borders Books & Music, Starbucks cafes and even McDonald's restaurants.

SBC said it would concentrate its hot spots initially in areas where business travelers congregate, such as hotels and convention centers, but plans to expand that to many more venues within three years.

"We see the market evolving," said Laura McCadney, SBC's assistant vice president for Wi-Fi Strategy. "Right now its skewing more toward the frequent business travelers, but we see it evolving toward a mass market," she said. "That's why the footprint will be so broad."

SBC won't announce pricing for its service until its initial launch in September. Verizon Wireless' Wi-Fi service costs $6.99 for 24 hours or $39.99 per month for unlimited access.

Both companies also plan to integrate their technology so a laptop user can seamlessly connect to either a Wi-Fi hot spot or to a slower but more widespread cellular phone data network, commonly known as 3G. Charges for such access would show up in just one bill.

That capability already is available with Verizon Wireless, while SBC will implement it with the Cingular Wireless network in early 2005.

Such simplicity should appeal to a lot of potential customers, said Jeff Kagan, telecommunications analyst based in Atlanta.

"This way customers will always have connectivity without having to juggle multiple accounts," Kagan said.

Analysts said the size and marketing clout of big carriers like Verizon Wireless and SBC could generate more enthusiasm for Wi-Fi. That in turn could help companies like Intel Corp., which is investing huge amounts in developing and marketing its Centrino Wi-Fi chips.

"SBC is a very big player," said Charles Golvin, an analyst with Forrester Research in Cambridge, Mass. "Its endorsement will give businesses more confidence in the technology ... and consumers more awareness."

So far consumers have not rushed to Wi-Fi in public places. According to a Jupiter Research survey, only 6.4 percent of respondents had used a public Wi-Fi hot spot. More than 32 percent said they'd never pay to use such a facility.

That may contribute to the conclusion that Wi-Fi will not be a huge revenue generator for companies like SBC and Verizon Wireless. But offering Wi-Fi could make those companies more appealing to customers who want a package of features such as wireless calling, long distance and other services.

While a number of companies have installed public Wi-Fi access points across the country, SBC has an advantage because it already has an existing telecommunications network.

For a few hundred dollars, analysts said, SBC can easily attach Wi-Fi gear to existing equipment such as pay telephones.

That, said Ask of Jupiter Research, could allow the company to keep its prices low enough to attract cost-conscious customers.

In addition to installing its own hot spots, SBC has signed a deal to let its customers use access points owned by WayPort Inc., which has such facilities in more than 500 hotels and eight airports nationwide.

Customers using WayPort hot spots would pay an additional roaming fee.

Verizon Wireless customers also will use WayPort hot spots, but will pay no additional charge beyond their daily or monthly fee.

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(c) 2003, The Sacramento Bee, Calif. Distributed by Knight Ridder/Tribune Business News.

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