Boingo Makes Bank From Verizon

I’ve praised Boingo here before – they’re simply awesome, specifically if you travel and need to stay connected. Recently, Boingo signed a 4-year extension with Verizon to offer free WiFi to Verizon’s FiOS and High Speed Internet customers. This is a big deal, and here’s why:

For starters, this would be an even bigger deal if the deal included access for Verizon’s wireless customers. Unfortunately, it doesn’t, and the deal apparently only includes Boingo’s Windows client – no dice for smartphone users or Mac users (though that could change, obviously). Unfortunately, it’s not, but it’s still cool anyways.

Verizon’s wireline services is competing with the likes of Clearwire, who is pushing into more and more markets every day. I used Clearwire in college, after dumping Cox Communications for our high speed internet, and could hardly tell a difference. The benefit of Clearwire – and one that Cox couldn’t match – was that the modem only needed power. I could plug it into any outlet in our apartment and have high speed internet – no need to be locked down to the coax connections already there. Take this one step further, and I could have taken that modem anywhere in Abilene, TX, and had the same connection speed – the library, the coffee shop, heck, I could plug it into my truck’s cigarette lighter port and power it from there, to get mobile high speed data, theoretically.

Verizon knows that it can’t do that with FiOS or its High Speed Internet package, so it’s partnering with Boingo to entice the growing number of laptop users who may not really use their home internet as much as they used to.

So, why doesn’t Verizon just offer these users a discounted EV-DO dongle, to make use of its extensive mobile network? Because Verizon, smartly, is cautious of falling into the same trap that AT&T has. AT&T’s 3G network, burdened by a nation of iPhone users, is stretched so thin that I have to switch my phones to EDGE-only in order to hold a phone call in my office.

By leveraging an expansive WiFi network like Boingo’s, Verizon can keep those customers without putting extra strain on its EV-DO network. AT&T is doing similar, both with its hardline customers using Uverse, and with its iPhone users, offering them free access to a nationwide WiFi network.

The king of this, however, is T-Mobile. Rather than spending quickly to build out an expensive 3G network, the company invested in UMA technology, which allows cell phones to seamlessly transfer calls from a 3G connection to WiFi. This not only allows them to offer extended services to their customers, it also serves to help plug up low-coverage areas, as affected customers can simply use a local WiFi hotspot instead. Brilliant.

With Femtocells coming from Sprint already and AT&T soon, it will definitely be interesting to see how the various ISPs – mobile and hardline – will handle the increasing traffic load. Either way, it seems like Boingo is well-positioned to make bank from the opportunities.

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