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Europe’s WiFi hotspot program is a “marketing scam”, says critic

Wireless Watch’s sister service, Faultline, which analyzes digital video and WiFi issues, has been critical of the European Commission’s €120m scheme to expand WiFi hotspots. The latest supporter of its view is Niklas Agevik, CEO at Instabridge, which markets a ‘free’ WiFi app – he took to social media recently to label the EU initiative a “marketing scam”.

Agevik boasts spending his entire professional career in telecoms with five years at Ericsson, two at Payfone in the US and the last five years building Instabridge.
He says the €120m has been put aside by the European Union on the say-so of Jean-Claude Juncker, President of the European Commission, although it was voted through in a larger European Parliament appropriations bill.

The European Commission said this week that the program was open for the first 1,000 applications for a WiFi hotspot and it will be giving out vouchers each worth €15,000 to spend on installation and equipment.

Agevik argues that the EU is not actually building free WiFi, pointing out that equipment is cheap and that it is the service, maintenance, and backhaul which is where the money is. And the voucher specifically is not paying for that.

He likened it to you paying for your own college education and once you’re done, your parents pay for the taxi ride to your graduation party and begin boasting about how they paid for your education.

He goes on to point out that for large parts of Europe there is insufficient infrastructure to attach WiFi to fiber networks and predicts that it is only the well-developed countries which need free WiFi the least, such as Sweden, Germany, the UK and France, who will be the beneficiaries. All countries will pay for it equally, but the most advanced countries will be the sole beneficiaries. In the end each access point will be identified by the brand WIFI4EU, despite the fact that someone else will have to pay for backhaul and service and upgrades.

The role of the EU is normally to allocate resources from rich member states to poor ones, not the other way around. And much of the cost will be taken up with bureaucracy to manage this: a custom-built web portal, staff to evaluate the applications (only certain cities are eligible and only certain areas of cities) and marketing materials translated into 24 officially recognized EU languages.

Interestingly, when Rethink carries out research projects around WiFi, everyone always reminds us what a force Google is in WiFi. But when we look at its local WiFi project in Mountain View which it gained much publicity for, along with its takeover of Starbucks WiFi, Google turns out to be a damp squib in WiFi. Three years after those deals, the cost of maintenance, upgrades and backhaul saw Google closing down its Mountain View WiFi project, and giving it back to the city with a $500,000 payment to run a reduced scope operation. The deal to replace AT&T WiFi at Starbucks was never completed, and fewer than half of the stores were upgraded.

This gives you an idea of how expensive WiFi is to manage and maintain – even Google shies away from the cost.
Effectively this is what the European Commission is doing, taking the glory of saying it runs 8,000 new hotspots (the targeted number once all phases of the project are complete) but without taking the backhaul or upgrade or management bill.

Agevik also raises the issue of why the EC is competing with hotspot operators, and potentially putting them out of business, proliferating the idea that WiFi is free. There has been a long term trend towards WiFi actually being free (which is how his business makes money) in order to attract people to hotels and restaurants, but this has been quietly reversed, as hotels now offer two speed WiFi, one that will talk (slowly) to your phone for free, and a faster version you have to pay for to actually get any work done on a laptop. Most restaurants now offer completely free WiFi, but it is often on outdated equipment and tough to log into.

Agevik concludes that the program is wrong, wasteful and doesn’t solve the right problems. We agree. The right approach would be to set up a handful of exemplar installations which manage to break even using a locally funded business model, for instance one where retailers are sharing the costs of backhaul and maintenance, in order to create a free WiFi zone which drags in more customers, and then they get footfall analytics in return. And then extend the lessons learned freely to other regions.

Interestingly, all of the new 8,000 hotspots are supposed to be in shared areas, such as railway stations, shopping malls, libraries and airports – where the greatest concentration of WiFi lie already.

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