The new-look iPass – big data and expanded MNO services

The CEO of WiFi service provider iPass, Gary Griffiths, has been working hard recently to convince investors that, after two years of work, he is transforming the company into something new and different. The company is almost out of money, but it has a series of new business models which should generate new growth, he explained to Wireless Watch’s sister service, Faultline, last week.

He talked about unlimited deals on WiFi, he talked about operator partnerships to offer WiFi to their customers, and he talked about the company’s first deal for Veri-Fi, a product only out of the blocks a few months ago.

When Griffiths took over iPass it had a clear problem. It asked for $25 a month for each customer and promised them a log-in to about 30m WiFi hotspots all over the world. This was challenging, at least in its main market, the US, once T-Mobile USA offered unlimited cellular and both Verizon and AT&T followed. Even before that, enterprises were always pushing back on price, and how much data they were allowed for that price.

So, like anyone with an application installed on a large number of devices, Griffiths – with a history of working in software-as-a-service businesses – began to see value in the huge amount of data iPass has. It has details of how much comes into a device from a particular access point, and the number of APs that iPass can access has now moved up to 63m, so that can be parlayed into valuable information about devices and data usage patterns.

Big data will be a big boost to the model, but the roots of this corporate salvation started way back in April 2015 when iPass gambled on an unlimited WiFi package for enterprise customers – a necessity to keep its customer base onside, in order to stay around long enough to develop new streams of technology and revenue.

Effectively, it prevented access point owners running a clock on iPass customers, so they could charge more. This in itself would have been a tough deal to swing. iPass network providers all have a contract which governs how much they can charge iPass to use their WiFi (network access costs or NAC). It had to get most of its major providers to agree to charge on a different or lower basis.

Then the first software product came out, a year later, to take the pain out of finding and connecting to an AP for any iPass enterprise clients. This was in the form of a product called SmartConnect which came out in February 2016, offering a roaming app for WiFi which takes users in and out of the best AP invisibly. There were other products which could select the best AP, based on cost, quality of connection or automated credentials management. But Griffiths said: “We had quite a lot of IPR in that sector and wanted to build something of our own.”

Neil Griffiths, global head of big data sales at iPass (no relation), also talked to Faultline and said: “The way operators use SmartConnect is with a dashboard but it can also behave like ANDSF, it can drive mobile offload where that is needed.”

Are MNOs still interested in WiFi offload? “Big carriers in Europe are very keen on it,” he added. “And with our dashboard they can control it, and push new policies to devices. But also we can sell them Veri-Fi.”

Veri-Fi lets an operator engage intelligently with WiFi, gaining insights into user behavior, and enabling applications based on accurate WiFi infrastructure location data.

iPass says it doesn’t only offer information on its own Aps. When SmartConnect looks around at which APs are available to connect, it also gains information on many others.  It has measured their signal strength and knows how busy they are even if it does not have an authentication opportunity to use it. “This means we can curate data on 300m access points,” said Neil Griffiths.

The firm has now found a secondary market for that data, in the form of Adtech and Fintech companies. Advertisers are often prepared to pay a bit more to know about people who are close to a place where they can purchase a particular product or service, and Fintech companies want to be able to know where the owner of a particular credit card is geographically, not just so they can prevent fraud, but actually to maximize the use of that card at that location. If a lot of card users go to a particular store, an in-store promotion may serve both retailer and financial services company, so iPass is now selling this real time data to technology firms addressing this market. “This has big applications in retail finance and in the hospitality markets,” said Griffiths.

The AP address is a way of validating location data, he added, saying: “Some 50% of apps use location data. Advertisers use it to ensure advertising attribution.”

Over the past four or five years we have seen lots of retailers work with beacons or using WiFi access in a beacon-like fashion to track in-store movement and buying habits and try to use a tiny WiFi footprint as a retail advantage. But doing this on the macro scale, iPass seems to have the ability to take these efforts out of the equation and drive big data to a huge footprint of WiFi APs, in the process eating the lunch of many WiFi start-ups.

As we said it’s tough to pull this “changing horses midstream” act, creating new revenue streams as old ones die, but it is very clear that the use of some software on a device and some CPU and storage cycles in the cloud, leave a lot of room for significant margin. iPass only has to stay alive long enough for the transition to complete and it clearly thinks 2018 is the year.

At his Q3 2017 earnings call, CEO Griffiths said: “I am very pleased to report that we closed with a major global mobile network operator the first part of what we expect will be a two-part seven-figure Veri-Fi deal. I remind you that because Veri-Fi is essentially software, the margins are very high compared to our legacy business.”

But what he is also doing is asking new customers for money upfront, and has a long-standing deal with HP Asia Pacific where money comes in as units are shipped. It significantly improves the cashflow, but has less effect on the profitability, as the revenue is recognized over several months.

One of the new major enterprise clients has also made a payment in December of $2m up front and some companies are now paying for iPass software to be included in devices as they are shipped, and this results in an upfront payment. Separately iPass has cut a Stock Purchase Agreement with Aspire Capital Fund so that it can draw up to $10m at will for new stock. So far it has taken down $1m. These are all tricks for staying afloat and not letting the cash burn break the company.

And although the old iPass business was with enterprise, the unlimited options are driving a great deal more data usage, which has resulted in far higher spending on NAC costs. It has had to rush to negotiate downwards the cost of its network deals.

“The way we see it, WiFi is heading towards being free,” points out Neil Griffiths, which means that it makes little sense for iPass to be paying top dollar to use other people’s WiFi networks, when it could repay them with soft benefits like data and getting more people to their location.

New deals include one signed with middle East MNO Ooredeoo in November for allowing its 138m customers to use iPass WiFi when they are on the road; another with Diner’s Club for enterprise access to the iPass network; and a third with HP to include SmartConnect in HP’s innovative device-as-a-service business. There is also a new agreement with TechData, an equipment distributor, which has added iPass in the US, Canada and Europe and resells the software into its partner device makers.

Finally iPass talked about another major global MNO (as well as Ooredoo) which is about to take a seven-figure Veri-Fi deal. It also said then it was on track for a $54m full year which will come out in a few weeks. The company says it will break even when revenue hits $15m a quarter, and that it saved $600,000 in Q4 NAC reductions.

The original iPass idea to make WiFi easy for enterprise executives is still a good idea in our book, because as much as people say that WiFi is shifting to free, we have found that airports, for instance, only offer time-limited free WiFi and then charge, and hotels support free WiFi for phones, but charge extra for extra devices or higher speeds. If anything, outside of the US, the cost of WiFi is rising, not falling. If you add these new revenue streams, with major MNOs and new constituencies who want data about WiFi, then the Griffiths’ optimism is perhaps justified.