Is free Wi-Fi killing the whole economy?

There’s talk right now about free Wi-Fi killing the coffee shop. According to dozens of stories online, cafes around the world are removing their free Wi-Fi Hotspots because they’re sick of people sitting around all day not spending any money. And who’d blame them.

But is free Wi-Fi is killing the whole economy, not just the cafes?

It wasn’t long ago that 90% of the UK horeca market (Hotel / Restaurant / Café) was offering pre-paid Internet access. I should know, I started a Wi-Fi business on the back of this.

The initial problem with paid Wi-Fi was that the big players, t-mobile, BT, The Cloud were charging extraordinary amounts of money to get online. Not only did you have to pay too much, they were also charging the cafes too much for the equipment.

When we started PolkaSpots Supafly Wi-Fi in 2005, our aim was to offer something affordable. Was PolkaSpots a success? No if you consider success to be total number of Wi-Fi Hotspots because we’re tiny in comparison to BT. Yes if you consider overal presence, especially online. Our idea was spot on, make it affordable and people will use it.

(We went for service over world domination and it’s paying off.)

The big players continued to dominate and before long, people started getting annoyed about paying to get online.

What do you think happened next?

The cafe owners binned their expensive Wi-Fi hotspot equipment and bought a cheap Wi-Fi router from PC World. They plugged it in, opened the network up and off they went. And this is where our problems really started.

With no controls in place, we (the people) went berzerk. We moved our offices to the cafes, paying no attention to what we were downloading or looking at. We sat  for hours on end sipping at a single cappuccino. The cafes started getting upset about illegal downloading, slow Internet connections, government fines and a mass of people sitting in their shops.

We then start getting paranoid about security – I think there’s someone in my laptop a friend recently said. (How on earth could a human get into your laptop I said, it’s only 3cm thick?)

And then this year, we’ve been hit by the Digital Economy Bill. Introduced mainly because the music labels are getting annoyed that their profits are down. And so the cafes moved their services back to commercial providers, like PolkaSpots Supafly Wi-Fi.

And here lies the problem. There are lots of big companies providing Wi-Fi but there are more smaller ones. The smaller (and a few big ones) have engaged in a price war – offering everything for £0 (or close to nothing). And how are they subsidising this? With advertising or they’re making a huge loss, just for some publicity. What kind of business model is that?

When you’re not paying anything for a service, how can you expect someone to answer the phone or come out when you need help? And, surely quality is still important, despite the ongoing problems with our economy.

At some point it has to settle out. We don’t want to watch an advertisement every time I logon, nor will we pay £6 for one hour online. The cafes have to realise that if they want a service that attracts customers but doesn’t hurt their business, they’re going to have to put their hands in their pockets. We the people, have to realise that we can’t have everything for nothing.

Let’s get sensible people.