The Hotelling Effect, Wi-Fi Edition
7 May 2007 at 11:59 pm Peter G. Klein Leave a comment
| Peter Klein |
A cafe without free wi-fi is as rare these days as, well, your neighborhood Starbucks. Indeed, in my town virtually every coffee shop where students, professors, and townspeople hang out provides free wireless to its patrons. The only exception is Starbucks, which offers pricey metered service through T-Mobile.
Strategic response by an upstart wireless provider? Give routers and access points to homes and businesses next to a Starbucks. This is the strategy employed by FON, an Argentine startup backed by Skype, Google, and other heavies.
The routers, which usually cost $40, split an Internet broadband connection into two wireless signals — one for personal Internet use and the second for public use, which can be accessed by anyone within range for $2 per day. The routers’ owners get to pocket half of the sign-on fee, and FON takes home the rest.
Read about it here. Thank goodness for Hotelling effects!
Entry filed under: - Klein -, Strategic Management.
Organizations and Markets 
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