Only connect: introduced to Wi-Fi--the latest rage in wireless Internet access--at an old job, Ronan Higgins made the best of a layoff and started offering access to coffee shops. (Small Business).RONAN Higgins developed a taste for wireless Internet access See how to access the Internet. while working at a movie-marketing Web site. He got a lot more familiar with the technology when the dot-corn bubble burst and he was among those laid off by the company, FirstLook.com, in 2001. A regular at a handful of coffee shops in Hollywood and Santa Monica Santa Monica (săn`tə mŏn`ĭkə), city (1990 pop. 86,905), Los Angeles co., S Calif., on Santa Monica Bay; inc. 1886. Tourism and retailing are important, and the city has motion-picture, biotechnology, and software industries. , he spent hours pondering the idea of bringing wireless technology into cafes. Within a few months of being let go, and with the backing of an Irish venture capital firm, Higgins was pitching his Cafe.com. "We focus on the coffee shops because many people bring laptops there and the concept can be expanded to a lot of public locations," said Higgins. Cafe.com operates Wi-Fi systems at 15 shops in Santa Monica, Hollywood, West Los Angeles
Company that provides Internet connections and services to individuals and organizations. For a monthly fee, ISPs provide computer users with a connection to their site (see data transmission), as well as a log-in name and password. spreading the gospel of Wireless Fidelity See Wi-Fi. or Wi-Fi, which extends the reach of high-speed wired Internet connections to an area roughly the size of a football field. Higgins plugs an antenna into a cafe' s existing broadband connection See broadband and wireless broadband. such as DSL DSL in full Digital Subscriber Line Broadband digital communications connection that operates over standard copper telephone wires. It requires a DSL modem, which splits transmissions into two frequency bands: the lower frequencies for voice (ordinary or a cable modem cable modem Modem used to convert analog data signals to digital form and vise versa, for transmission or receipt over cable television lines, especially for connecting to the Internet. . If the store isn't hooked up, Cafe.com arranges for the installation of the connection. Coffee shop customers become aware of the service when they boot up their Wi-Fi-enabled laptops in the stores. The laptops automatically detect the wireless Internet connection and guide them to the Cafe.com Web site to sign up. Monthly service plans vary from $6.95 for 24 hours Adv. 1. for 24 hours - without stopping; "she worked around the clock" around the clock, round the clock , $15.95 for 200 minutes, to $34.95 for unlimited use. Set-up costs for shop owners is $495, plus $50 per month for maintenance. Cafe.com then gives the stores 25 percent to 45 percent of the revenues generated in the shop (each antenna has a signature associated with it, allowing Cafe.com to tell where users are logging on). Higgins said that aside from the nominal revenue stream, stores benefit because customers using Wi-Fi stay longer and end up buying more food. "We should get a cut of that," he joked. Competitive market A native of Ireland, Higgins, 33, came to the U.S. nine years ago, bouncing around in a variety of L.A. media businesses. He was in merchandising at Sony Pictures, public relations public relations, activities and policies used to create public interest in a person, idea, product, institution, or business establishment. By its nature, public relations is devoted to serving particular interests by presenting them to the public in the most with now defunct Orion Pictures and a Web producer with Youbet.com Inc. and FirstLook. He and a partner, whom he declined to identify because he has a full-time job elsewhere, put up $50,000 to start Cafe.com In January 2001, Cafe.com had selected its hardware and set up credit card and technology support services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services . In November 2002 Higgins raised another $100,000 from an Irish venture capital firm, which he said took a 30 percent stake in the business. Though still a relatively new concept, the market has plenty of big-time competition -- including Starbucks Corp., which has a deal with T-Mobile USA to hook up thousands of its stores, including more than 150 in L.A. County. Some coffee shops want to give away Wi-Fi access to get a leg up on those that charge for it, but Higgins said such competition is not a concern because the costs of maintaining and training store employees on how to work the technology are too distracting for shop owners. "They should be selling sticky buns and coffee," said Higgins. Limited market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" can also prove a hindrance to growth. Since there are roaming agreements between T-Mobile and Cafe.com and other smaller Wi-Fi service providers, there is little incentive for users to log on in venues where their service is not carried. Efforts by smaller Wi-Fi service operators to set up roaming agreements with T-Mobile have so far failed. In a roaming relationship, two wireless Internet operators allow their customers to use the service at the other operator's Wi-Fi locations. Just like cellular network operators, Cafe.com adds a charge on top of its regular rates to pay for the use of a roaming partner's network. Cafe.com customers pay a few cents extra each time they use roaming, said Higgins. In preparation for future growth, Cafe.com has built roaming agreements with several other small regional Wi-Fi operators, a pooling of customers resembling the early days of cell phone networks. Cafe.com customers can use the service at 115 other nationwide locations such as the Shilsole Bay Marina in Seattle or Baltimore/Washington International Airport. Falling prices for wireless communications wireless communications System using radio-frequency, infrared, microwave, or other types of electromagnetic or acoustic waves in place of wires, cables, or fibre optics to transmit signals or data. hardware and the spread of regular broadband Internet See broadband. connections have helped propel consumer interest. In March, Intel Corp. released its Centrino Wi-Fi chips for laptops that are expected to drive business because users won't have to purchase extra equipment. Despite the difficulties, Higgins said he has seen a surge in business in the past few months as more consumers become familiar with Wi-Fi and are getting cards or laptops with built-in Wi-Fi chips. Cafe.com has doubled its subscriber base to 600 since February, and Higgins optimistically projects $80,000 in revenue for 2003. One location, the Bourgeois Pig coffee shop in Los Angeles, reported that 40 customers use the service every day, up from just a few per week a year ago. "A lot has to do with the laptop Wi-Fi cards becoming more standard," said Rodney Hargrove, the restaurant's owner. "There seems to be a regular flow of people using it but it's hard to say if I get more food business out of it." RELATED ARTICLE: PROFILE Cafe.com Year Founded: 2001 Core Business: Wireless Internet service provider Revenues in 2002: $4,000 Revenues in 2003: $20,000 to date Employees in 2002: 1 Employees in 2003: 3 Goal: To have 50 profitable wireless Internet service locations in Southern California by the end of the year Driving Force: Proving this is a market that can be built into a real business |
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