By: Gigaom
Boingo gravitates toward “free” Wi-Fi with Cloud Nine purchase
As consumers begin chaffing at the prospect of paying for Wi-Fi in public spaces, Boingo is revamping its business model through a strategic acquisition. It's acquiring sponsored Wi-Fi access firm Cloud Nine to help it set up ad-supported free access to hotspots around the country.

Consumers are increasingly expecting free Wi-Fi in public spaces, so one of the world’s biggest hotspot providers is adjusting its business model accordingly. Boingo has acquired Cloud Nine Media, which manages sponsorship deals for Wi-Fi access in more than 6000 airports, hotels bars and restaurants in the U.S. and Canada.

You may have already seen some of Cloud Nine’s works in a few major airports. When logging into a hotspot, instead of getting the usual registration and payment screen, a terms-of-use page pops up offering to show you a video or ads in exchange for 30 minutes or more of free Wi-Fi access. AT&T is launching a similar service at Dallas-Fort Worth International Airport this September.

Boingo had been testing the sponsored Wi-Fi model working with Google Offers to provide ad-supported Wi-Fi in New York City subways and with American Express to do the same at a handful or airports. According to Christian Gunning, Boingo VP of corporate communications, sponsored Wi-Fi has been in increasing demand especially as Boingo expands beyond airports and convention centers into more consumer-centric locations such as malls, restaurants and stadiums where the expectations are much higher that Wi-Fi should be gratis. Gunning said in an email interview:

“… [W]e’ve historically outsourced this capability. As our consumer segment growth continued (and along with it the need for more sponsored access), it became evident that having this capability in-house would be beneficial.  Cloud Nine Media has built a strong business specializing in the delivery of sponsored Wi-Fi. They have a proprietary sponsorship platform that gives us the ability to deliver these sponsorships ourselves, as well as generate valuable data for sponsors. Bringing advertising/sponsorship expertise in-house puts us in a much stronger position to fulfill corporate goals.”

Boingo runs a global hotspot of network of 500,000 hotspots, though don’t expect every hotspot it owns or manages to suddenly stop taking credit cards. Many of its restaurant and café venue partners already offer Wi-Fi free to the public as a means of attracting customers – Boingo just signed a deal with Wendy’s to connect thousands of fast food restaurants. But the biggest part of Boingo’s business comes from subscriptions, which allows laptop, smartphone and mobile device customers to instantly connect to its global hotspot network for a monthly fee.

It’s likely Boingo will run the “free” service and the subscription service in parallel, generating revenue from non-subscribers through advertising while charging its customers monthly fees to access the same hotspot. The benefit of the subscription model, though, is that it treats all of Boingo’s disparate hotspots as a single network. Subscribers with the proper software on their devices not only bypass advertising, they don’t have register at every hotspot they encounter.

Terms of the deal weren’t disclosed, though Boingo may be more forthcoming on the financial details at its earnings call scheduled Wednesday afternoon.

Airport image courtesy of Flickr user Michal OsmendaWi-Fi image courtesy of Flickr user suttonhoo


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