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T-Mobile scores Wi-Fi points in deal targeting business users

By Nancy Gohring
Special to The Seattle Times

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In a move that expands the market for Wi-Fi among business subscribers, T-Mobile USA is announcing a partnership today that will make its Wi-Fi network available to up to 415,000 customers of iPass, one of the largest providers of Internet access to traveling business people.

The partnership means that on-the-road employees who work at corporations using iPass services will gain access to T-Mobile's hotspots — locations with Wi-Fi access — throughout the United States.

"For T-Mobile, this is a back door into the enterprise," said John Yunker, an analyst with Pyramid Research of Cambridge, Mass., referring to the often-lucrative business of providing products and services to large corporations.

IPass provides corporate users with secure Internet access through wired, wireless and dial-up connections from hotels and other locations around the world. The Redwood Shores, Calif.-based company counts General Motors, Booz Allen Hamilton and Dow Corning among its customers.

The strategy at Bellevue-based T-Mobile USA, a unit of Deutsche Telekom, is to combine Wi-Fi and cellular offerings and develop customers across both networks. By attracting business customers to its hotspots, for instance, T-Mobile hopes to encourage them to sign up for its cellphone service.

Business customers have proved to be more lucrative than consumers to cellphone carriers.

Yunker said T-Mobile is "leveraging Wi-Fi" to get subscribers with a higher ARPU (average revenue per user). ARPU is a common metric cellphone carriers use to determine the value of their customers.

T-Mobile is regarded as a mass-market cellphone carrier, rather than one that appeals to corporate subscribers. But it has focused far more than its rivals on building an extensive Wi-Fi network and one specifically geared toward business users.

The company reports that 88 percent of usage on its Wi-Fi network is for business purposes.

Wi-Fi is a wireless technology that lets laptop users connect to the Internet within about 300 feet of an access point.

T-Mobile operates Wi-Fi networks in 3,900 locations, or hotspots, including Starbucks, Kinko's and Borders stores. It is adding new hotspots at a rate of 35 per day.

Business customers haven't signed up in droves for Wi-Fi services. That's partly because they must subscribe to several services if they want access to as many hotspots as possible — a potentially costly proposition.

Starting in the first quarter next year, however, an iPass subscription will offer access to T-Mobile's hotspots plus 1,555 hotspots owned by other iPass partners, including Wayport and Concourse Communications.

"What the enterprise space really wanted is the sense that there's enough of a footprint to make a difference," said Ken Denman, chairman and chief executive of iPass.

T-Mobile agrees the partnership may be just what the Wi-Fi industry needs to land more subscribers.

"We think this may represent the tipping point in the industry for Wi-Fi as it can probably be described as accelerating the adoption of Wi-Fi in the enterprise," said Joe Sims, vice president and general manager of T-Mobile HotSpot.

Pricing for the iPass service depends on customer needs, but often a company pays $9.95 for each day an employee uses the network.

T-Mobile will get a cut of the revenue iPass receives from customers using T-Mobile hotspots.

T-Mobile's branding will be more prominent than that of iPass' other hotspot partners.

Under the new partnership, the iPass software for subscribers will show a Starbucks or Kinko's shop identified as a T-Mobile hotspot. Other hotspots are listed only by the name of the venue, without noting the hotspot operator.

T-Mobile plans to announce other similar deals soon, Sims said.

Nancy Gohring, a Seattle freelancer, writes frequently about wireless and telecommunications issues.

Copyright © 2003 The Seattle Times Company