The Death of WiFI Hotspots?

I’ve been thinking about the new unlimited data plans and wondering what impact they will have on public WiFi. As I wrote in a recent blog, none of the plans from the major cellular carriers are truly unlimited. But they have enough data available that somebody who isn’t trying to use one of these plans for a home landline connection will now have a lot more data available than ever before.

The plans from the big four carriers have soft monthly download caps of 22 Gigabytes or higher, at which point they throttle to slower speeds. But 22 to 30 GB is a huge cap for anybody that’s been living with caps under 5 GB or sharing family plans at 10 GB. And to go along with these bigger caps, the cellular companies are also now offering zero-rated video that customers can watch without touching the data caps. That combination is going to let cellphone users use a mountain of data during a month.

So I wonder how many people who buy these plans will bother to log onto WiFi in coffee shops, airports and hotels any longer? I know I probably will not. For the last few years I’ve seen articles almost weekly warning of the dangers of public WiFi and I’ve become wary of using WiFi in places like Starbucks. And WiFi in other public places has largely grown to be unusable. WiFi can be okay in business hotels in the early afternoon or at 3:00 in the morning, but is largely worthless in the prime time evening hours. And free airport WiFi in the bigger airports is generally already too slow to use.

If you think forward a few years you have to wonder how long it’s going to take before public WiFi wanes as a phenomenon? Huge numbers of restaurants, stores, doctor offices, etc. spend money today on broadband and on WiFi routers for their customers and you have to wonder why they would continue to do that if nobody is asking for it. And that’s going to mean a big decrease in sales of industrial grade WiFi routers and landline broadband connections. Many of these places already buy a second data connection for the public and those connections will probably be canceled in droves.

I wonder how much sense it makes for Comcast and others to keep pouring money into outdoor hotspots if people stop using them? You only have to go back a few years to remember when the concept of building the biggest outdoor hotspot network was the goal for some of the largest cable companies. Already today my wife has to turn off her WiFi when running in the neighborhood since her phone constantly drops her music stream through attempts to change to each Comcast WiFi connection she runs past. How many people with these unlimited plans will even bother to ever turn on their WiFi?

I also wonder if the cellular networks are really ready for this shift. There is a huge amount of data shifted today from cellphones to hotspots. As a business traveler I’m already thinking about how hard it might be soon to get a cellular data connection during the business hours if nobody is using the hotel WiFi. I know that 5G is going to fix this issue by offering many more connections per cell site, but we aren’t going to see widespread 5G cell sites for at least five years and probably a little longer.

I’ve always found it interesting how quickly changes seem to hit and sweep the cellular industry. There was virtually no talk a year ago about unlimited data plans. In fact, at that time both AT&T and Verizon were punishing those with legacy unlimited plans to try to drive them to some other plan. But the industry has finally plateaued on customer growth and cellular service is quickly becoming a commodity. I think a lot of us saw that coming, but I never suspected that the way it would manifest would be with competition of unlimited calling and the possible death of public WiFi. I don’t know if this industry will ever stop surprising us at times.

I guess a day could come soon when kids will have no memory of public hotspots. I can remember fondly when traveling to places like Puerto Rico or the Caribbean that the first thing you did on landing was find the locations of the Internet cafes. I remember back when our company decided to move out of our offices that one of my partners practically lived in a Starbucks for the next year. It was an interesting phase of our industry, but one whose days are probably now numbered.

6 thoughts on “The Death of WiFI Hotspots?

  1. Dear Doug:
    The answer is going to come in the usage reports… If people prefer using WiFi, they will continue to do so, especially in areas where the cellular data connections are sketchy.
    WiFi hotspots may still continue to be a value-added feature for certain businesses, and the answer as to which technology “wins” will depend upon how well each technology provides coverage and customer service…
    Short answer — we’ll see…

    ~ Ron

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  2. I’ve been reading your columns regularly for some time and I find them very informative and fairly accurate. However, I find this one very subjective and inaccurate, and with a strong bias towards what the future of hotspots might be, but for which, presently there is no indication whatsoever that, that might be the case. As you state in your article, realistically there are no true unlimited data plans from cell carriers, and neither with most ISPs.

    So, the majority of consumers do watch their data cap limits and try to minimize them by using wifi whenever possible; specially millennial and generation Z, who are the biggest consumers. Businesses everywhere keep adding wifi or upgrading their current setups; and unfortunately some of them, like the large hotel chains, still treat it as a commodity by not making it complimentary and charging excessive fees for it. As we both know, data usage keeps and will keep increasing, and as long as carriers keep putting limitations on it, and/or charging additional fees for it, consumers will keep depending on wifi. So, for the forseable future wifi is here to stay.

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    • I agree the blog is subjective, because that’s what most opinions are -but this reflects my best guess. I have no crystal ball, but I have a fairly good track record over the years of spotting there kinds of trends early – but we’ll have to wait and see! And certainly I agree with you and this is not going to happen overnight.

      But I foresee hotels and coffee shops getting out of the WiFi business when most customers no longer use it. Already today I rarely use hotel WiFi because it’s generally of poor quality – so I use WiFi tethering from my cellphone. You are right that the new plans aren’t really unlimited, but moving the monthly data cap up north of 22 GB is a huge increase and will allow a huge number of people to not bother with hotel and Starbucks WiFi any longer when out of their homes. In addition to raising the data caps a ton, the cellular companies are making it even easier for people to stay on their cellphones by bundling in Netflix and other content that is not counted against data caps. Combine that with these new plans and they are starting to feel unlimited.

      Something I didn’t say in the blog is that my best guess is that the cellular companies are going to keep enhancing the ‘unlimited’ plans and will keep increasing the monthly data caps. Cellular is headed down the path of becoming a commodity and the carriers would much rather give away more data as a way to compete rather than cut prices. But T-Mobile is going to keep pushing the other cellular companies to give away more data (unless Comcast or somebody else big buys them).

      I certainly am not predicting that people will drop WiFi in homes or in the workplace, although over time that might migrate to millimeter wave radios indoors using 5G or some standard other than WiFi. But when the monthly caps are above 20 GB a whole lot of people are no longer going to have to closely watch their usage. That’s a lot of data for a cellphone.

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  3. I think it will be around a little longer than you may be thinking.

    We need the wifi location for more precise Geo-Location. In the best cases Cell towers only get us to within 10 to 20 meters and worst case it’s hundreds if not 1000s of meters. Having good data about your customers location and the amount of time spent a certain locations is very valuable. I don’t know so let me ask you, is their a way to get a better location on a smartphone user from a/(two)cell towers then what is currently available?

    If I had a new car dealership and I put up a geo fence around my competitor I would want to if the customers are spending time in the trucks, suv or car section to send a push notification or sms add to them. I can get that with cell and wifi tracking together but not with cell towers only. These kinds of adds and notifications are worth tens times more then other cookie tracking type adds.

    Ben

    Sent from my iPhone

    >

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    • I agree. Nothing ever happens overnight. And there are certainly many places that use WiFi for reasons that might make sense forever. But as more and more people are comfortable using their cellular data, and as 5G actually rolls out and allows everybody in a hotel or stadium to get a reliable data connection, then I think you’ll see hotels, coffee shops and others less eager to provide WiFi service. I’ve read that poor WiFi is the number one complaint at hotels these days and I bet they would be thrilled to be out of that business.

      By the way, there is a new improvement for GPS that can geo-locate things down to a centimeter. That’s a game changer for many purposes. Here is an article that describes it: http://gizmodo.com/a-new-technique-makes-gps-accurate-to-an-inch-1758457807

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  4. A lot of people don’t have the money for current ‘unlimited’ plans, and/or want to use a(nother) device without cellular data service without paying extra for a cellular hotspot or tethering-capable smartphone. Businesses offering free functioning WiFi on their premises is still very important to me, personally.

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