Free WiFi? Been there.

Unlimited WiFi subscription? Done that!

The tech scene has been abuzz time and again in the past few months or so about companies and organizations that envision to set up free city- or municipal-wide WiFi hotspots. This is in addition to the existing slew of service providers offering public-access wireless networks either for free or under subscription. And then you can add to this the independent shop/cafe/establishment owners who run their own WiFi hotspots–again, either for free or for pay.

With everyone wanting mobility these days (whether at work or play), WiFi has been the marketing push of choice for many businesses, from those that manufacture and sell laptops, PDAs, cellphones, handheld game consoles, and even digital cameras, to those who run cafes, restaurants, pubs, and hotels. There are even companies that have used the “WiFi” branding on non-802.11x technologies (pick a letter of your choice in place of x–A, B, G, N, or what-have-you), such as “Smart WiFi” in the Philippines, which is essentially a terrestrial line-of-sight network technology run by a GSM operator. Why “WiFi?” Branding, of course, and the aim to pull in more customers curious about the technology (but who are likely to be disappointed by the service, which has been proven to be crappy in most cases).

One question that would pop into mind is the profitability aspect of WiFi in terms of its indirect effects on business establishments. When you consider the costs versus the benefits, do businesses come out at a net advantage?

Take for example a chain of popular coffee joints that runs prepaid public-access WiFi hotspots. What’s stopping patrons from buying a single cup of drip-brew and staying at their tables for an entire afternoon? This gets even worse if the WiFi hotspot is free, moreso if it’s the cafe itself that runs the network. My point being the tendency of people to have one over everyone else, it is likely that a WiFi user would take advantage of the facilities more than he should, at this could be at the cost of the establishment, and possibly other patrons who are unable to be seated.

As I’m writing this, I’m in an upscale portion of a local mall with free wireless access. I’m likely to sit here for three hours with my laptop–maybe four or five, depending on how long my battery will hold up. I’ll be reading my news, posting on my blogs, sending emails and IMs to friends and business contacts, and perhaps I can even produce a podcast. All this I’m doing over a single order of my favorite Cafe Americano. I’ve done it before, and I’ll definitely do it again after this. And by the time my trusty Thinkpad runs out of juice, I might just plug in my laptop for several hours to charge this time. Talk about slow table turnover!

How much do I pay for coffee? About two bucks. What’s the cafe’s marginal cost for my business? Probably more than two bucks. And that’s for electricity, prospective business lost (assuming the cafe is full and no one else can be accommodated), and not to mention the cost of preparing the coffee itself.

And then there are the couple of other guys at the next tables doing just the same as I am. Everyone’s thinking this is a good idea.

So is WiFi a good marketing pitch to attract business? Probably. Are establishments earning enough to cover for the costs? Likely, at least for now. They get good traffic, and attract the upscale crowd. But what about when everyone and his uncle is using a WiFi gadget of some sort? And what if people suddenly decide to telecommute or set up mobile offices en masse? There’s no stopping this from happening, especially once we get those city-wide hotspots running.

Until we arrive at a more sustainable business model for WiFi (i.e., location-targeted ads, etc.), WiFi and cafes don’t sound like a good mix–at least for the cafe owners.