Advertising support for free Wi-Fi service is a small but growing part of Boingo Wireless' business, which is also rapidly growing its legacy Wi-Fi network business as well as its DAS business.
Advertising on Boingo's retail Wi-Fi network is still quite small, averaging 3-6 percent of revenue depending upon the quarter, but it is "a fast-growing part of our business," said David Hagan, Boingo CEO, speaking at last week's J.P. Morgan Global Technology, Media and Telecom Conference. He said Boingo is ramping up ad support as it extends into smaller venues that want to offer free Wi-Fi to customers.
Boingo's advertising program includes sponsorships and promotions, as well as location-based display advertising.
Boingo, which went public one year ago, currently draws 47 percent of its revenue from the retail Boingo-branded global Wi-Fi network, with cash being generated by selling Internet access to individuals on month-to-month auto-renewing plans as well as hourly, daily and other single-use plans.
Half of Boingo's revenue stems from the wholesale portion of its business, which includes distributed antenna systems (DAS) and private-label Wi-Fi arrangements with companies such as iPass, Skype and Verizon (NYSE:VZ). The DAS business alone contributes 25 percent of Boingo's revenue, said Hagan.
Data traffic congestion on cellular networks is leading to a major network topology change, he said, predicting, "Every building you're in is going to have its own network, DAS and Wi-Fi; even some outdoor spaces will have that as well. That's the overall network trend."
Boingo has partnered with operators of Wi-Fi networks around the world and now counts 125 global partnerships with 550,000 hotspot locations. The company successfully expanded its retail business, which originated with service in airports, into shopping malls and will offer service in more than 100 malls shortly, with five of the top six U.S. malls signed up, said Hagan.
The company has also been working to sign up quick-serve restaurants and has one under contract that it has not yet announced, he said.
Hagan noted that the glue holding together Boingo's retail and wholesale businesses is its software and services platform, which includes billing infrastructure.
On the DAS front, Hagan said Boingo has generally bid for all wireless rights at a venue, which allows the company to offer both Wi-Fi and DAS as appropriate. "We have run the business as a Wi-Fi-first company and then we kind of pull through DAS," he said.
The company operates 16 DAS networks with 4,600 nodes today. "We tend to build very large-scale DAS networks," said Hagan, noting Boingo operates DAS networks in the three New York metro area airports.
DAS networks are used by mobile operators to extend the coverage of their macro cellular networks into large venues, such as arenas and stadiums. Hagan said that once Boingo wins permission to deploy a DAS, it generally gets AT&T and Verizon on board to contribute capital to help pay for the build. The original operators get rebates as other, smaller operators sign onto the DAS. Boingo runs the DAS as a neutral host and makes recurring revenue by leasing DAS access to interested wireless operators, usually under 10-year contracts, and charging minutes-of-use fees.
Boingo's historical approach has been to deploy DAS only in conjunction with a Wi-Fi network, sharing all cabling between the two deployments, though that tactic is changing, said Hagan. "We're expanding our business focus to not only lead with Wi-Fi but we're happy to lead with DAS," he said, noting the company now intends to "aggressively pursue" standalone DAS deployments.
- see this Boingo presentation (PDF)
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