Towerstream aims to be wholesale WiFi hotzone provider

Lynnette LunaWiMAX provider Towerstream is getting into the WiFi hotzone game with an aim of becoming a wholesale provider to operators desiring to offload heavy mobile data traffic.

After a pilot project in midtown Manhattan that saw an average of 250,000 connections and more than one terabyte of data transferred per day, primarily by handsets that just found the free trial network, Towerstream was convinced of a business model.

The company is now developing an initiative to build out additional hotzones throughout New York City and other key markets, including San Francisco and Chicago. The news comes on the heels of AT&T Mobility's (NYSE:T) own hotzone announcement--that it is expanding its WiFi hotzones into more areas of New York and San Francisco--to offload heavy 3G traffic.

Towerstream's strategy makes sense given the fact that the mobile industry is moving toward usage-based pricing and that many data-intensive mobile applications work much better over WiFi. Towerstream has the assets to do it given that it can leverage its WiMAX network and offer up to 200 Mbps of available bandwidth per location.

"The business model gets tough when you don't own the last mile," Towerstream CEO Jeff Thompson said in an interview with FierceBroadbandWireless. "We've been doing portable services for large events, and we have the options to build out a dynamic WiFi network that is carrier class."

In addition to targeting operators aiming to offload heavy data traffic, Towerstream has uncovered another market unexpectedly, Thompson said. Local search and advertising companies, such as Groupon, have an interest in knowing where users are, and, of course, WiFi can easily track users without taking personal information.

"This was a market we weren't planning on, but people have come to us about this," Thompson said.

While WiFi hotspots and hotspot aggregators are prevalent, it's becoming evident that carrier-class WiFi networks with different coverage requirements are required as WiFi-enabled smartphones continue their huge adoption curve along with data-hungry tablets. Towerstream, using Ruckus Wireless 802.11n equipment, said the key requirement is to not replicate the wireless network but find extensive zones where the density of commuters is highest and throw a lot of bandwidth at them.-Lynnette