Boingo inks Wi-Fi offload deal with Verizon, hopes for 'significant revenue' from Hotspot 2.0

BARCELONA, Spain--Wi-Fi network vendor Boingo inked a Wi-Fi offloading agreement with Verizon (NYSE:VZ); Boingo said it now counts Wi-Fi offload agreements with three of the nation's four Tier 1 wireless carriers. Moreover, Boingo said the offloading agreements pave the way for Boingo to generate significant revenues from the deployment of Hotspot 2.0 technology.

During Boingo's conference call with investors as part of the release of its fourth-quarter financial results, the company disclosed that it renewed its Wi-Fi partnership with Verizon and that the agreement now includes terms for "carrier offloading." Boingo CEO David Hagan also said the company now has offload agreements with three of the nation's four nationwide carriers, though he didn't name them.

"We believe that carrier Wi-Fi offloads is still a long-term play and will not be contributing significantly to our financials in the near term," Hagan said, according to a transcript of the event provided by Seeking Alpha. "We remain true believers that carrier offload will come. The latest Cisco Visual Network Index … projects that by 2018, more than half of all traffics for mobile connected devices will be offloaded to Wi-Fi and other small cells. With our emphasis on DAS in the short-term and building for Wi-Fi offload in the long-term, we should be well positioned for the tide change as it comes in."

During the call, Hagan also addressed the potential of Hotspot 2.0 technology, which would essentially allow Boingo to operate as a cellular wireless data carrier by automatically logging smartphones onto Boingo's network (at least smartphones from those carriers that have agreements with Boingo). Hagan pointed out that Boingo recently launched Hotspot 2.0 networks at 21 airports in the United States, an action he said shows that Boingo is on the forefront of the technology curve.

In an interview here at the Mobile World Congress trade show, Boingo CTO Derek Peterson said that Hotspot 2.0 technology "has the potential for significant revenue" for Boingo, though he declined to provide specific forecasts. He explained that Boingo today provides Wi-Fi services to wireless carriers on a per-user and per-login basis, but under a potential Hotspot 2.0 agreement, Boingo would act more like a traditional cellular roaming partner by billing for users' actual usage of its network. He said that Boingo could increase its roaming revenues because of the potentially large number of customers that would automatically roam onto its Wi-Fi networks via Hotspot 2.0 technology.

Hotspot 2.0 is an interoperable Wi-Fi authentication and handoff technology that enables automatic, seamless roaming between Wi-Fi hotspots. The Wi-Fi Alliance offers a certification program for Hotspot 2.0 devices under its Passpoint brand. Devices that pass this certification testing can be referred to as "Passpoint devices." Because Passpoint certification is based on the Wi-Fi Alliance Hotspot 2.0 specification, one tends to see the terms "Passpoint" and "Hotspot 2.0" used interchangeably, though that is not technically accurate.

No U.S. carrier has officially implemented a Hotspot 2.0 strategy, though some, including AT&T Mobility (NYSE:T), have expressed support for the technology.

According to research conducted by research firm Senza Fili for the Wireless Broadband Alliance, around 9 percent of global mobile traffic will be diverted to Wi-Fi by 2018, which the report said will generate $150 billion in operator revenue by then.

For more:
- see this Seeking Alpha transcript
- see this Boingo release

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AT&T, Cisco and others to demo live Next Generation Hotspot Wi-Fi network
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