With all the excitement regarding wireless LAN or "WiFi" services, there are still lingering questions as to how service providers will actually make money from this technology. While some service providers are simply testing WiFi, others have been in "land-grab" mode in order to lock down the best venues where business people may find themselves while temporarily away from the office.

WiFi service offerings and business models will likely evolve over time, in a manner much like that of cellular communications and the Internet in past years, but at a quicker pace. Both technologies were once perceived as being "nice to have" capabilities rather than a real value to the end user. Today, they have become a part of the everyday business and personal lives of billions of people worldwide. It was not until these services established true value in the minds of end users that they began to realize continued subscriber and revenue growth.

The truth is that there is no single answer for how to build a profitable business model around WiFi. To begin with, service providers must make the critical transition from land grab and testing mode to building end user value. And making that transition represents one of the biggest challenges for service providers.

MAKE THE SERVICE - AND THE MONEY - EASY TO MANAGE
Building value starts with building customer confidence in the service. If the user cannot sign up instantaneously, it leaves a bad first impression and they may not try again. Service providers must offer real-time activation so that users may try the service during their visit to a venue, rather than waiting until the end of their visit or even the next visit.

This ease of use must continue from sign up through the entire self-management cycle. Insight into balances is very important for users first trying a service. If a particular service plan has a number of included minutes of access for a monthly charge, the user should be able to know exactly when those minutes are being used and when incremental charges are being incurred. Surprise charges at the end of a billing cycle negatively impact user experience and perception of the service moving forward.

Advice of charge can be used to let users know the cost of a service as well as current balance levels. Balance warnings can also be sent when funds are running low for prepaid accounts or when a balance is reaching a preset spending limit for postpaid accounts.

PRICING - OFFER SEVERAL WAYS TO GET STARTED
Pricing and payment type play an important role in attracting users, building confidence with users and ultimately establishing long-term value. Many WiFi providers have chosen subscriptions as the primary method for pricing. Subscriptions work very well for users who have already decided that there is value in WiFi. However, if new users have to commit to a monthly and annual subscription before they have tested the value, they are less likely to try the service.

WLAN pricing and payment models will continue to evolve and change in the coming weeks, months and years. Consequently, service providers must be equipped to change their pricing and business models on the fly or they will fail in this rapidly changing market.

Offering multiple options such as pay-per-use and prepaid, along with multiple types of subscriptions, can draw a larger audience to try the service. Once value is established, users can switch to other offerings, if desired, based upon usage levels that they have grown accustomed to. Currently, with users unsure about the value of WiFi, service providers need to be prepared to offer WiFi services on terms that are suitable for different types of users and the different ways they choose to manage their money.

BUILD VALUE THROUGH PACKAGED OFFERINGS
Whether for consumer or business use, most users are still evaluating WiFi as an individual service. However, they are generally accustomed to other wireline and wireless communications services that, when packaged with WiFi, could deliver overall value as a bundled solution. For example: A bundle for a small business with five salespeople who work from home offices and travel considerably. A wireline carrier could offer this company a bundle that includes local voice, long-distance, DSL and WiFi services for the five salespeople along with a bundled discount. Specifically for WiFi, the bundle could include 100 hours per month of WiFi access that is shared among the five salespeople, with any extra hours being charged at a discounted rate.

Other packages could also include equipment bundles offered in partnership by a device manufacturer where the first two months of WiFi service are included in the price of the laptop. Or perhaps a wireless service provider may offer loyal voice/2.5G subscribers an upgrade package which includes a new WiFi/3.5G-enabled PDA and WiFi service. Given the right infrastructure, the possibilities are endless and offers can become more personalized. Multi-service providers who look to bundle WiFi as a value add need to look for billing solutions that have flexible, multi-service bundling and discounting through configuration, not customization.

OFFER INCENTIVES
There are many ways that service providers can entice users to sign up and continue to use WiFi services. Volume-based discounts or discounts based on off-peak usage can help promote continued usage of the service. Taking it one step further, discounts could also be given to people who use lesser-traveled hotspots. Or service providers could offer discounts based upon the end-user financial commitment. For example, prepaid users could be rewarded with better rates based upon how much money they "top-up" or recharge their accounts. This concept can also be applied for postpaid customers who get discounts based upon subscription length.

Service providers can also reward users to build loyalty and to encourage the recruiting of additional WiFi users. For example, a WiFi service provider might offer a $10 usage credit or 10 hours of free usage for every new subscriber the person brings in. On the individual side, the service provider might reward the end user with one month free after six months of subscription, or $20 prepaid usage credit after $200 prepaid usage or even free promotional use of a new service.

Another way to encourage WiFi usage is through promotional partnerships. For a coffee shop, one might offer a promotion that provides the buyer of a coffee and scone 30 minutes of "free" WiFi access for that day only. To make the partnership reciprocal, the service provider could provide prepaid voucher cards that, once used, could be brought to a coffee shop for a 10 percent discount on a purchase. Building a "value community" such as this with strong branded hotspot providers will build value with the end user.

BILLING AS AN ENABLING TECHNOLOGY
As with many different types of emerging services, the billing and customer management system can either be an enabling technology or a hindrance in establishing this value. Traditional legacy systems as well as one-off quick fix solutions are not well suited for this very dynamic market, taking many months to implement changes to price plans, promotions, or bundles. Given the dynamic nature of the WiFi market, do service providers really have the luxury to wait this long to find out if their ideas worked? On the other hand, next-generation billing solutions can accelerate this transition by enabling service providers to offer a personalized user experience and value through ease of use, innovative pricing, attractive bundles, and payment choice.
As stated earlier, there is no single answer on how to make money from WiFi. However, if one is looking for some answers, look no further than the end users and the value they see in WiFi. And if a service provider is looking for an enabling technology that will help them establish value by making the transition from "land-grab" or testing mode to revenue-generation, look no further than next-generation billing solutions.

Brian McCann is senior marketing manager, wireless solutions, for Portal Software. Portal provides flexible billing and subscriber management solutions to enable organizations to monetize their voice and digital transactions. Portal's convergent billing platform enables service providers to charge, bill, and manage a wide range of services via multiple networks, payment models, pricing plans, and value chains. Visit their Web site for additional information.