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Cometa takes Toshiba hot spots on board

The Wi-Fi hot-spot operator takes charge of Toshiba's SurfHere network, extending its U.S. reach and cementing its position as a wireless wholesaler.

Cometa Networks is set to ride the Wi-Fi hot-spot waves belonging to Toshiba America Information Systems.

On Tuesday, the companies announced a strategic alliance under which Cometa will take over the operation of Toshiba's SurfHere hot spots, effective immediately. Hot spots are public areas where a wireless network has been set up to allow Wi-Fi device owners to share resources, such as a broadband Internet connection, usually for a fee.

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Toshiba on Monday sent letters to the owners of its 350 U.S. hot-spot locations, to explain the change and let them decide whether to use Cometa as their hot-spot operator. Cometa expects to be running about 800 outlets, not including the SurfHere network, by September.

"Toshiba was not a major U.S. hot-spot player, so this is a modest acquisition for Cometa, which still has a steep climb ahead of it in terms of establishing a wholesale business model," said John Yunker, an analyst at Pyramid Research.

The companies would not disclose the financial terms of the agreement.

Toshiba's goal with the deal was to improve the mobile experience for owners of its notebooks, according to Chris Harrington, a vice president of strategy and business development at the company.

"Our ultimate motive was to stimulate the value proposition for our notebook owners, and connectivity in public spaces was a significant feature," Harrington said.

Toshiba America Information Systems, a subsidiary of Japanese giant Toshiba Corp., and Schaumburg, Ill.-based Cometa said they will work together on promotional and marketing programs. Details of those efforts will be determined within the next quarter, they said.

Yunker said that Cometa needs more hot-spot installations to attract the service-provider audience that it is targeting. Its competitors, such as T-Mobile USA, are already ramping up with thousands of locations, compared with Cometa's hundreds.

"The industry has been too focused on the raw number of locations and has not been considering the quality or profile of the locations," said Kent Hellebust, vice president of marketing with Cometa.

While many of its rivals both run hot spots and provide the services for them, Cometa focuses on providing network operations to outside service providers. The advantage of this wholesale model, according to Hellebust, is that it allows multiple service providers to use the same hot spot. That spreads the cost of maintaining the network and can lead to lower prices for consumers, Hellebust said, noting that one of Cometa's service providers offers monthly access for $11.95 per month. Other hot spot providers charge as much as $40 per month.

Both Toshiba and Cometa recently lost out to Wayport for a contract to operate hot spots in thousands of McDonald's restaurants across the United States.