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Hot-spot fever?

Wayport CEO Dave Vucina has big plans to create a far-reaching network of hotel and airline Internet hot spots.

Wayport is one of those companies you never hear about unless you happen to be an industry insider--a state of affairs that's just fine with CEO Dave Vucina.

In the meantime, the Austin, Texas-based company he runs has emerged as one of the major "hot spot" players that provide mobile Internet access to subscribers.

The company, which offers W-Fi access in approximately 600 hotels and airports, has been partnering with carriers and service providers as Vucina looks to spread out the reach of the Wayport network. In August, Wayport began working with McDonald's in a Bay Area-based trial to become the fast-food chain's primary hot-spot provider to all its restaurants.

Hot on the heels of enthusiasm for Wi-Fi, Vucina spoke with CNET News.com about the hot-spot market and his plans to add a host of new services in the near future.

Q: Wayport is in a unique position, because it acts like a service provider as well as a network operator.
A: We look at it as being a full-service provider, which means that we do all elements of the quality of service--operations, network monitoring and management, and the software and hardware engineering. There are people out there that do just bits and pieces of each one of the three things we do, and there are a lot of components under each of those things.

How would your business differ from an aggregator such as Boingo Wireless?
When you want all the networks out there brought together, you go to Boingo. We tend to aggregate with the large players. An AT&T Wireless might want to use our coverage area for its customers. We allow it to do that under the client software it might give you. You can go into a Wayport location, and it will look like it's an AT&T location, but you are still using us.

We're launching an application that will allow you to print your boarding pass on a printer in the hotel.
So you're mainly a network operator, but you're also a service provider for major carriers?
Yes, you bet. AT&T Wireless, Verizon Wireless, SBC Communications, Sprint PCS--they would all come to us to build or maintain hot-spot networks. But if all a carrier wanted is all of the hot spots out there under one piece of client software, they might go to a Boingo.

Couldn't many of those large carriers potentially grow their own networks and give you a run for the money?
Sure. I could also squeeze them in their market, if I wanted to get good at what they do. But we're not very good at what they do and don't have the resources to do it. They could become good at what we do, but there are a lot of venues out there.

As an example, I could tell you the top 12 reasons why people phone our call center from a hotel. Somebody who's getting into that market fresh doesn't even know the questions. They really don't know how long someone will stay on the line with a customer. They don't know how to solve the problem initially. We have developed a number of things we are really good at but that somebody else could certainly replace or also do. But that would take time.

What else is Wayport doing besides building out the network to differentiate itself from potential carrier competition?

We'll have volume through either wholesaling service to those who can really move volume like carriers.
We not only try to distinguish ourselves but also try to be more collaborative. For example, in our deal with SBC, its customers are not only roaming on our network, but we're also building out SBC's coverage area and managing it. So SBC puts 6,000 locations out there. We have an agreement with the company in which we are its managed service provider. We do the site survey, build the materials, maintenance, the call center, network monitoring and management, the software overlay onto the system to make it work--we do all that.

So even if they grow, they still need you to be their network operator expert?
Yes, we're their core competence in that area. They may still want to own the venue and do what they want with the customers, but we manage the network for them. So it allows me to participate in the business rather than lose the venue to them. So that's the collaborative piece.

What are you doing in these venues to make Wayport a different experience?
We're launching an application that will allow you to print your boarding pass on a printer in the hotel so that you don't have to wait in line when you go to the airport. We're also delivering BusinessWeek to you in a compressed format for free when you connect. We're going to have a whole series of content--not just connectivity. We're going to package up the connectivity with content very much like you might see with Yahoo, MSN or America Online.

What about in venues like airports?
Here's our plan: If I'm a business traveler, and I'm about to jump onto a three-and-a-half hour flight, I might ask myself: "Jeez, can I download a movie here? And how does all that work on this Wi-Fi system?" So I click on my browser, and now I have a wireless connection. There is an icon there that says "movies." I click on that, and it offers me a movie menu, and I click on that, and I can download a movie and watch it on the airplane as I travel to the next city.

So you're just targeting business travelers?
The low-hanging fruit is what we call the executive business traveler. The second stage is the "windshield warrior," like the insurance salesman who takes digital photos and fills out reports--who needs to get them back into the home office but is traveling by car all day. How does he connect? And so you try and find that ubiquitous and high-quality network--which McDonald's is, we think--allowing you to pop off all your stuff to your home office. And the evolution after that is the consumer, but I think that is probably down the line a bit.

How does your model change as revenue per user comes down?
It gets less expensive, but volume goes up significantly. That has to be the play. Today in a hotel, we do $9.95 for a connection for 24 hours. More and more, people who use that on a repeated basis will go to a subscriber model. That model is great, because it takes on the form of an insurance policy. For $29.95 per month for travelers, some will maximize their subscription with 10 or 15 connects per month; others will go two months without traveling.

The more volume you get, the more money you're going to make. Volume plays very well on these networks; we're just filling up an existing pipe or space. We'll have volume through either wholesaling service to those who can really move volume like carriers.