EarthLink chairman and founder Sky Dayton is set to unveil his newest company, a wireless Internet service provider named "Boingo."
Dayton said Boingo will sell Internet access that is actually provided by about 750 mostly small wireless Internet providers now dotting the country in places like Flynt, Mich., or Elmira, N.Y.
Each uses a technology called "Wi-Fi" which consists of antennas that beam high-speed Internet access to computers up to 300 feet away and has become increasingly popular in hotels, airports, convention centers and cafes that cater to business travelers by frequently providing free access to the service.
Boingo subscribers would pay up to $75 a month for unlimited access to any of these networks, and Boingo would pay the providers a share of that revenue.
"I'm an uber-aggregator," Dayton said.
Boingo emerges at the tail end of a rough year for wireless Internet providers. By some estimates, nearly 21 ISPs have either shut down or filed for bankruptcy. Most of these companies blame their troubles on the high cost of building their own network and the slow trickle of dollars from fickle customers who generally paid between $60 and $80 for the service.
Cost may be an issue for Boingo even though it utilizes others' infrastructure, analysts warn. Customers must buy a Wi-Fi card, which acts like a modem and generally costs from $80 to $150, then pay a monthly fee that is roughly twice the price of a dial-up connection. Among the failed wireless providers was Ricochet, which charged $80 a month and attracted only 50,000 customers.
"I don't think there will be a lot of price sensitivity amongst earlier adopters," Dayton said. "Ricochet failed because they had to spend $2 billion before they could book a dollar of revenue."
Boingo investors include eCompanies Wireless, a joint venture between eCompanies and Sprint, which invested $15 million in eCompanies two years ago; Silicon Valley venture capital firm New Enterprise Associates; and Evercore Partners, a New York investment firm.
Like many other Internet incubators, eCompanies and one of its affiliated venture funds have suffered several investment failures. eCompanies had an investment in eParties, a party-planning site that went out of business in less than a year. An eCompanies affiliate, eCompanies Venture Group, was an investor in failed hobby site eHobbies.
Dayton has built Boingo the same way he built EarthLink, said Tim Bajarin, a wireless analyst with Creative Strategies, a high-tech consulting firm in San Jose, Calif. Instead of actually building his own network, he either bought or partnered with enough smaller carriers to offer EarthLink service on a national scale.
"It was inevitable that someone would do the same thing for wireless, but it has more meaning because it's by Sky Dayton," Bajarin said. "He's neutral. He doesn't care. He already made the Switzerland approach to building an ISP possible."
Boingo is trying to unite an industry that in the past two years has been slowly growing while other better-funded companies have failed. There are an estimated 1,100 wireless ISPs in the country. A typical example is Air2Lan, a 55-employee company that sells wireless Internet access to about 600 customers in four cities, including Montgomery, Ala.
Air2Lan is now a Boingo member. Vice President Bill Hays said Boingo members can now use their network. But there's no reciprocity, he said. Air2Lan customers can't use other wireless providers who have signed up with Boingo. Not yet at least, he said.
"Our deal doesn't include reciprocity," he said. "But it might soon. We'd like Boingo to develop a whole list of places (that) our people can roam to."
While wireless ISPs might be hitting the skids, Wi-Fi itself has been growing in popularity. Not only are a growing number of companies using it, but so are cities like Jacksonville, Fla., which created a public Wi-Fi area in one of its busiest business areas.
The cost of the equipment to create a Wi-Fi network has dropped so dramatically that some people are even creating networks for anybody to use for free. Setting up a system involves installing a series of "access points"--little radios as small as a can of soda that provide Internet access to anyone within a 300-foot radius. The cost varies, depending on the location, but it usually runs between $500 and $1,000 per point.
But Dayton doesn't see that as competition. Instead, he said he lists about 200 of these sites, and a way to access them, on software that needs to be downloaded from the Boingo Web site.
"The future is only going to get brighter for these guys," he said.