Will Wi-Fi's Future Be Paid Or Free?

The future of Wi-Fi may be playing out in a quiet neighborhood in Austin, Texas. At a Starbucks Corp. store, Wi-Fi users fire up their laptops and log onto the Internet. At nearby Schlotzsky's, the sandwich shop's patrons likewise log onto the Web. The difference? Starbucks charges $40 a month for the privilege; at Schlotzky's, it's free.

In fact, sometimes when the Starbucks partrons settle down for a hot cup of java they actually log onto Schlotzky's free Wi-Fi service, because the sandwich shop's signal covers an area that includes the Starbucks store. As Wi-Fi spreads, this scenario could become commonplace.

For if Schlotzsky's experience with free Wi-Fi is any indication, the phenomenon will likely spread. Monica Landers, Schlotzsky's director of communications, said Wi-Fi has been installed in 40 of its 600 stores scattered across 38 states. "WiFi is a real draw," she said. "It creates a friendly buzz in the restaurant. Now we always have people there, and that's good. Nobody wants to walk into an empty restaurant."

The Wi-Fi program--along with Schlotzsky's free use of in-restaurant PCs--is now mandatory for new franchisees. And many existing Schlotzsky's proprietors are installing Wi-Fi service in their sandwich shops. Landers said the chain was initially worried that that people would "hang around" too long, but that really hasn't been the case. The lunchtime crowd moves on quickly to go back to work, and other Wi-Fi users just seem not to linger. She said a survey of Schlotzsky's patrons indicated that six percent visited primarily for the Wi-Fi access.

Most Wi-Fi commercial sites are still for paid subscribers--Frost & Sullivan estimates that two-thirds to three-quarters of commercial Wi-Fi locations charge for the service. But the market-research firm's wireless analyst has speculated that the percentage could reverse, with free sites overtaking the charging locations in two years.