For past few days, a screenshot captured by a Yahoo user is leading to a lot of speculation about Yahoo coming up with its answer to Google’s WiFi efforts. There are a couple of reasons why this isn’t going to happen - and none of them have to do with the fact that it was a screenshot of a mere marketing survey etc etc etc. (Niall has his take on why too much has been made of this screenshot.)
The first reason Yahoo is not going to go off on a WiFi binge is because of its past: the company has a very healthy and strong relationship with the Baby Bells. The relationship is pretty simple - Yahoo stays out of the access business, and Bells drive traffic to Yahoo sites. Yahoo makes money from advertising, and kicks some of it to the incumbents who in turn offer a cheap-plan to compete with cable companies. It is a great game, and believe it or not, everyone is happy - except the cable companies.
The second reason Yahoo is not going off on a WiFi-tanget, is actually the first reason. AT&T, Yahoo’s staunchest ally, has cobbled together a big enough WiFi footprint around the country through internal efforts and partnerships with the likes of Boingo and GRIC. AT&T currently sells a $1.99 a month package to its DSL customers and charges a bit more from non-DSL customers. Cingular, which is now part of the new AT&T also has its own WiFi networks in select airports and Amtrak stations.
The bottom-line is that Yahoo can easily re-sell these wi-fi networks, or offer for them as free ad-supported service. Interestingly, the so-called proposed Yahoo Messenger On The Go product is just like the current deal between Skype and Boingo Wireless. (Except you have to pay for the Skype-Boingo offering, and Yahoo offering could be free.)
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3 comments so far
4:07 AM PT
I didn’t even know about their 1.99 offer to DSL customers. AT&T/Yahoo need to do a better job of cross selling and promoting that offer.
7:04 AM PT
I didn’t think anyone would assume Yahoo would build a network of Wi-Fi hotspots. There’s not 30,000 locations left to build in the world that someone like Yahoo could build out and have useful to them. It’s clearly Boingo’s footprint worldwide and Boingo’s current Skype-only price.
11:31 AM PT
I agree with Om on his analysis.
Yahoo! is in the content and communication business, not networks and infrastructure. Yahoo! will not go the route of building WiFi nets, rather it will just do what it does best… build relationship with providers. If it is going to be a free service, I imagine Yahoo! will offset the cost by partnering with a free WiFi service or by ads in the messenger client.
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