Will Google's Free Wi-Fi Be Paid for by Ads?

ByABC News

Oct. 3, 2005 -- -- Internet powerhouse Google is known for many online services, including Web searches, free e-mail, driving directions and maps using satellite imagery.

Now the Mountain View, Calif.-based company may be taking steps to ensure that people can get to those features by adding an actual online access service to its offerings.

Google filed an application Friday to help the city of San Francisco build its municipal area network, or MANs, that would allow anyone in the city free access to the Internet using wireless Wi-Fi technology.

As with many MAN projects in the U.S., about a dozen companies -- from telecom companies to traditional Internet service providers -- have submitted proposals for the City by the Bay's planned network. But Google's plan, some industry watchers speculate, could bring about a new business model: a free MAN centered around online advertising that knows where users are within the city's limits.

Esme Vos, founder of MuniWireless.com, a Web site devoted to monitoring MAN projects, notes that Google already has many technological pieces that would make such wireless "location-based" advertising possible.

"On Google, you can type in 'pizza' and your address and you can see tens of restaurants tied to that area," says Vos. "Now, add to this Google Maps with its satellite imaging and they could target that user very locally."

Since Wi-Fi networks use radio waves, Google would be able to determine where users are within the city by noting which MAN transmitter they were using. So, when users log onto the MAN from the Moscone Convention Center, for example, only online ads for stores and restaurants in that area will pop up on the user's computer or Wi-Fi device.

Such a localized online ad approach, traditionally a rich revenue stream for local newspapers and television stations, could produce the funds needed to build and maintain San Francisco's MAN -- an estimated $10 million to $20 million project.

Other analysts say the idea isn't far-fetched, given that public interest in free Wi-Fi services is still high -- and preferable to fee-based networks.

In a recent report, market research firm JupiterResearch found that use of public Wi-Fi "hotspots" has increased to 20 percent of online consumers this year. But only 9 percent of wireless online users are accessing the Net using a "paid" or subscription-based service. What's more, a full 30 percent of the online population said they were interested in free MANs, but only 6 percent said they would pay to use them.

"Right now a lot of wireless access is available on a paid basis," says Julie Ask, lead wireless analyst for JupiterResearch in San Francisco. "But people using Wi-Fi aren't willing to pay."

And while Google's ad-supported MAN might seem like an ideal answer, Ask is a bit skeptical that such a network is a surefire slam dunk for Google.

"Google could generate a lot of revenues from local ads, but they would still have to do maintenance and customer service while running the network," says Ask. "And that's something that Google doesn't have experience with and that's not a trivial thing."

Twelve other companies have submitted applications for San Francisco's request for information and proposals for its MAN project. City officials say they hope to make a decision "within weeks" and possibly offer the network to residents and visitors by next year.

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