THE BLOG
11/10/2014 06:19 pm ET Updated Dec 06, 2017

There Is No Such Thing as Free WiFi: Understanding the Business of the Internet

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As someone who has been in the technology space for some time, I've always thought about how ironic the term "free WiFi" is and how we really don't understand that it's not really free. Don't get me wrong: WiFi at places like Starbucks, Panera Bread, hotels and the airport is fantastic, and I could not run my business without it. But not understanding the business behind it allows people to make the wrong assumptions or be misled about why we have it and what it takes to keep it. So let's look at a key point you should know.

Someone is paying for the access. Either the company itself is paying for the access and offering it to you as an incentive, or, in most cases, it is sponsored by a provider in a partnership (e.g., Google or Starbucks). So understanding that someone is covering the cost is important. It is not free!

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So if we understand that it's not free, the next question is "Well, how are we paying for it?" since there is not an upfront cost. Here are some of the ways we pay:

  • Our presence: If we stay in a venue because of the WiFi, we may have meetings there, and that means more people (potential customers).
  • Our purchases: When we go somewhere that offers WiFi and we stay there, we'll make purchases. (Some places make it a requirement.)
  • Our eyeballs: The ads they present and the sites we visit have value to help them promote products. (Our behavior is valuable.)

Now, why did I go through this exercise? Well, because when you have the wrong perception about something, it can lead you to make wrong decisions.

Even with all the reasons I listed above, "free" WiFi is great for individuals and small businesses that would not thrive without the option. Where there is Internet access, there are always costs associated with it, but we will always come out on top in terms of value because of competition. It forces companies to connect with us and come up with new ways to give us value.

Now imagine if competition and innovation were limited because people did not understand that it costs money to give Internet access and let people believe that hard regulations would be better to protect the "free" Internet. Whom do you think that regulation will affect? All the people who benefit from "free" WiFi, for whom the benefits outweigh the "costs."

So when people talk to you about regulating the Internet, ask them what will they do to make sure "free" WiFi continues to flourish?

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You can ask them because now you know the costs and know that it's not really free and you should be glad it's not. Because competition, innovation and the current state of the Internet help pay for it so you don't have to.