Wi-Fi public hot spots have been in the news, but for very different reasons. Korea Telecom is expanding its successful Wi-Fi business. The carrier has 12,000 hot spots in South Korea and plans to have 23,000 by the end of 2004. KT claims to have 375,000 Wi-Fi subscribers. Industry analysts credit KT as the world's leading hot spot operator.

In contrast, here in the U.S. the big news is the recent demise of Cometa Networks, the wholesale hot spot operator that was financed by Intel, AT&T and IBM. While some analysts say Cometa's exit raises broad questions about viability, I believe it simply demonstrates that one relatively traditional business model was more difficult to execute than originally anticipated.

Granted, Cometa's story is but one scenario. T-Mobile's strategy was to build on the initial acquired assets from MobileStar for pennies on the dollar. Meanwhile, more cautious U.S. carriers formed partnerships with Wayport, each apparently happy to let this start-up's investors assume the cost and potential risks.

So why are profits still in question? Perhaps Cometa's investors realized its real competition wasn't T-Mobile or Wayport, but rather the growing free (to end users) Wi-Fi hot spot threat.

Clearly, carriers need to entertain other options. Consider the network TV model, where the three primary networks are advertiser-supported, and a co-existing public television network uses a combination of member and corporate sponsorship. Syndication networks could sell text ad placements, handle hot spot installation and provide support and managed services. Retail chains, CPG companies and even local independent retailers could support nearby hot spots via this model.

Alternatively, carriers could fund hot spots from Yellow Pages advertising fees. Local merchants would value timely qualified sales leads (knowing that people viewing hot spot venue ads are in close proximity to their business location). Both models could be supplemented with new revenue by supporting hot spot venue back office workflow-oriented applications that take advantage of in-store broadband connectivity outside business hours.

Still concerned about hot spot mass-market appeal? Experts say we'll soon witness some Wi-Fi enabled smart phones, PDAs and even handheld computers dropping to the $99 to $150 price point, and this could become a catalyst that will drive more mainstream demand beyond current mobile notebook-toting computer users.

Carrier Wi-Fi revenue options are far from exhausted. In fact, I think we've only just begun to explore the hot spot business model possibilities.

DOSSIER DAVID H. DEANS

Occupation: Senior partner, Deans & Associates; founder, Economic TeleDevelopment Forum

Location: Austin, Texas

Current reading: “How to Grow When Markets Don't” by Adrian Slywotzky and Richard Wise

What's on your iPod?: Thomas Dolby, T-Rex, Neil Young

Favorite Web sites: daviddeans.webhop.net; www.myway.com

What's next: Finishing my white paper research on Enterprise Talent Networking and posting the findings on GeoNetworker International (http://geonetworker.webhop.net)