Taking Wi-Fi To The NYC Subway System, Almost (WIFI, VZ, T, S)

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Finally, Wi-Fi while you are on the subway!!!  Sort of.  News is out this Thursday that sounds like a home run for Boingo Wireless, Inc. (NASDAQ: WIFI).  The Wi-Fi provider of hotspots for airports and other public venues has announced an agreement with an outfit called Transit Wireless to manage and operate Wi-Fi Internet services within the New York City Subway System.

So, here is why this is only a partial win.  The Wi-Fi access will be in the subway stations and will gradually roll out over the next five years.  Saying that this allows for 1.6 billion annual subway riders is misleading unless it is only planning to offer a subway pass on per-use model rather than a subscription service.

The agreement will eventually allow subway riders to connect to the Internet using their smartphones, e-readers, tablets and other wireless devices while waiting for a train.  The release shows that Boingo Wi-Fi services will be available at stations throughout Manhattan, Brooklyn, the Bronx and Queens.

The real reason that this is an ‘almost’ win is that the effort is not wiring the entire subway line.  Riders are often on a subway ride for a very long time, but the waits inside the subway system may only be a few minutes depending upon which subway line and depending upon the time of day.

If Boingo wants a home run announcement, it should aim to provide Wi-Fi throughout the entire subway line and sell monthly subscription services or single use connection fees like it does in airports.  Then it could do the same in Chicago and in other large global cities with subway systems deep underground where there is no real Wi-Fi connection during the ride.

Boingo shares are only up 1.4% at $10.85 but this much larger and much broader effort should be the real goal.  Those who frequently use the subway lines may pay a monthly subscription to Boingo if it means that they can get access to email, Facebook, news, and other online efforts on their way to and from work or when they are out on weekends and using the subway system a lot.  To occasionally use this while you are waiting on a subway where a user might already still have some limited internet access on their smartphone is not really a very ambitious effort.

KT offers Wi-Fi on some of the Korean subway lines but the U.S. has been way behind on various forms of wireless connectivity for years now.  If Boingo does not offer this service, perhaps AT&T Inc. (NYSE: T), Verizon Communications Inc. (NYSE: VZ), or even Sprint Nextel Corporation (NYSE: S) could.  It is not out of the realm of possibilities and it might really drive customer loyalty in those regional markets where subways are used by the masses.

If Boingo really wants to make an effort that will drive paid subscriptions and pay-per-use, it should be focusing on the entire subway ride.

JON C. OGG

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