LinkNYC – Monetizing Free Gigabit City Wi-Fi: The Secret Sauce + Google (Alphabet)

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Just a few years ago we were assured that free municipal WiFi services were dead, as major city projects collapsed in San Francisco, Philadelphia and elsewhere. “Whatever happened to municipal Wi-Fi?” asked The Economist (7/26/13), patting itself on the back for having suggested earlier that it was really “Wi-Pie In The Sky.”

Now, comes LinkNYC, and free WiFi is coming back to New York City, at least in stages.

But there is much more here than just free WiFi. LinkNYC pulls together multiple threads that have been started over the last 25 years that involve:

  • Proximity Communications
  • Proximity Marketing

And the Secret Sauce in this ambitious project is the combination of Mobile Cloud and Omnichannel Marketing.

What is LinkNYC? Why Will this Work?

LinkNYC (Link) is a private venture that has reached an agreement with the city, under which the company takes over all of the existing payphone (public pay telephone, or PPT) structures in the five boroughs of New York City. The company is responsible for re-designs of the PPT structures and is required to provide: “free public WiFi” and “free or pay telephone service.” The initial term of the agreement is through June 24, 2026.

The crucial commercial fact is that Link is granted the right to display advertising on the structures, or kiosks, as long as they “offer public pay telephone service” at the structure and are in locations that are zoned to permit commercial or manufacturing businesses.

So, while “free WiFi” may be the rallying cry, this is a very interesting commercial arrangement that could involve very significant dollars. The city is to receive the greater of: a) a minimum guaranteed payment per year, that starts at $20 million and rises to $71 million by year 15, or b) 50% of all gross revenues of the company from advertising and other sources – the percentage rises to 55% for ad revenues in year 8 of the agreement.

The kiosks provide:

  1. Free WiFi, within 150 feet, at up to gigabit speeds
  2. Free nationwide calling (via Vonage), using the Vonage app on the tablet or the tactile keypad and microphone. Personal headphones can be plugged in for privacy
  3. Touch screen tablets for Internet browsing
  4. Two USB charging ports for wireless devices
  5. Two 55 inch screens for ads and info display
  6. Other features: 911 access (via a red button) and 311 (non-emergency); ADA compliance; access to city services

There are 500 sites reported operating, with plans to go to at least 4,550 by 2020 and thereafter a total of 7500 by 2024, of which 1500 will be non-advertising units. Eventually, Manhattan, in particular, will be very heavily blanketed, with locations in the other four boroughs as well. The company is committed to construction costs of $200 million. The kiosks will be accessed by fiber. The company could elect to install up to 10,000 total units.

One of the claimed distinguishing features of the system is the very high speed service being promised, up to gigabit speeds. The agreement between the city and the company states specifically that the service must be “capable of supporting up to 256 devices with a total aggregate throughput of 1Gbps.” Service must be available 24/7 with 97% uptime and must support simultaneous dual spectrum 2.4 GHz 802.11 b/g/n, and 5GHz a/n/ac services. (There are a limited number of sites where the parties contemplate that only 100 Mbps service will be available.)

In addition to the public WiFi, the company is offering a private network encrypted using Hotspot 2.0. However, this network can currently be accessed only by iOS devices. It will be upgraded to accommodate Android.

Enter Google (Alphabet)

Now called Intersection, the Link project is owned by a consortium including Sidewalk Labs, an Alphabet company, i.e., Google. Previously the project was under a consortium called CityBridge, which included:

  • Titan – specialists in advertising for municipalities, which was the largest payphone franchisee in New York
  • Control Group – a New York technology design firm
  • Qualcomm
  • Comark – a kiosk maker, now operating as CIVIQ Smartscapes

Control Group and Titan merged into Intersection, with Sidewalk Labs. The complete corporate structure is somewhat complicated.

Others involved with the project include: Transit Wireless, which holds the contract to provide mobile access in New York subway stations, and which will be providing fiber connections for Link; and Antenna Design, which designed the kiosks.

Sidewalk Labs has a stated mission “to build products addressing big urban problems.” The Google entity is identified as a minority investor, however, its influence is probably not to be under-estimated.

Advertising – How Big Can this Be?

The backend of the system allows for targeting of ads, and presumably personalization similar to beacon proximity marketing. One of the founders refers to it as, “insight-driven advertising,” (Colin O’Donnell, Founding Partner at Control Group.) The system will obviously have access to browsing activity of individual users, although the company states that it will only use aggregated, anonymized data.

What kind of dollars might we be talking about here? We did a considerable amount of work with a company that was putting kiosks into large malls. The kiosks, which dispensed certain goods also had two screens for ads.

Their assumed ad rate for a 15-second slot was $550 per month, equivalent to about $18.33 per day for a single slot. Using this assumed rate, anyone who cares to do the math can determine that a single kiosk with two screens has the theoretical capacity to generate about $70,000 per day (assuming an eight-hour day.)

The theoretical numbers get staggeringly large very quickly. The $550 rate, by the way, was based on a cost per thousand (CPM) of about $2.50, which was determined using the exact foot traffic of the various malls. In the case of Link, foot traffic per location on city streets can obviously vary tremendously. Also ads in certain locations can command far higher rates (e.g., fashionable shopping district) than other locations. Most authorities, however, seem to peg outdoor ad rates at an average of $2.00-5.00 CPM for billboards.

Looked at another way, with 6000 kiosks, to generate $1B in revenue, each kiosk would have to average about $167,000 per year, or about $14,000 per month. Even allowing for variables such as weather that could cause sharp drop offs in foot traffic and ads, this doesn’t appear to be a very high threshold.

The potential seems to us to be very open ended. Unlike other outdoor ads – on buses or billboards for example – there is user engagement. There can, in fact, be a high degree of interactivity with consumers. They can be invited to respond to messages, offers, discounts, etc., either on the kiosk screen or via their mobile devices (similar to beacons.)

We see a learning process and a number of questions to be answered. Will the advertising be very local and immediate (an offer from the clothing store across the street); will it be very personalized (similar to beacons – see: “Unacast’s Bold Vision – Unlocking the True Power of Beacons” MCE, 7/11/16); or will it be primarily major brands? Will the advertising be based on an auction process, once usage characteristics and volume are known? Will the kiosk capabilities be expanded over time, for example, to actually offer products – as many other kiosks do? These are only some of the questions and possible opportunities.

Our Take: Drawing on 30 Years of Initiatives

Link interests us for several reasons, one of which is that it draws on literally thirty years of different developments and initiatives. These include:

1. Payphones – These were around almost from the inception of the telephone industry and provided billions in revenue per year to the Bell companies into the 1990s. The concept was, since the phones couldn’t move, put phones wherever people were expected to be – some locations like truck stops and airports, were gold mines. Mobile doomed payphones.

2. Telepoint – A little-noticed development that passed into history after a brief flurry mainly in the UK, in the late 1980s-early ‘90s, this involved putting wireless access points in city locations. The access points had about a 300-foot range. The system was low cost and convenient, but had an overwhelming drawback – it required a special handset.

3. Kiosks – Interactive kiosks began to gain widespread use by the mid-1990s. ATMs were the most familiar example. Most interactive kiosks had modems and could offer some level of communications. For example, an early kiosk in the banking industry had the consumer, who sought a small loan, go through a script, while the system was checking the individual’s credit rating in the background. The kiosks brought the touch screen into vogue.

Note how Link has drawn on all of these and brought the resulting offering up to date in the era of the Mobile Cloud and Omnichannel marketing. The location is still at the heart of the offering; the communication combines wireless proximity, i.e., WiFi, and interactive kiosk features via touch screen. The full range of Internet activity is opened up, while the advertising explores new ground in location-based economics.


Visit their website: www.link.nyc