McDonald's Wi-Fi Deal Is A Loser

Wayport's hotspot plan for McDonald's is a stroke of genius that, first time out, is likely to fail. That's my take, even after SBC signed a roaming agreement enabling its customers to use the hotspots Wayport is putting into McDonald's restaurants. While Wayport's plan is brilliant, it fails to take into account one key factor: McDonald's is not a hotspot kind of place.

After winning the competition to install hotspots in as many as 6,000 McDonald's restaurants, Wayport announced an innovative marketing scheme with two key elements. First, Wayport is charging roaming partners like SBC on a per-restaurant basis instead of per-connection, as has been the norm. Second, vendors that provide backhaul services from the restaurants to the backbone, which in this case also is SBC, get in-store advertising for their broadband services, which is much more of a mainstay of SBC's business than hotspots.

This is as close to a win-win-win marketing scheme as I've ever heard of. Charging by the restaurant gives Wayport a steady stream of income and incents roaming partners like SBC to market the hotspots aggressively. That's because, the more people that use the hotspots, the more money the roaming partner makes. Plus, SBC gets a free advertising venue for its broadband service. McDonalds theoretically does well because SBC is driving customers to the restaurants to use hotspots.

The brilliance of this scheme is important because hotspot vendors have been desperately looking for a business model that works. I believe that this model can work -- but not at McDonald's.

The Wayport and SBC marketing types waxed eloquently in their press release this week about the ubiquity of McDonald's and its high level of brand recognition. But they apparently didn't try to use their laptops while eating a super-sized meal on a tiny table in a noisy restaurant. It's hard to envision a lot of businesspeople using McDonalds for access and a meal if there are hotspots nearby in more comfortable venues such as coffee shops. And it is businesspeople who use hotspots -- they haven't caught on yet with consumers.I may eat crow (or even worse, a Big Mac) about this in a year or two but, despite the brilliance of Wayport's idea, the venue for the hotspot has to make as much sense as the business plan behind it. In this case, it doesn't.

David Haskin is the editor of the Mobile Pipeline.