About Boingo Wireless
Founded in 2001 as a pure-play Wi-Fi aggregator when the nascent technology was just beginning to gain traction among business travelers as IEEE 802.11b. It soon became a default option in laptops and eventually found its way into other consumer devices. When Apple launched the original iPhone in June 2007, the Wi-Fi and cellular worlds changed forever.
The advent of user-friendly smartphones put a powerful computer in everyone’s hands that relied more on Internet access than its ability to make phone calls. Data consumption began to climb and the increasing demand took a toll on networks. Cellular 3G data networks struggled with capacity issues. Public Wi-Fi networks struggled with device proliferation that taxed infrastructure. Even LTE upgrades provided only temporary relief as more people and more devices demanded more data.
This data explosion creates an ideal environment for service providers like Boingo to supplement available data networks with small cell networks that recycle available wireless spectrum — both licensed and unlicensed — to increase available data capacity. In-building DAS and Wi-Fi networks enhance data performance in places where user density or physical structures impede traditional networks. They both put the network closer to the user to provide a better user experience.
The Big Picture
In order to build out these networks, Boingo acquires long-term wireless rights to large-scale venues like airports, stadiums, universities and military bases. These contracts typically run 5 to 10 years, and allow us to deploy and monetize the network through wholesale sources, like carrier build fees, carrier access fees, roaming fees, and licensing; retail products, like Wi-Fi, Broadband and IPTV; and advertising and sponsorship. In 2013, wholesale made up approximately 47% of the company’s total revenue, while retail revenue came in at approximately 42%. The remaining 11% came from advertising and sponsorship revenue.
Distributed Antenna Systems (DAS)
In 2006, Boingo acquired Concourse Communications. Concourse had been building DAS networks since 1998, when it was primarily a voice service enhancement for buildings where cellular signals couldn’t penetrate from the outside. With the explosion of smartphones and the corresponding data tsunami, the role of DAS networks has expanded to ensure that mobile data performance can keep pace with demand. Boingo has capitalized on this shift, increasing the number of DAS deployments in airports, stadiums and universities, as well as unconventional locations like the Lincoln and Holland tunnels in New York City. DAS networks generate revenue from carriers through the build process, ongoing network access fees and upgrade cycles. As data demand continues to skyrocket, we see increased interest from mobile carriers to deploy DAS networks, and as a neutral host operator we have one of the industry’s highest average carrier tenancy rates.
As more and more network-enabled devices are shipped, Wi-Fi has emerged as the most cost-effective way to supplement data capacity. The mass adoption of Wi-Fi by users fuels demand for more networks in more places. As the world’s leading provider of Wi-Fi in airports, Boingo has seen the number of devices trying to access Wi-Fi increase exponentially over the last few years. This explosion requires upgrading networks from coverage designs (which “cover” the square footage with the fewest access points) to density designs (which maximize the number of devices to provide ample throughput for a much larger number of devices). This shift enabled us to deploy state-of-the-art networks that are Hotspot 2.0-enabled, giving subscribers the best possible user experience with seamless login to a secure network. Hotspot 2.0 also gives carriers an industry standard method of offloading mobile customers to the Wi-Fi networks to better manage capacity and cost issues. This is an important part of the Wireless Broadband Alliance’s Next Generation Hotspot program. As a member of the WBA Board of Directors since 2010, Boingo has played a prominent role in bringing Hotspot 2.0 to market to maximize Wi-Fi accessibility and improve the customer experience.
More than 1.5 billion people per year pass through venues where we manage the networks, and we help keep them connected on-the-go. Recent research claims that the average person carries 2.9 devices when they travel. That makes for more than 4 billion devices per year passing through some of the highest-trafficked airports and stadiums in the world. And not only is the number of devices exploding, but the types of data consumed is changing, too. A business traveler historically sat at the gate with a laptop, checking email one last time before the flight and maybe catching a few headlines. Today, an entire family may get connected on different devices, each consuming a different multimedia or streaming media source — Netflix, Pandora, Facebook, Instagram. More people on more devices consuming more data generates a tremendous demand for Boingo’s services in the places where large numbers of people gather.
The explosion of smartphones and the exponential data burden they place on the legacy mobile networks creates a tremendous growth opportunity for Boingo to increase DAS buildouts, which generate revenue in the build, operation and upgrade stages of deployment. By placing mobile networks closer to the user and recycling spectrum in-building, Boingo helps carriers better manage the data capacity crunch. This is especially true for the large-scale, high-density locations Boingo specializes in — airports, stadiums and universities.
While retail Wi-Fi – where end users pay for Wi-Fi access directly – historically represented about 50% (or more) of Boingo’s revenue, the market shift to free-to-the-user Wi-Fi sponsored by major brand advertisers created an opportunity to grow revenues from advertising. Boingo Media’s value proposition is simple. Exchanging a guaranteed brand engagement for complimentary Wi-Fi is a win-win-win: Venues are able to provide free Wi-Fi to their customers; Advertisers reach a desirable audience of mobile, affluent professionals; and consumers receive free Wi-Fi – named by J.D. Powers the most important amenity for travelers. Boingo’s media platform can even be deployed on networks not managed by the company, so the advertising business can grow in conjunction with Boingo’s wireless rights acquisition in new venues, and it can grow in parallel as they secure advertising service contracts with other network owners.
Boingo acquired a small company in early 2013 that had a contract to deploy broadband and IPTV on Marine Corps bases in the Western US, along with a state-of-the-art TV satellite earth station and a remarkable point-to-point wireless network for distributing Internet and TV services from building to building without digging trenches. In the fourth quarter of 2013 – on the strength of those core products – we secured 10-year contracts to deploy residential broadband and IPTV services across Army, Air Force and Marine Corps bases both domestically and abroad. Boingo is currently in the process of deploying tens of thousands of access points across dozens of bases that cover hundreds of thousands of beds. This presents a significant growth opportunity for our retail business, which is driven by end user paid fees.