StarBucks announced this week they will start offering free internet in their coffeeplaces later this year. McDonalds already offers free internet in their restaurants. Several hotel chains offer free in-room internet. Internet access is used as an incentive to bring in customers.
Internet access at home is very affordable nowadays. This is also part of the reason why those $10/hour WIFI networks simply do not work anymore. People are not prepared to pay for internet access. It is as cheap as electricity. Know a hotel where you have to pay for your electricity usage?
The major challenge is how the economics around internet access will work out. I see 3 relevant parties on the internet:
- content provider
- network provider
- site provider (physical location of internet access)
The telco’s should better be prepared to become the electricity companies of the 21st century. Their role will be relegated to building and maintaining the network. Content will move more and more outside the reach of the network providers. As long as net neutrality is kept intact there is nothing they can do about it.
The site provider owns the physical location of the internet access point. They pay for making the access point to the internet available.
Value is only created on either end of the internet connection — either by the content provider and the site provider. For most site providers the internet access is a service they provide to their customers. But like StarBucks there is much more opportunity to make money from internet access. StarBucks offers a physical location enabling to mix online and offline marketing. Via affiliate marketing StarBucks can get extra revenue from their internet access point.
Internet wants to be free. In the near future the internet will be available everywhere without or for very low costs. Google gladly wants to pay to get people on the internet. They have to because that is how they make their money. More people on the internet are more people which use their service and see the ads. Google is a content provider and they are not the only one. Amazon, Facebook and all the other major destinations are content providers too and without internet users they cannot make money
The next 5 years will be very interesting. Question is will it be a rocky road — like with the music / movie companies — or will the companies part of the internet ecosystem adapt?