Firm taps a new Internet frontier
By Simon Avery
Associated Press
LOS ANGELES — Sky Dayton made his name by streamlining the complicated business of delivering the Internet to homes. His 1994 startup, EarthLink Inc., has grown into the country's largest independent Internet service provider, with nearly 5 million users.
Associated Press
The 30-year-old entrepreneur now wants to bring high-speed access to travelers as they move between coffee shops, airports, hotel lobbies and any number of other spaces equipped with wireless networks using the dominant Wi-Fi standard.
Sky Dayton, the founder of EarthLink Inc., is hoping to copy the formula he used to build the successful independent Internet service provider firm at his latest venture, Boingo Wireless. He is backed by $15 million in venture capital.
His latest venture is Boingo Wireless Inc., a Santa Monica, Calif., startup with $15 million from venture capitalists New Enterprise Associates and Evercore Ventures, and from wireless carrier Sprint PCS and other smaller investors.
"We are at the new frontier of the Internet. This is frontier number two," said Dayton, who put an undisclosed amount of his own money into Boingo and serves as chairman and chief executive.
Wi-Fi, technically known as 802.11b, operates on the same unregulated radio spectrum used by the newest cordless phones. It can dish out data at speeds up to 11 megabits per second, which is about 200 times faster than a dial-up modem.
Users require laptops with Wi-Fi capability — PC cards sell for less than $100 while some higher-end portables have it built-in. They also need software that tells them when they are in range of a Wi-Fi signal.
Boingo's software package, currently available only for Windows desktop operating systems, finds the network, handles user authentication, and provides security and billing.
The wireless signal is generated by a special Internet-connected hub and can reach a radius of about 300 feet.
Wi-Fi service scattered
While Wi-Fi is becoming more common, the networks are scattered about the country in an unpredictable manner. The decentralized approach has led to several big failures.
Dayton wants to copy the lucrative formula he used at EarthLink and pull together the provider market, while leaving the actual building and operation of the expensive infrastructure to wireless phone companies.
On Jan. 21, Boingo began serving as the single point of contact for 400 Wi-Fi "hot spots" across the country, including airports in Austin, Texas; Dallas; San Jose and Seattle, and various hotels run by Four Seasons, Hilton, Marriott, Sheraton, Radisson, and Wyndham.
Several hundred more locations will follow in the weeks ahead, the company said, including airports in Atlanta, Chicago, Philadelphia, Baltimore, Washington, D.C., and Boston.
Boingo offers consumers several pricing plans, which range from $7.95 to $74.95 a month depending on the amount of time used.
So far, the firm has announced strategic partnerships with eight service providers, including Hawai'i's Pacific Direct Connect.
Martin Reynolds, a Gartner Group research fellow, predicts Boingo will drive more wireless users into the fold by making Wi-Fi locations more common.
At the moment, most business travelers, including himself, balk at handing over credit card information to different service providers as they move between airports and hotels.
Boingo's target market is some of the 27 million business travelers who carry laptops. These voyagers frequently scramble to access e-mail between flights, using pagers or public phone lines.
"Getting an attachment on your (old) modem connection can mean missing your flight," Dayton says.
Development may be slow
While most analysts agree there is a future for Wi-Fi local area networks, they say a comprehensive system won't develop overnight.
Allen Nogee, an analyst with Cahners-Instat in Scottsdale, Ariz., said Wi-Fi networks will gain validity as the major wireless carriers get more involved.
Already, VoiceStream Wireless, a subsidiary of Germany's Deutsche Telekom AG, has entered the fray with its recent purchase of most of the assets of MobileStar.
In addition, handset makers Nokia and Ericsson are building phones that support both Wi-Fi and the next generation standard for wireless phones, called 2.5G, which is designed to handle voice and data. As well, Wi-Fi cards are already available for Palm handhelds.
However, Boingo does not currently offer software for the Palm or Microsoft PocketPC operating systems for handhelds — or for the Mac.
Dayton's success at EarthLink is helping Boingo's launch but won't be enough by itself to make the company successful, analysts said.
In 1994, Dayton and partner Reed Slatkin created EarthLink using just 10 modems. A year later, they had revolutionized the ISP business by offering the first flat-rate Internet service for $19.95 and were providing access in nearly 100 U.S. cities.
Slatkin later became an investment manager and is under investigation by the Securities and Exchange Commission for an alleged scheme that bilked 800 investors out of $593 million.
Dayton has remained chairman of EarthLink, which reported $1.2 billion in sales last year after merging with Atlanta-based MindSpring Enterprises in 2000.
His track record has not been perfect, however. The business incubator he formed with former Walt Disney executive Jake Winebaum, eCompanies, is now just a holding company. Its biggest splash was Business.com, a search engine and directory that spent a whopping $7.5 million for its Internet domain name.
"Dayton's reputation brings him investment money. It doesn't bring him customers," Reynolds said.
The key to Boingo's success will be building a critical mass of wireless ISP partners. If it can do that fast enough, the firm could become an attractive buyout target for a major wireless carrier, he said.
