VERIZON'S WI-FI EXPERIMENT YIELDS RESULTS

Nine months after its launch, Verizon is hailing its New York free Wi-Fi experiment a success, even though the carrier cut its projected rollout of access points by more than half.

Usage of the service surpassed the carrier's initial expectations, and most important, the service led to a 2% reduction in churn among its New York City DSL subscribers, who receive the wireless service at no charge. Still, Verizon appears reluctant to go beyond its initial experimental phase and is making no plans to expand beyond its Manhattan Wi-Fi testbed.

Verizon's original plan was to blanket Manhattan with 1000 access points concentrated in heavily trafficked areas. As deployment progressed, however, the carrier discovered it was not only getting more range out of any given access point, but also that customers were describing their own usage patterns — which eliminated the need for such a large-scale deployment, said Michael Bolduc, director of products and services for Verizon Broadband Wireless Internet. About 70% of the network's Wi-Fi traffic is originating from only 50% of the phone booth-mounted hot spots.

“We never had the intent of covering all of Manhattan,” Bolduc said. “We wanted to focus on the high-traffic areas. But by December, when we had 430 access points deployed, we discovered that only 50% of them were being really used.”

But those 215 access points were really being used, Bolduc said. While Verizon released no statistics on number of subscribers or volume of traffic, both the number of DSL subscribers that have opted to the try the service and the amount of time they're spending on the network surprised the carrier, Bolduc said. Verizon found itself scrambling to increase coverage in areas it never expected, such as Central Park, he said.

While Verizon is happy to keep the traffic on its own network, the carrier is even more pleased with the effect the service is having on its DSL customers, Bolduc said. Verizon shook up the Wi-Fi world last year by denouncing the notion that there was a separate business model for the technology, choosing instead to experiment with Wi-Fi as a sticky enhancement for DSL customers. Since its launch, churn has fallen by 2%, which, due to the high cost of customer acquisition in a market like New York, more than recovers all cost for operating the Wi-Fi network, Bolduc said.

“In fact, if we had only crossed over 0.6% in reducing churn, we would have been able to justify the subscriber costs,” he said. “We definitely consider this a success.”

However, the rollout may remain nothing more than an experiment as Verizon pursues an aggressive expansion of its CDMA 1X EV-DO network as well as other broadband technologies.