San Francisco-Area Trains Get Fee-Based Wi-Fi

Published April 1, 2009

A pilot project testing high-speed Internet access on portions of the Bay Area Rapid Transit system is expanding systemwide, allowing public transit riders in the San Francisco area to surf the Web, send e-mail, and videoconference when riding the rails or waiting in stations.

The plan, which relies on the private sector and will charge a fee for service, may be a better way to bring broadband to the public than municipal-run wi-fi plans that often have failed—including a program in San Francisco.

“This is a manageable amount of real estate,” said Derek Kerton, principal analyst at the Kerton Group, a telecommunications consulting firm based in Pleasanton, California. “It’s not like trying to provide wireless to an entire town. They have a willing and able consumer.”

Expanding an Experiment

Wireless Internet access will be available on trains under a deal the transit authority, known as BART, struck with Gold River, California-based Wi-Fi Rail Inc. The company began a limited experiment with the system about a year ago, involving underground downtown San Francisco stations and a short stretch of open-air track in Hayward.

Wi-Fi Rail reported seamless service between the stations, even as the trains ran at high speeds. Service was free during the demonstration project, and more than 16,000 users signed on. The 20-year deal BART struck with Wi-Fi Rail to provide riders with fee-for-service high-speed wi-fi Internet access was reached in January.

Once the system is complete, subscribers will be charged about $30 a month, $9 a day, $6 for two hours, or $300 for a year’s subscription, Cooper Lee, CEO of Wi-Fi Rail, said. The service will be offered at reduced rates until the full system is up and running.

At that point BART riders will still be able take advantage of free Internet access—but with a catch. Access will be cut off after 3 1/2 minutes, and users will have to wait through 30 seconds of ads before being able to surf the Internet.

Natural Progression

The company will start charging for use when it completes the next phase of the project, which will include the Transbay Tube and all subway stations in San Francisco and downtown Oakland.

Atlanta-based telecom analyst Jeff Kagan said this public-access wi-fi plan is a natural progression of the market rising to meet demand.

“We are seeing the Internet move onto airplanes and now trains. This makes enormous sense,” Kagan said. “It gives riders access to the Web to work, read, shop, or just surf around. It gives another profit center for BART.”

Long-Term Deal Questioned

Kagan, however, questioned the choice to give a single company an exclusive franchise for 20 years, an eternity in the technology sector.

“What does not make sense is a 20-year agreement,” Kagan said. “[That] is crazy. No one signs up for long-term agreements without an escape clause, because technology changes so quickly. Hopefully there is a way to break the agreement if the technology changes or regulations change.”

While the technology is likely to change, the fiber being used for the project is a viable platform for accommodating other changes in Internet technology over the next several years, according to Kerton.

‘Everything Will Be Different’

The telecom industry should be well aware of the problems with long-term agreements and the way government regulations can cause trouble, Kagan said.

“Just 13 years ago the Telecom Act of 1996 was signed into law, and everyone loved it,” Kagan said. “It set the new rules of competition between the local and long-distance giants and sounded good at the time. But it only took a few years for the Baby Bells to win and to acquire the long-distance giants. The marketplace is very different today. Today the Baby Bells compete with the cable television companies.

“The point is, everything will be different over the next five to 10 years,” Kagan added. “Perhaps this deal will still make sense, but perhaps it will not. It may be like Compuserve or Prodigy. That made sense in the beginning of the Internet revolution in the mid-1990s, but look where we are now.”

Phil Britt ([email protected]) writes from South Holland, Illinois.