San Jose Airport Unveils Free Wi-Fi Service

Published August 1, 2008

Mineta San Jose International Airport has begun offering travelers free wi-fi Internet as an alternative to the paid access previously available at the site. The airport’s decision has raised questions about the legitimacy of a taxpayer-funded institution investing in such a service.

Since May 29 the airport’s users have been able to choose between the new, ad-supported, free wi-fi network, SJCfreewifi, and the previously existing networks without advertisements–T-Mobile and Wayport–which continue to charge users $8 per day.

The airport made an upfront investment of $90,000 to establish the free wi-fi system. Subsequent yearly costs are expected to be $41,000.

The Mineta Airport is expecting revenues from SJCfreewifi eventually to more than cover fixed and variable costs. Denver International Airport established an ad-supported wi-fi network in the fall of 2007 and has found it brings in more revenue than fee-based wi-fi networks.

The Mineta airport purchased 15 megabytes of bandwidth for the free network, expecting it to be more than sufficient to cover user needs. The advertisements for the network will be provided by private firms such as AnchorFree Inc., Clear Channel, and Airport Marketing Income. Airport officials expect the ads to begin appearing about a month and a half after SJCfreewifi’s inception.

Tax Dollars Used

Timothy B. Lee, adjunct scholar at the Cato Institute, notes any taxpayer-funded institution has multiple goals to meet. According to Lee, “to the extent that the government is running the airport, it also has an obligation to ensure that the experience of using the airport is reasonable” in addition to using taxpayer money wisely.

Lee noted free wi-fi access is comparatively inexpensive to deploy, and he suggested its convenience to users might outweigh the setup and maintenance costs. Consumers’ increasing expectation of getting free wi-fi access might be a good reason for public airports to provide it, Lee says.

The Mineta Airport is currently the only one in the San Francisco Bay Area offering free wi-fi. It receives considerable passenger traffic–approximately 30,000 per day and 10.9 million every year. David Vossbrink, the airport’s communications director, believes at least 1,000 people will use the free wi-fi service daily, enabling the airport to more than cover its expenses.

But Lee also noted the airport’s taxpayer-funded status makes it difficult to determine the legitimacy of this use of its money. He said, “I think you can make a reasonable case either way” regarding whether the Mineta Airport should have implemented free wi-fi access. “In an ideal world, you would have more competition among airports and let the market decide the most effective policy on wi-fi access. If an airport is taxpayer funded, I can also see the argument for only charging user fees,” Lee said.

Profitability Questioned

Samuel Bostaph, Ph.D., chairman of the Department of Economics at the University of Dallas, emphasized the impossibility of objectively evaluating the profitability of the airport’s policies because of its taxpayer-funded status.

“Whether they are ‘profitable’ or not is not possible to calculate because the absence of the profit motive and competition makes the opportunity costs of the use of resources for the airport an unknown amount,” Bostaph said.

Bostaph says the fundamental problem lies in the coercive funding behind the airport. He remarked, “taxpayer-supported airports are airports supported by thievery,” irrespective of the policies they implement.

Taxpayer Relief Uncertain

Analysts also question whether a possible profit from the airport’s wi-fi service would decrease the burden on taxpayers anyway.

Governments do not have a good record of relinquishing control of any funds they obtain from taxpayers, Lee notes. “Politicians tend to spend the money they have available rather than giving it back to the taxpayers,” he said.

Lee believes it is possible the airport will simply use any extra revenues from the free wi-fi service to pay for something else, without reducing the amount of money the airport receives from taxpayers.

Nonetheless, Lee expressed hope the airport’s handling of revenues from this service will be the exception rather than the rule. “I certainly hope that the taxpayers will benefit by this,” he said, hoping the new wi-fi service would render the airport more self-sufficient and less dependent on public funds.

Gennady Stolyarov II ([email protected]) is editor-in-chief of The Rational Argumentator, an online magazine advocating the principles of reason, rights, and progress.