FRAMINGHAM (09/15/2003) - United Parcel Service (UPS) Inc. next week will dip its toe into the public-access Wi-Fi market by launching a test of the wireless technology at 66 of its retail packaging and shipping stores in the Chicago area.
Nick Costides, retail technology group manager at Atlanta-based UPS, said the company plans to use the Wi-Fi test to gauge customer interest in the service. If there's enough demand, UPS will roll out Wi-Fi services at more than 3,000 U.S. locations.
Costides is also looking at making Wi-Fi access available in the 1,000 UPS retail outlets that are located in other countries. "Everything we do has a global view," he said.
UPS will piggyback Wi-Fi connections to the Internet on a nationwide network that serves its in-store computers and point-of-sales systems, Costides said. The network uses DSL links with an average data throughput of 256Kbit/sec., although some cable modems are also used.
Data Traffic Separated
Costides said UPS has isolated and secured the portion of the network that will carry public Wi-Fi traffic from the part that transmits corporate data. During peak usage periods for the in-store systems, the company's network managers will be able to cut back on Wi-Fi throughput to avoid performance hits, he said.
Alan Reiter, an analyst at Wireless Internet & Mobile Computing in Chevy Chase, Maryland, said the piggybacked connections planned by UPS are a key to developing nationwide Wi-Fi access capabilities. But that's also the most expensive option, he noted. And if the service is popular, UPS might need to install T1 pipes with 1.54Mbit/sec. transmission rates, Reiter said.
Wi-Fi setups use 802.11b wireless LAN technology to provide 11Mbit/sec. connections between users' laptop PCs and wireless access points. Datamonitor PLC, a market research firm in London, predicts that the number of Wi-Fi hot spots worldwide will grow from 31,000 this year to 135,000 by 2007.
UPS rival FedEx Corp. has considered offering public-access Wi-Fi to its customers but has seen little demand for the technology thus far, said Ken Pasley, director of wireless systems development at the Memphis, Tennessee-based company. He noted that FedEx's retail locations and the customer service counters at its shipment hubs are essentially package drop-off and pick-up sites.
UPS's retail operations are built around the Mail Boxes Etc. chain that the company bought in 2001, with most of the locations now rebranded as The UPS Store. Costides said UPS hopes to use technology such as Wi-Fi to turn the stores into "branch offices for road warriors."
Because the stores are operated by franchisees, UPS needed hardware that was inexpensive and easy to install, according to Costides. The company tapped Toshiba Corp.'s computer systems group to provide a hot-spot-in-a-box system for use in the Chicago trial run.
John Marston, Vice President of Business Development at the Toshiba unit in Irvine, California, said its hot-spot hardware costs US$199 per access point. Toshiba also provides back-end billing and user authentication services through a partnership with IT consulting firm Accenture Ltd.