United Parcel Service has decided to dip into the booming public-access WiFi market with a test of the service at 66 of its retail outlets — The UPS Store — in Chicago.
Nick Costides, retail technology group manager at Atlanta-based UPS, said the company will use the Chicago WiFi test, which starts September 16, to gauge customer interest in the service. If demand is there, UPS would then roll the service out to more than 3,000 domestic locations.
UPS operates another 1,000 retail outlets internationally, and Costides said he has an eye on taking public access WiFi global. "Everything we do has a global view," he said.
Memphis-based FedEx , UPS's rival in the package delivery field, has looked at offering public-access WiFi but has seen little customer demand for it, according to Ken Pasley, director of wireless business development for FedEx business services. FedEx isn't pursuing public-access WiFi service at its stores or at customer service counters at hubs or stations because those outlets are essentially package drop-off and pickup sites.
UPS retail operations are built around the Mailboxes Etc. chain UPS acquired in 2001, with most of the locations now rebranded as The UPS Store. Besides offering packaging and shipping services, some UPS stores offer copying and computer rental services. Costides said UPS hopes to use technology such as WiFi to make the stores into "branch offices for road warriors."
UPS said it believes mobile workers, such as sales personnel and repair technicians with UPS national shipping accounts, are a natural target for the service.
Public-access WiFi uses industry-standard 802.11b wireless LAN technology to provide an 11Mbit/sec. wireless connection to the Internet for users within a 100- to 300-foot range of the WiFi access point. Many airports, hotels and restaurants, including the McDonald's chain, have embraced public access WiFi, and Datamonitor PLC, a London-based research firm, predicts an explosive growth in WiFi hot spots, from 31,000 this year to 135,000 worldwide by 2007.
Because UPS retail stores are operated by individual franchise owners, the company needed inexpensive and easy-to-install hardware, Costides said. It tapped the Computer Systems Group (CSG) of Toshiba to provide its hot spot in a box system for the Chicago test. John Marston, U.S.-based vice president of business development at Toshiba CSG, said the company sells its hot-spot hardware for US$199 and provides back-end billing and authentication services through a partnership with Accenture
Toshiba also promotes the service through its SurfHere WiFi network, which also includes Wi-Fi-equipped McDonald's outlets in Chicago.
SurfHere charges a sliding rate for access, from $4.95 an hour to a $39.95 a month, Marston said. UPS plans to use promotional offers, such as a free hour of Web time in return for upgrading a package shipment from ground to air, Costides said.
UPS will piggyback the connection to the Internet through an already-installed nationwide network that serves in-store computers and point-of-sales systems, Costides said. The network uses Digital Subscriber Lines (DSL) with an average throughput of 256Kbit/sec., or in some cases, cable modems.
UPS has isolated and secured the portion of the network that will carry public traffic between in-store systems, Costides said. During peak periods for the in-store systems, managers will be able to cut back throughput on the network carrying WiFi traffic.
Alan Reiter, an analyst at Wireless Internet & Mobile Computing in Chevy Chase, Md., said the piggybacked connection is a key to developing a nationwide WiFi network, but he noted that it's also the most expensive option. WiFi hardware is far cheaper than the continuing monthly costs for a high-speed pipe. DSL service in many areas of the country runs about $40 a month for a 256K to 640Kbit/sec. connection.
If WiFi traffic increases, however, UPS might need to install T1 (1.54Mbit/sec.) pipelines, Reiter said. Covad Communications Group in Santa Clara, California, charges $439 a month for a T1 circuit.