Cometa’s Wi-Fi Clients Left Scrambling

Cometa Networks’ announcement that it is suspending operations has its former clients—and the providers who court their business—scrambling to pick up the service.

Click here to read more about Cometa’s decision to pull the plug on Wi-Fi.

Peter Hoedemaker, vice president of retail at Tully’s Coffee, said Tully’s is actively looking for alternatives. “Everybody is still trying to figure out the economics of [Wi-Fi],” he said.

“The issue is, where is the revenue stream? We thought that since Cometa had AT&T, IBM and Intel behind it, they would have enough manpower and funding to make a go of it,” Hoedemaker said.

Speaking with eWEEK by phone last week as he was leaving a meeting with AT&T, Hoedemaker said he wasn’t certain that AT&T, a stakeholder in Cometa, would step into the void left by the company.

“With AT&T’s current deal pending with Cingular, I think they’re going to be slower to move in this market,” he said.

Still, there’s no shortage of potential replacements for Comet, he said. “Everybody’s looking at this opportunity. I’ve had between 50 and 100 phone calls since Monday from people who would like to provide some sort of service.”

Has Cometa given its former clients any sort of transition plan? “Zero,” Hoedemaker said, adding that Tully’s is definitely looking for someone to pick up the Wi-Fi service.

“We’re no different than the rest of the retailers looking at this—we’re selling coffee, so this is not a primary driving business for us. But we have the real estate, the ability to market the service, and a million customers a week coming through our doors.”

The main concern in any transition to a new provider, he said, is the confusion caused when customers who have already bought service have to come back in and sign up all over again.

Cometa public relations spokeswoman Jennifer Gehrt, of PR firm Knowledge Anywhere, said the company is still trying to formulate a transition plan for its customers.

“In the coming weeks, Cometa is committed to making the transition as smooth as possible,” she said. The decision to close Cometa came so quickly, she said, that management has not yet had the opportunity to come up with a plan.

Gehrt said McDonald’s award of its entire Wi-Fi installation to Wayport did not have anything to do with the decision by investors to end funding of Cometa.

She said it was purely based on what the perceived return on capital would be from a nationwide rollout of the company’s network.

Greg Waring, a lead member of McDonald’s Digital Innovations team responsible for hot-spot service, said the company selected Wayport over Cometa based on “the strength of its overall offering and the neutral way in which it does business.”

Wayport has signed a variety of roaming agreements that allow subscribers of partners’ services to access those services through Wayport hot spots.

Click here to read more about troubled trials of wireless technology at McDonald’s.

Cometa appeared to be headed for rough waters even before it lost the McDonald’s deployment. AT&T withdrew its backing of the venture in March, saying that the wholesale hot-spot market was not a business model it wanted to pursue.

That model has had its share of troubles. Last year, Verizon Communications lowered its ambitions to deploy public Wi-Fi service through pay phones in New York City when it announced it would drastically scale back an earlier plan to deploy Wi-Fi service through pay phones. The endeavor would have unwired about 300,000 pay phones in New York.

Commercial hot spots are also under increasing pressure from freely accessed public hot spots operated by community organizations around the country, such as NYCWireless, which operates 193 public nodes around New York City, and SF Wireless in San Francisco.

Cometa’s demise is the most recent casualty among public Wi-Fi providers. Others that tried and failed include MobileStar, Joltage and HereUAre.

MobileStar slid into bankruptcy in 2001 after deploying 600 hot spots in Starbucks coffee shops. That network was ultimately consumed by T-Mobile which now includes hot-spot offerings in its menu of services.

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