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The hidden costs of public Wi-Fi

How much are you willing to spend online for the privilege of using complimentary Wi-Fi while you're shopping?

By MSN Money Partner May 23, 2012 1:17PM

This post comes from Quentin Fottrell at partner site SmartMoney.


For many people, Wi-Fi costs a cup of coffee. But as five major cable operators band together to spread free Wi-Fi across the country, some experts say consumers may end up buying everything from manicures to a pair of jeans in order to get online.


Image: Man with laptop (© Ken Seet/SuperStockThe cable operators plan to create a nationwide service called "CableWi-Fi" to give customers access to each other's wireless Internet hot spots. Existing customers of Time Warner, Comcast and Cablevision, Cox Communications and Bright House Networks will have access to more than 50,000 hot spots.


People will be able to access free Wi-Fi outside of their home and office, and even outside their state, says consumer advocate Edgar Dworsky. "It's almost like saying that a movie pass you have for AMC Theaters will also be accepted at Showcase Cinemas," he says.


But it's not an entirely altruistic move by the retail outlets offering the Wi-Fi, analysts say. There are thousands of clothing stores, salons and amusement arcades that want to lure cable customers with free Wi-Fi so they stick around and buy more, says Steve Herz, president and founder of New York-based marketing firm IF Management. (Post continues below.)

"The $3.86 you may spend on that Frappuccino at Starbucks may look like a huge bargain when you factor in what you might spend elsewhere," he says. While some retail outlets are already using celebrity events to build customer loyalty, Herz says free Wi-Fi and comfy chairs are still the simplest and easiest way to keep customers browsing.


Cable companies also have less selfless reasons for cooperating, tech pros say. They don't want customers to forsake them for other television and movie streaming services like Netflix, Hulu and Apple TV, says technology analyst Jeff Kagan.


"Cable companies need to give customers reasons to stay cable television customers," he says. (The cable operators did not respond to requests for comment.) "It may not be profitable, but there's a lot of value in giving customers what they want," Kagan says.


Cable companies also need to catch up with AT&T, he says. In 2008, AT&T became a leading player in public Wi-Fi after snapping up Internet company Wayport, which serves Starbucks and McDonald's.

To be sure, the new hot spots will also help discourage people from logging onto "unencrypted" rogue public networks and getting hacked, says Chester Wisniewski, senior security advisor at online consultancy Sophos.


Before logging onto any public Wi-Fi service, he advises consumers to always check with the retail store first. For instance, Wisniewski says most people would never think of asking if a network called "Starbucks Guest" is an official public Wi-Fi service rather than an interloper looking to capture all of your personal information. To be 100% safe, he says, "Always do your online banking at home."


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