A tremendous blow for businesses providing pervasive WiFi at commercial establishments is how Arthur Goldstuck, MD of World Wide Worx, has described news that VAST Networks will close its doors.
On Friday, Bloomberg reported VAST Networks will go into liquidation, after it “failed to secure new investors”.
Goldstuck says: “WiFi has become all but a hygiene factor at business and hospitality establishments, meaning that people have come to expect it as readily as they do parking and other facilities.”
He goes on to say that in the same way businesses will now have greater cost and complexity in providing WiFi, consumers will face greater cost and complexity in accessing the Internet.
“Given how widely VAST was used, one must assume the company could not get its business model to work. It's a great shame that there seems to have been no way to rescue the business. However, this may well open the way for numerous smaller providers to enter the space, and provide access in a more competitive way.”
Working business model
Like Goldstuck, other analysts believe failure to get its business model to work may have resulted in VAST’s decision to wind down its business.
For Mark Walker, IDC associate VP for Sub-Saharan Africa, failure of industry and the public sector to commercialise a free WiFi service is something that must be overcome as access to Web-based services becomes a critical utility for citizens and businesses.
“Costs associated with implementation and on-going service provisions are prohibitive to suppliers where returns based on traditional business models relying on advertising and data registrations have proven not to be feasible.”
Billed as “Africa’s first truly open access WiFi network provider”, VAST Networks officially entered the market in November 2015.
Formerly known by its interim name Wireless Co, VAST was officially established by bringing together the WiFi assets of market players Mweb and Internet Solutions.
At the time, industry watchers, including the Wireless Access Providers' Association (WAPA), described the launch as a good opportunity to define open access as well as consolidate the WiFi industry.
In 2017, the company even put its name in the hat as a potential suitor looking to take over running of the City of Tshwane’s free WiFi offering.
WAPA’s executive management committee member, Paul Colmer, says it is sad that after 18 months of talks that a sale agreement could not be reached.
“Public WiFi has long been difficult to monetise even with innovations in advertising portals, Facebook login and voucher systems. It now appears that even the innovative WiFi offload deal with Vodacom could not save the day.”
According to Derrick Chikanga, IT services analyst at Africa Analysis, VAST Networks’ model of selling WiFi bundles is in direct competition with mobile data bundles.
However, Chikanga highlights that most consumers weren’t interested in buying WiFi bundles in public hotspots for various reasons that could include not being close to a hotspot regularly enough to warrant a bundle purchase.
“This was the similar case with WirelessG, which sold off its assets to Exmile Technologies in February 2018, after being under business rescue since August 2015.”
Feeling the pinch
Colmer is of the view that many businesses will be affected. This, he says, includes malls, restaurants, airports and hotels.
“...One thing we have learnt from the past is that network collapses are somewhat like bush fires, very damaging but clearing the way for new fresh growth which happens quickly. This fresh growth is always different from the original and hopefully leads to a sustainable model.”
Chikanga offers a different opinion, saying the impact on businesses is likely to be very limited. “The extent of paid-for use of VAST Networks’ products was limited, which has led to its poor financial performance, and other technologies will likely step into its space; [for example], more extensive use of 4G services as coverage expands, quality improves and prices decrease.”
On finding a successful formula in future, Walker advises serious consideration of innovative approaches using public-private partnerships, involving local and international partners.
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