Why starting a Free WiFi Zone in India is so expensive?

We conducted several in-depth interviews with HCID researchers, financial analysts, business modeling experts, Internet service providers, hardware company suppliers, investors, business owners, lawyers, government official, software engineers and network architects to understand why decent public WiFi access is still a huge issue!

The following sections contain summary notes from the market research highlighting information that became relevant for a series of solutions in the later stages of design.

Economic Roadblocks
To understand economic roadblocks it is necessary to learn about the cost components and revenue models involved setting up and operating free (or low cost) Wi-Fi Zones.

Understanding Costs for free WiFi Service Providers

There are many costs involved for Internet (WiFi) Service Providers before starting a free (or low cost) Wi-Fi zone. Different factors such as network architecture styles and business modeling techniques lead to varied costs from one Wi-Fi Provider to another.
A broad classification of the common components of fixed and recurring costs has been illustrated as follows

Cost components for free WiFi zones
Illustration showing break up of cost components for running a legally complaint public Wi-Fi network in India

If the user would not pay for access how do Quasi ISPs and ISPs financially sustain themselves?

The second step was to understand how ISPs and Quasi ISPs were paying for these cost components and financially sustaining themselves while giving out a free service.

Business Model for Free wiFi Networks in India
The following illustration represents how free Quasi ISPs and ISPs financially sustain the free Wi-Fi service.

Understanding financial models of Free Wi-Fi service providers in India.
Free Wi-Fi as a Service
Most cases of free Wi-Fi Zones maintained by Quasi ISPs followed the ‘Wi-Fi as a service’ model. In this model there is no extra charge to the user for accessing/using Internet. It is a part of the overall service or experience. For instance, a cafe that marks up the cost of coffee and offers free Wi-Fi as a service to its customer. However, in a price sensitive market like India, adding a few rupees to the menu often means losing a lot of customers to the competitor.

Hybrid Models
Most cases of free (or low cost) Wi-Fi Zones maintained by licensed ISPs can be classified into (one or combination of) the following three models.

Publicly Funded
The government of India has been taking measures to bridge the digital divide. One key measure is to partner with ISPs to offer free Wi-Fi at public spots. The cost of setting up and running the service is borne partly or wholly by the government.

User Funded Models
In User Funded Models ISPs create two user groups – Free Plan Users and Premium Plan Users. The free plan is usually slow, and limited by time and data download. The premium plan is a paid plan for faster speeds and lesser limitations on time and downloads. The fee received from the premium plan users is used to balance the expenses incurred on the free users.

Advertiser Funded / Data mining
In the recent years advertising has been an alternative way to monetize Wi-Fi Zones. During the sign in process an advertisement is shown to the user. The advertiser pays the ISP who in-turn enables free Wi-Fi for the user. In some cases, ISPs would collect user data such as emails, phones numbers etc. and sell it to advertisers.

Legal Roadblocks
To understand the market conditions completely, along with economic roadblocks, legal roadblocks affecting ISPs and Quasi ISPs were explored.

The section that deeply affects ‘affordability’ and enablement of Wi-Fi Zones
As of 2015, ISPs and Quasi ISPs face a series of economic and technical roadblocks because of one abruptly drafted legal notice published in 2009 by The Ministry of Communications IT (Department of Telecommunications) of the Government of India to all Internet Service Providers in India. The following is an extract from the entire legal notice.

Extract from the legal guidelines by Government of India (DoT, TRAI) that affects Wi-Fi access in India
Extract from the legal guidelines by Government of India (DoT, TRAI) that affects Wi-Fi access in India

To put it simply, it is stated that all public (or guest) Wi-Fi hotspots need a clear user authentication process and a user database management system. This notice lead to a huge technical and economical roadblock in enabling free Wi-Fi Zones in India; the implications of which are discussed below:

Cost Implications of the legal guidelines in India that affects Wi-Fi access
Cost Implications of the legal guidelines in India that affects Wi-Fi access

The requirement practically makes an open Wi-Fi network illegal. Unlike setting up an open wireless network, most small ISPs and Quasi ISPs do not have the technical resources to implement a legally compliant network management system with user authentication and database management.
Implementation of such systems substantially drive up costs as it requires additional hardware, software and skilled talent.
Additional Hardware
Additional server(s) required to store user’s login data (login date, time, IP and MAC address.) for a period of 1 year and run various other network management scripts that track usage activity.

Additional Skilled Talent
Setting up and monitoring such systems/software could mean having to hire additional talent – a network architect, a network solutions agency or someone with wireless networking expertise.
Additional Software and Service: Network Management, User Authentication with SMS Gateway and

Database Management System
Additional software and service is required for network management with user authentication and database management. While there are many open source software packages for network management with user authentication from around the world, the licenses can be extraordinarily expensive in the context of India.
Most network management software authenticates users via an email – which is NOT allowed as per Indian laws. This means the authentication system needs to be connected to a SMS gateway that can deliver the password on the user’s registered cellphone number prior to granting Internet access to him/her.
The user authentication system can also be considered as a ‘login validation system’ for those who want to access the wireless network for free Internet. A database of successfully logged in users is maintained through this system as per legal requirements.
Having an extra SMS gateway and paying for an SMS every time a user who logs in is an absurd cost driver. Along with the Internet service, Quasi ISPs now have to pay for SMS gateways as well. The additional software and service account for largest (fixed and recurring) cost elements for operating free Wi-Fi Zones. In some cases, annual recurring costs for such software and service, and its maintenance would be more than the actual Internet service costs.

Common Roadblocks for Enabling Free (or low cost) Wi-Fi Zones
After gaining insights on the various roadblocks faced by ISPS and Quasi ISPs, the most common (economic and legal) roadblocks that hindered user goals were identified and grouped.
The classification helped ideate upon and develop a series of different solutions to individually tackle the following problems:

Common roadblocks faced by Internet (WiFi) Service Providers
Common roadblocks faced by Internet (WiFi) Service Providers

High Cost of Wi-Fi Network Enablement: Ideate On Bringing Down Costs

With regard to the cost of Internet acquisition and distribution – Costs of commercial Internet, hardware, software etc. is very high and that drives up total fixed/recurring costs for businesses. Due to lack of inexpensive skilled resources it is difficult to set up, manage and audit the wireless network. This is the reason most existing ISPs kept their network open and unsecure.

High Legal Risks: Ideate On Creating an Open Source User Authentication System with Database Management System for WiFi Zones in India

We found out that many small Quasi ISPs lacked the right technologies for a clear user authentication. In case of a cyber-crime attack, the owner of the Internet connection would be penalized and would have to bare the liabilities on behalf of the user(s) as per Indian laws. Often, the penalty can be high enough for the businesses to go bankrupt.

No Clear Revenue Plan to Meet User Goals: Ideate On Sustainable Revenue Models

Monetization by service means the prices of their products or services go up. Monetization by user means breaking the overall venue experience and overall user goals. The wireless network would generate far too little digital inventory for advertisers to be interested hence making it difficult for ISPs or Quasi ISPs to monetize completely through ads.

By understanding identifying and isolating problems we began ideating on a series of solutions here at Muft Internet. If you’re an ISP that needs legal or technological help in starting a WiFi zone in India – call us on +91 80802 40000. 



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Would you like to increase your customer base by proving free wifi at your bar, cafe or restaurant?
We are looking for public places where we can to test out our technology.

Dear Bar/Restaurant/Cafe Owners in Mumbai,
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What happens when everyone becomes a cellphone zombie?

As HCI researchers, a lot of us believe that computing should exist and not computers.

“Technologies have a life cycle, says Donald A. Norman, and they must change as they pass from youth to maturity. Alas, the computer industry thinks it is still in its rebellious teenage years, exalting in technical complexity. Customers want change. They are ready for products that offer convenience, ease of use, and pleasure. The technology should be invisible, hidden from sight.

In this book Norman shows why the computer is so difficult to use and why this complexity is fundamental to its nature. The only answer is to develop information appliances that fit people’s needs and lives. To do this, companies have to change the way they develop products. They need to start with an understanding of people: user needs first, technology last—the opposite of how things are done now”
The Invisible Computer | The MIT Press.

Contest: $60,000 prize for Localization of Apps

The Innovation Challenge in India supports’s vision of a connected world by recognizing those who are working to make the internet more relevant to women, students, farmers and migrant workers in India. Our goal with this challenge is to encourage the development of apps, websites and online services that provide real value for the members of these important communities.
One Innovation Challenge Award prize in the amount of $250,000 USD will be presented to the app, website or service that the judges determine best meets the needs of one of the four designated population categories: women, students, farmers and migrant workers (four awards total). Each of the Innovation Challenge Award winners will also be eligible to receive a package of tools and services worth up to $60,000 USD from Facebook’s FbStart program.
In addition, two apps, websites or services designed for each of the four specified population categories will receive an Impact Award prize in the amount of $25,000 USD (eight awards total).
All entries must be received by January 31, 2015. Winners will be announced at Mobile World Congress, which will take place during the first week of March 2015.
Your entry should include:
  • The full legal name, mailing address and phone number of the individual, organization or group submitting the app, website or service. If you’re submitting as an organization or group, also include the name, email and phone number of a contact person.
  • A project brief (summary) that includes: team background, project goals, target audience and size, and plans for rollout and language support. You may also include screenshots or other images of your project in your summary, if applicable. The summary should be no longer than 2,000 words, and can be submitted either in the body of your email, or as a link or attachment.
  • App installation and usage files (attached or as a separate URL), along with instructions for installation and usage, if necessary.
  • A signed copy of the Challenge rules, as an attachment.
  • Optional: You may also choose to submit a video about your project. Your video should be no longer than 5 minutes and must be included as a link (no attachments).
1. Who is eligible to participate?
Individuals, organizations, and groups around the world are eligible to participate so long as their applications, websites or services are designed to meet the needs of Indian women, students, farmers and/or migrant workers. (Note: Residents of countries where the United States has trade restrictions will not be eligible. See rules for details.)
2. Does it matter what platform I’m using to develop my app?
You may develop your app, website or service on any platform, so long as it will work on a mobile phone. Keep in mind that the platform you choose will affect your application’s potential reach and this will be factored into the judging (mobile web is more widely available than iOS, for example). If you’re looking for a hosting platform, Parse offers application tools and limited hosting free of charge.
3. What if my app isn’t in English?
Your entry and all accompanying materials need to be in English, but the app, website or service itself can be in any language. We encourage you to to provide local and multilingual support.
4. Does my app have to be finished?
Your app, website or service must be in a working state, not simply a prototype. If it isn’t already publicly available, be sure to include the timeline for public launch as part of your entry.
5. Who are the judges?
A diverse global panel of technology leaders will be judging the competition:
  • Dr. Avneesh Agrawal, President, Qualcomm India & South Asia
  • Arun Bansal, SVP & Head of Radio, Ericsson
  • Chris Daniels, VP,
  • Ameet Suri, Partnerships Manager,
  • Raj Talluri, SVP of Product Management, Qualcomm
6. How will you choose the winners?
Entries will be judged based on innovation, impact, scalability and launch-readiness.
  • Innovation: How original, groundbreaking or creative is the app, website or service?
  • Impact: Will the app, website or service impact numerous lives in meaningful ways?
  • Scalability: Does the app, website or service scale technically? What percentage of the designated population will it reach? Is the content localized? Is multilingual support available?
  • Launch-readiness: How soon will the app, website or service be publicly available, beyond prototypes and limited trials, if it isn’t already? If it’s already publicly available, how stable and consistent is its performance?
Selection of winners will take place at the judges’ sole discretion.
7. How will winners be notified?
Winners will be contacted by email in late February, approximately one week before the public announcement. Due to the large volume of submissions we’re anticipating, only winners will be notified once selection has taken place.
8. Can I enter more than once?
If you have more than one app, website or service that serves the needs of one of the designated populations, you may absolutely enter more than once. However, a maximum of one prize will be awarded to each individual, group or organization.
9. What if I have more questions?
10. How can I get up-to-date info about the Innovation Challenge?