Steven Landsburg wonders in Slate why some hotels offer free wireless service and others charge for it. His preliminary explanation relates to legal price discrimination, but he can't quite make sense of it.
The reason may be because he assumes there is a rational reason for it. Hotels simply haven't figured out where wireless internet fits into their overall offering - is it a necessary feature, such as a TV, soap or a bedside phone? Is it an optional amenity, such as the beer and nuts in the minibar? Or is it one of those weird things only a few guests want, like shoe polishing services?
My guess is that they haven't figured out how to source it, either, so they're probably paying some third party some ridiculous amount for a service that is utterly lacking in transparency (hint: there may be a business opportunity here).
It seems to me only a matter of time before people who need wireless access everywhere will have ubiquitous access for a flat monthly fee, whether it's through GPRS, WiMAX, or some future G solution. Local 802.11 is a bridge technology to that future, and possibly an avenue to ultra-highbandwidth.
The thing is, though, that it is very inexpensive for hotels to provide local wireless connectivity. Let's say they have to pay $300/month for pretty damn good internet connectivity, and another $4,000 to buy and set up the towers to get good coverage. This adds practically nothing to the fixed costs of running a hotel, and if they wanted to pass it along in room rates, it wouldn't add much.
They may obtain price discrimination by charging for it separately, but in doing so they ignore the fact that price elasticity for rooms is different from price elasticity for internet connectivity, simply because business travelers will more often get reimbursement for their hotel room (with whatever amenities are included) than for the daily internet connectivity.
It's my view that hotels might as well accept internet connectivity soon will become a necessary feature the way curtains are. And worry about providing it well and inexpensively.
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