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Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]

This is so cool

I am presently on a Singapore airlines Boeing 747 over Afghanistan, on my way back to London from Australia. The aircraft has in flight WiFi. It is for-pay WiFi, but I could not resist. Looking at the physical geography of the place, I really do wonder what the Soviets were thinking when they thought that they could invade and subdue the country. (And what exactly was the point, anyway? What did they have to gain?)

More importantly than that perhaps was that the WiFi is not really that expensive. I am paying $9.99 for an hour, two hours is $14.95, and it gets cheaper from there. (Up to $26.95 for a 24 hour pass, which would just about manage the entire trip from Australia to England). Given that they are managing WiFi in an aircraft, and some sort of link to the ground (presumably via satellite) I can not really complain about the cost.

Intriguingly, this is actually less than my local Starbucks charges for WiFi access. Given that the total cost to them of offereing the service is one £50 router and a £ 25 a month ADSL connection that they probably have already, I think that somebody has their pricing wrong.

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10 comments to This is so cool

  • Somehow its way cool to be blogging while overflying the bastions of ignorance and savagery that the Taleban still maintain in that poor country. In these horrible times one must not fail to enjoy these little ironies.

  • HJHJ

    Michael,

    You’re confusing cost and price.

    If the airline’s pricing is what is required to maximise revenue and Starbucks are also pricing to maximise revenue, it’s hard to argue that they’re wrong.

    It may be that the cost to the airline is fixed and that they reckon they can make more revenue and therefore profit by encouraging more passengers to use it by offering a good price. Starbucks may find that customers using Wi-Fi block seats without drinking commensurately more coffee, so they have priced their service so that they don’t lose out and to maximise revenue overall.

    Pricing is a strategic issue for companies and is rarely as simple as it seems.

  • mike

    Then again Starbuck’s may not be finding any such thing. Besides I prefer tea – to hell with Starbuck’s.

  • I agree in principle with HJHJ, and have brought this up here before, but then in my local starbucks the price would appear to be set by T-mobile, and certainly not the manager of that particular outlet who seems neither to know nor care what goes on with the wireless.

    One potential strategic issue there is, of course, that T-Mobile happen to provide a mobile network to several million customers in the UK and elsewhere.

    SJG

  • HJHJ

    SJG,

    There are several possible business with Starbucks and Wi-Fi, but if T-Mobile were too exensive, Starbucks could you go elsewhere. On the other hand, Starbucks may have sold the rights to offer W-Fi in ther premises to the highest bidder, let the bidder set the price and then they just collect and pass the revenue on.

  • Julian Taylor

    I find that there are so many belkin54g router users (nigh on impossible to set up good WEP encryption on those POS routers) in the UK that I don’t really have a problem with ‘free’ (i.e. leeched) Wi-Fi access. The day that all routers come with WEP already engaged and a password stamped onto the router case, as British Telecom do with their own-brand routers now, is the day I will start to worry about T-Mobile’s service.

    Michael, that sounds truly amazing – just a shame that you must have been flying so high over Afghanistan that you weren’t in a position to either drain some local Taliban’s wifi access or run a DOS attack on those bastards.

  • HJHJ

    Not sure what you mean, but I will point out that Starbucks don’t in fact collect any revenue. You don’t pay at the counter. The revenue goes directly to T-mobile over their credit card processing system.

    It’s therefore possible that no revenue is collected even indirectly by local managers, which would explain the attitude and lack of competitive pricing Samizatistas have observed. Just speculating…

    SJG

  • HJHJ

    SJG,

    I left out the word “model” after business in my previous post.

    Assuming you are correct, Starbucks will probably have done a deal with T-Mobile whereby T-Mobile pay Starbucks for the right to operate their service in their outlets. If Starbucks had any sense they would have extracted as much money out of T-Mobile for this right as they could get.

  • Patrick

    (And what exactly was the point, anyway? What did they have to gain?)‘ – I dunno, did you see a small body of water just a short tank drive south of Afghanistan’s borders?

  • Eric

    Patrick is right. They wanted (have always wanted) a warm-water port for trade and naval basing. This desire pre-dates the USSR by hundreds of years.