Gowex’s demise will strengthen the wico opportunity

In the increasingly animated world of wireless concessions, news that wifi provider Gowex has filed for bankruptcy comes as a shock to many. With the company offering services in 91 cities including New York, Bordeaux, Madrid, Santiago de Chile and Dublin, the move will clearly have major repercussions for city authorities around the world, not least in Edinburgh, Newcastle and Gateshead where wireless concession agreements with the Spanish-based company were announced earlier this year.

According to reporting from Reuters, Gowex filed for bankruptcy on Monday 14 July because it was in a state of “imminent insolvency” and faced a “financial standstill” after a high number of contracts were ended and new projects cancelled. This followed news reports the previous week that Former Chief Executive and Chairman Jenaro Garcia Martin had said he had misrepresented the financial accounts for at least the last four years. He is now facing the prospect of a prison sentence.

Gowex’s relatively recent entry to the UK market had been a boost to the sector bringing in a large international player with an installed wifi base, the experience to match and a strong smart city play. Gowex added to the pot of potential wico suppliers, no doubt helped sharpen competitive tendering negotiations and extended the range of business models on offer.

Now things look messy with Reuters reporting that the financial and management situation at the company remains unclear and we feel for the employees and customers caught up in developments through no fault or involvement of their own. Indeed it may prove to be a lengthy and cumbersome process for those councils currently contracted to Gowex to extricate themselves from wireless concessions, especially if they have to wait for a definitive release from Gowex itself.

On the positive side this sad news does lend weight to the argument that stand-alone free wifi is not the way forward for local authorities looking to bring better connectivity to their citizens. The business model for free wifi has always been problematic, as experienced by a number of local authorities in early deployments within the UK. Councils are increasingly taking note of the commercial world which treats wifi as one element of a wider strategy. The likes of O2 WiFi, The Cloud (BSkyB) and BT Wifi, use the technology to support existing customers from other lines of business, while food and retail outlets leverage wifi as a means to increase footfall and visitor dwell time.

Free wifi is not the be all and end all. It is the combination of wifi as one element alongside others that is the answer for local authorities looking to implement a comprehensive and longer term digital strategy. A wireless concession should be about using public authority assets for a range of benefits, whether developing small cell sites for mobile providers, ensuring mobile traffic off-load, developing new wifi sponsorship approaches and ‘big data’ usage, or connecting business parks and community centres. These elements feed off and support one another.

It can be argued the UK has got off lightly with Gowex pulling the plug before further concession wins and therefore further investment in time and infrastructure takes place. Gowex’s demise is essentially a wake-up call for local authorities and wico suppliers alike to develop new approaches and integrated business models to deliver a holistic digital strategy that adapts and develops over the long-term. With this thinking at its core, the wifi opportunity remains as strong as ever.

Point Topic will continue to track developments and announcements as wico coverage and apps develop. If you see anything you think is interesting, please let us know. Our Wireless Concessions report, co-produced with Regional Network Solutions, was published on 30 May 2014.