If wireless Internet access were like candy, ICOA Inc. would be like the people in a parade throwing it to the crowd.
The Warwick-based company, which started out 23 years ago selling pay-per-use fax machines in airports, marinas and other public places, still caters to clients who want to charge for broadband Internet access and Wi-Fi service.
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But increasingly, it’s finding success in setting up free Wi-Fi networks.
For ICOA’s clients, such as Panera Bread, a national chain with more than 850 bakery-cafés, including five in Rhode Island, it’s a way to draw customers and build their loyalty.
“I’m a strong believer in the ‘no-pay’ model,” said George Strouthopoulos, chairman and CEO of ICOA, which now employs 39 people.
“The usage is 10-to-1 higher” when the service is free, he said, and “it allows the local customer to attract more people. They attract more customers.”
Panera Bread has been offering free Wi-Fi – installed and managed by ICOA – at its cafés since 2004, gradually adding it at sites across the country, so that now it’s offered at more than 800 sites.
“At first, we would see a couple people using it in our cafés,” said Tanya Harms, director of marketing for the Panera Bread franchise in Rhode Island, southeastern Massachusetts and eastern Connecticut.
Within the past few months, Harms said, she’s been noticing as many as seven or more people with laptops at a time in Panera restaurants. “I think more people are starting to know we offer the free Internet access, so they’re seeking out Panera Bread.”
In addition, the free Internet service “encourages them to stay as long as they want,”
Harms said. Some purchase multiple items, such as a coffee or pastry, and if they stay long enough, they might purchase a meal.
“The biggest growing part of our business is what we call ‘chill time,’ ” she said, the periods from 9 to 11 a.m. and 2 to 5 p.m. “That’s when we see people coming in with laptops.”
Building free networks has helped ICOA to sharply increase its revenue – it was up 75 percent in the second quarter, to $767,590, from $438,729 in the second quarter of 2005.
Strouthopoulos said shifting the company’s focus to the Wi-Fi market three years ago has paid off. Since then, ICOA has gained long-term contracts to operate and manage more than 1,800 wireless Internet installations in 45 states, he said. “We own most of them.”
Owning the installation means ICOA purchases and installs the wireless hardware, he said. The only thing ICOA’s customer pays for is the high-speed Internet connection (usually through cable, satellite or telephone lines), which is provided by a carrier such as Cox Communications.
ICOA also provides 24/7 technical support to users, through its call center in Warwick. Strouthopoulos said the company installs Wi-Fi mostly in airports, marinas, restaurants, supermarkets, hotels, RV parks and resorts, because those are the markets where it already had a presence before shifting into the Wi-Fi market.
“We had a strong presence there,” he said. “They knew and trusted us. That was key.”
Before providing Wi-Fi in such locations, ICOA had installed and managed pay-per-use “payfax” machines, Strouthopoulos said. When the Internet became popular, the company switched to installing and operating pay-per-use Internet kiosks.
He said the company moved its headquarters from Nevada to Rhode Island in 1991, when it acquired GOFAX, a company founded by Strouthopoulos. GOFAX specialized in installing “payfax” machines, which it had placed in about 2,500 locations in the United States, Canada, the Caribbean and the United Kingdom.
ICOA now is expanding into new markets with Wi-Fi. It recently started installing wireless Internet networks for cities and towns, such as Newport and Narragansett. (It is not involved in the state’s RI-WINs initiative, which uses the separate WiMAX technology.)
Acquisitions also have fueled ICOA’s recent revenue growth, Strouthopoulos said. By purchasing smaller to mid-sized Wi-Fi providers, the company has been able to increase its presence in the market, which enables it to attract more customers.
“They outsource their call service to us, rather than building their own call center or back office, which can be expensive,” he said of smaller Wi-Fi providers. “Then they concentrate on marketing the service. We get 25 percent of the revenue.”
Purchasing those companies, then, becomes a natural extension of the relationship, he said. And it usually works out better for both parties.
Lastly, in addition to organic growth and acquisition, Strouthopoulos said he attributes the company’s recent success to the rapid expansion of the Wi-Fi industry in general.
“A lot of establishments, at the beginning, they questioned it,” he said. “They now demand it.”
And ICOA’s customers’ customers are demanding Internet access as well, he said. Strouthopoulos compared Wi-Fi’s evolution to hotels’ offering HBO as an amenity to guests. At first, he said, hotels offered HBO only during certain hours, and some hotels charged guests for it. Then, as customers began to expect the amenity, he said, many hotels started offering HBO 24/7, free of charge.
“People expect connectivity everywhere, all the time,” he said.
