By Andrew Patterson
Chances are you’ve used it but never really given it much thought; or while on a business trip it allowed you to log into the company server from your hotel room to download that document you forgot to pack.
Either way, the wireless hot spot provider Tomizone has quietly been creating a revolution around the country in order to become the country’s dominant wifi provider.
What makes this home grown New Zealand tech business even more impressive is that it was born global, establishing over 20,000 wifi hotspots in 107 countries in just six years and with plenty more growth on the horizon still to be realised.
Getting started
Founded in 2006 by tech entrepeneurs Steve Simms and Phillip Joe, Tomizone (short for ‘turn on my internet zone’) sought to create a seamless solution for internet users on the move by creating a series of low-cost wifi hotspots around the country when few people had even heard of the term.
These days we take it for granted, but at the time is was innovative in its approach.
The idea caught the attention of Warehouse founder Sir Stephen Tindall who took an initial stake in the company through his K One W One investment vehicle.
Steve Simms says it was a turning point for the business coming at a time when capital was proving difficult to raise.
“The GFC hit us just 18 months after we started and in that respect we were fortunate to have funding from K One W One to really develop the product and grow the market.
Initially we managed to coast through the downturn as a result of our product development but if it hadn’t been for the explosive growth in smart phones devices, lead of course by the iphone, then I think we’d be in an interesting position right now.”
Business Model
The growth in metro wifi in the major cities has been the real game changer.
But how does the company’s business model actually work when so much wifi is being given away for free these days?
“Essentially you can either pay for wifi or you get for free. If you’re getting it for free then someone else is paying. There’s no such thing as a free lunch and effectively someone is therefore sponsoring your free lunch.
So the revenue model is through air time, management fees or through integration charges. We then give some of that airtime revenue back to the owners of the hot spots or wifi zones.
However, in some cases where the wifi is being provided free, we’re being paid a management fee to ensure there’s a reliable and quality service being offered.”
A case in point is Sydney Airport where Tomizone manages wifi facilities across both the domestic and international terminals.
“Our role is to make sure the ads that you see [when you log on] are played in the correct format, that users are having a simple experience and also that they’re having a quality experience on the internet.”
One aspect of wifi that still confuses many users staying in various accommodation providers around the country is why room rates don’t have the inverse relationship to wifi charges that you’d expect. Stay at a backpacker and wifi is virtually free while upmarket five star hotels frequently charge wifi rates that are often through the roof.
Steve Simms says there’s a race to free happening but there are still those in the accommodation sector who are not moving with the market.
“I believe those more expensive internet charging options still being employed by some accommodation providers will disappear over the next five years.”
Security
Security is another issue uppermost in the minds of wifi users these days. But how can you be sure about the integrity of the wifi system you’re using, particularly when you’re travelling internationally?
“There’s a lot more accountability starting to come in around the world with these systems that needs to be in place.
For instance, we have a patent for technology we’re developed that allows us to identify the user on the end of a wifi connection which is obviously important if any nefarious activity is going to occur while the user is online.
So that’s why providers like us exist because we take away that risk.”
Growth
Despite the company’s rapid growth over the last five years it seems the emergence of new technologies will continue to fuel that growth in the future.
“The growth potential is really still in metro wifi zones, the accommodation sector and transport hubs such as airports.
However, one other area starting to emerge, which will shortly be announced at the Wireless Broadband Alliance in South Korea, is the next generation wifi hotspot initiative where there will be seamless roaming between a wifi operator and a mobile operator. In the next three to five years, you as a mobile phone customer won’t know whether you’re accessing the internet on wifi or on mobile which will create a seamless experience between the two networks.
Now that means that if you’re a wifi operator, such as ourselves, you’ve got the opportunity to get revenue from a lot of 3G operators that are off loading their customers on to wifi.”
Global footprint
Not surprisingly, its India and China that have the biggest growth potential for Tomizone in the future.
“We’ve quietly been doing some development in the background in both of these markets in terms of our sales opportunity.
With India, we’ve been there for some time with a good viable business and over time, when that market starts to mature, you’ll start to see some massive growth with our services.”
Future
Despite its global reach, just 15 staff manage the business from its Auckland headquarters, giving it possibly one of the smallest ratios of staff to turnover in the country.
The ability to scale the business without the need to take on additional staff is an added advantage.
While growth for Tomizone is assured, managing that growth will be the company’s biggest challenge.
“In three to five years’ time, I’d like to see us with a [substantial] turnover of revenue with profitability being imported back to NZ.
It’s much cheaper to export bits and bytes in intelligence than it is to ship a lamb of to London.”
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Tomizone came 10th on 2011 Deloitte Fast 50. The 2012 Deloitte Fast 50 information is here »
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