No one can accuse McDonald's Corp. of not staying abreast of the latest trends. Just recently they began offering a revised menu to keep up with the current low carb diet craze in the United States. Now the world's largest food retailer is offering Wi-Fi access along with their burgers.
McDonald's plans to use the Wi-Fi network to deliver a wide range of digital content to customers, including music files, and to support in-house business applications, such as cashless payment systems, according to an IT executive at the company.
Jim Sappington, the fast-food chain's vice president for US information technology, said the four-year Wi-Fi deal that McDonald's signed with Wayport goes far beyond providing wireless Internet access to customers.
Firewall grill Currently there are 13,500 McDonald's in the United States, approximately 30,000 restaurants worldwide. Wayport will install high-speed DSL lines in 3,000 restaurants this year and another 3,000 by mid-2005 to support the Wi-Fi service. Sappington said those network connections will also be used to support the company's cashless payment system. Wayport CEO Dan Vucina said the cashless payment system will be firewalled from the public-access network and will require a minimal amount of bandwidth.
Wayport will offer two-hour Wi-Fi sessions for US$2.95 an hour, as well as other pricing options, said Dan Lowden, vice president of marketing at Wayport,.
McDonald's also plans to use the in-store W-Fi system to deliver MP3 music files to customers, with teenagers a likely target market for this service, Sappington said. The company is in talks with a number of digital-music suppliers, but Sappington declined to identify them.
In late March, the Los Angeles Times reported that McDonald's and Sony Connect, the digital music download division of Sony, had a deal to provide digital content to McDonald's customers, with music clips provided free to customers who purchase certain menu items. Lisa Gephardt, a spokeswoman for Sony Connect, said the two companies had plans for a promotional deal to provide Big Mac purchasers with a code to receive a free music download.
She said that as far as she knew, the promotion wasn't connected to the in-store Wi-Fi networks, but more details will be available in the next month.
Vucina said Wayport would cache music files on an in-store server, saving network bandwidth. The Wi-Fi network could also be used to distribute movie trailers to customers, which would serve as a logical tie-in to McDonald's movie-based meal promotions, he said.
Wayport will also use the McDonald's network to provide customers with access to digital versions of newspapers and magazines, including USA Today and BusinessWeek, which Wayport provided in pilot tests at McDonald's restaurants. Wayport also provides access to these digital publications in the 700 major hotels it serves, Vucina said.
With the growth of public access Wi-Fi, service providers and the venues where Wi-Fi access is available must move beyond simply providing connectivity, Vucina said. "We have a rich network which delivers a significant amount of value," including support for VPN connections, business applications and content, he said.
Amy Cravens, an analyst at In-Stat MDR, agreed that pay Wi-Fi services such as the one McDonald's is offering need to deliver more than just connectivity to stand out from free Wi-Fi services offered by companies such as Schlotzsky's, which provides free access in 38 delis and restaurants in six US states.
"Pay has to differentiate itself," Cravens said, "either by the quality of the connection or applications." She said public-access Wi-Fi providers also need to start serving different audiences besides business travelers, as McDonald's plans to do by targeting teenagers with music downloads.
Security concerns However, what McDonald's may not have counted on is real concern from IT about security.
John Yunker, an industry analyst at Pyramid Research, said that although hot spots are not ubiquitous yet, there are already enough of them around the country to make IT managers nervous.
"For the IT manager, for more and more people to be logging into from more locations is a little scary from a security standpoint," said Yunker.
Industry analyst Cravens backs that up with recent survey results. "Our latest surveys show that security is a factor in determining whether a company allows its employees to access the network through Wi-Fi hot spots," she said.