From IT PRO:

In many ways, Cotton Traders is an ordinary, mid-sized British business. The company, which is based in Altringham, Cheshire, was founded in 1987 by two former England rugby captains, Fran Cotton and Steve Smith. Today, Cotton Traders operates a mail-order business, including online sales, a wholesale operation and a network of stores. Its turnover now exceeds £50 million. It is not involved in high finance or technology; nor is it an e-commerce pure play. It is typical of thousands of companies around the country that have used the internet to expand their sales, with some success. Its website is clean, simple and easy to use, and is designed to appeal to the mass market.

So if Cotton Traders could fall victim to an online criminal gang, so could almost any business that trades on the net. The security breach took place in January, although it was only confirmed by the company earlier this month, and attracted media attention over the last few days.

The company maintains that the data was encrypted. for their sakes I hope that is was. I’m a little surprised of how long it took for the company to disclose this breach. It apparently took place in January and it only now has come to light.

Read on for the full article.

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While this may sound familiar to those following municipal Wi-Fi, this deal is substantially different: it's much more like unwiring an airport than a city, and thus the expense in unwiring should be quickly outweighed by the uptake by passengers. City-wide Wi-Fi promised 1 to 4 Mbps in most cases; WiFi Rail has tested out at 10s of Mbps--their technology turns rail segments into wireless LANs with excellent reception. They terminate with fiber all over, so aggregation and backhaul isn't an issue. And unlike an airport, where travelers might turn to 3G cell data, those solutions don't work in the underground portions of BART and many other places along the rights of way due to obstructions.

And this isn't a "we have a great idea, let us build it" scenario. WiFi Rail has had test projects running for nearly a year, with a segment in San Francisco active for part of that time, and those tests determined the board's interest in proceeding. WiFi Rail told IDG News Service that 9,000 people have signed up for the current system and used 42,000 sessions.

WiFi Rail's network is currently free, and charges won't commence until the first stage is done. Lee said that fees, which will be about a dollar a day with subscriber discounts but are part of the negotiation with BART, will be charged at a 50-percent rate after the first phase is done until the whole network is complete. IDG notes that the company will be required to resell access at wholesale rates, and I expect aggregators like iPass (based in the Bay Area) and Boingo (further south in Santa Monica) will leap at reselling BART service, just as they do ferry-Fi here in the greater Puget Sound region.

The first route to be unwired will run from Balboa Park in San Francisco to two ends of a Y in Oakland, Lake Merritt and 19th St (see system map). For the 180,000 regular business commuters of the system, of which WiFi Rail wants to achieve an initial 20-percent uptake among, continuous Wi-Fi service should be a godsend against boredom and overwork. Yes, I know, for some, it will mean more expectation of work, but for others, it's a way to be mildly productive while en route, avoiding longer hours in the office or more work at home.

I need to go ride the ferries here during rush hour to talk to commuters and see what usage is likely on BART. There are tens of thousands of regular ferry commuters with an average 30-minute crossing as part of a longer (45 to 90 minute) trip each way into Seattle and other communities. It's a reasonable comparison with BART both in scale and nature of passengers.

What say you, Californian BART riders? Do you look forward to iPod touch, iPhone, BlackBerry (with Wi-Fi), and laptop connectivity? Or do you want to stay unplugged?

Although several other quick-service restaurants like McDonald's lack any comprehensive Wi-Fi plan--Burger King, Wendy's, and Subway to name three of the largest--Wayport is locked out of working with direct competitors. This opens the potential for another firm to handle a several-thousand-location network. Wayport has worked with both McDonald's corporate-owned stores (about 2/3rds of stores in the U.S.), as well as reaching out to franchisees, who Lowden noted pay a predetermined flat rate for the service via McDonald's. "It's made them incredibly efficient to be able to offer this to their franchisees at one price, instead of variable pricing," he noted. Wayport acts as the layer between various telecom providers, applications and services, and the stores.

Wayport provides several kinds of back-office services, although credit-card processing was the first thing htey rolled out. They've extended to remote video feeds for security, Redbox DVD rental systems that are found in some McDonald's, and kiosks used for job applications. Lowden said Wayport offers things as straightforward but critical as a dial-up fail-safe when a broadband connection drops.

Wayport also manages AT&T's hotspot network, which puts them in the unwiring seat for the 7,000-odd Starbucks stores that will converted from T-Mobile to AT&T service during 2008. Wayport was once the clear leader in the hotspot builder market, with T-Mobile in the second position. Now, Wayport will be operating through a direct contract or management agreement over 18,000 hotspots in the U.S.; T-Mobile will likely be the second biggest with a couple thousand locations (Borders and FedEx/Kinko's tops among them). The No. 3 player is hard to figure. Panera?

I've been predicting for some time that media on the edge--music, videos, movies, and games stored on servers on the local Wi-Fi network--will be the next big development in venue-oriented Wi-Fi, with Starbucks likely far in the lead. Lowden wouldn't comment on any specific plans in the works, of course, but said generally, "Storing and caching all that content on the edge...hasn't been leveraged in the past, but it will be in the future to create a very unique experience." At Barnes & Noble, Wayport caches some multimedia data that's available to customers in the stores.

The advantage for in-store media storage is that you can leverage the speed of the local network, and add additional access points to distribute network load. The choke point is no longer the Internet connection, but local network speed. I expect--though Wayport, AT&T, and Starbucks haven't said it--that Starbucks infrastructure will be all 802.11n for this reason, likely with both 2.4 GHz and 5 GHz support for the best throughput in the higher-frequency band for media transactions. (In fact, I wouldn't be surprised if you could only buy movies via 5 GHz.)

Lowden also noted that the proliferation of mobile devices with Wi-Fi built in have led to them reaching out to venues that wouldn't have made sense for them to work with previously, and for unlikely candidates to reach out to them, too. Wayport is now working with a number of healthcare facilities that, while they have their own network infrastructure, wanted to outsource public access Wi-Fi (whether they choose to charge or underwrite it), and certain applications that they're not as experienced with running themselves.

A little history: In 2001 and again in 2004, the heat seemed to be on the public side of Wi-Fi: lots of money to be made, ostensibly, lots of partnerships and venues to be built, and an overcrowded supply of infrastructure builders. The year before, Wayport looked to be an also-ran in the hotspot provider business.

Despite being one of the earliest firms to put Ethernet and then Wi-Fi into hotels, and build out hotspots in airports; and despite their survival of the first hotspot meltdown in 2001 during the dotcom crash and brief venture capital shortage; and despite their early entrance into allowing wholesale pricing for hotspot aggregators; the firm seemed about to be eclipsed by apparently deep-pocketed Cometa (with AT&T, IBM, and Intel in various capital and support roles), Toshiba's mom-and-pop focused turnkey system, and T-Mobile, which had the Starbucks contract. What a difference a year makes.

Cometa, Toshiba, and Wayport contended for the contract to build out back-office and public-access service at McDonald's in the U.S., and Wayport won. Within a few weeks, Toshiba passed its few hundred locations to Cometa, which shut its doors in May 2004. Wayport, meanwhile, had cooked up a strategy for McDonald's that it announced later that month.

Their approach involved a fixed-rate charged for unlimited access by retail network partners for all the locations in their pool. This meant that partners had a fixed cost, instead of a per-session cost, and Wayport could obtain specific revenue even before usage by a partner ramped up. Wayport hasn't discussed the details of this arrangement in depth since, but has partnered with Sony with its Mylo, Nintendo with its DS game player, and ZipIt with its wireless messaging appliance.

The McDonald's deal also apparently gave Wayport a way to extend its work with SBC-later-AT&T; Wayport had earlier in 2004 became the managed-services contractor for SBC to build out The UPS Store/Mailboxes Etc. nationwide. (UPS dropped AT&T as its partner in mid-2007, although that didn't appear to have anything to do with Wayport's role.)

AT&T through Wayport developed its large resold/managed footprint that incorporated resale of Wayport's McDonald's locations with the UPS Store and a few hundred other managed locations, including a handful of airports. The Cingular acquisition of AT&T Wireless put more airports in SBC's hands, too. (SBC was once the 60 percent majority owner of Cingular; when SBC and BellSouth, the other owner, merged that put the newly rebranded AT&T in charge of Cingular which it relabeled as AT&T. Confusing, huh?)

EarthLink announced its most recent quarter's earnings a few days ago, and they managed to turn a GAAP profit, while staunching the bleeding of so many businesses that had no short-term and seemingly little medium-term potential for net revenue. The company dramatically slashed its marketing, which they found only caused subscribers to join and quit. While revenue dropped from $290m to $235m year over year in Q1, operating costs and expenses were cut from $321m to $198m, with the most noticeable drop in sales and marketing ($99m to $31m) and operations and customer support ($60m to $39m). They recorded $58m in earnings versus a year ago's $22m loss.

Employees dropped from 2,108 to 922 during the period, while subscribers dropped from 5.7m to 3.6m. But it's worth noting that the biggest drop happened last year already: the 31-Dec-2007 subscriber count was 3.9m. They're making slightly more money from each of those remaining customers, and have slightly lower churn. Their municipal write-off is lower, too, as they've taken most of the expense, and have offloaded more and more of their future obligations.

The company still has the same problem that it had before it started unwinding its services beyond dial-up and broadband: None of its markets are expanding, and it has increasingly poor access to reasonably priced broadband to resell to customers, as no cable or DSL providers are obligated to provide true wholesale rates.

Rates were not disclosed, but have been estimated at about US$2.50 per minute before the recent steep decline in the dollar. Carriers set the price; OnAir sets the wholesale rate.