Day: June 22, 2016

Are you willing to pay more for better home Wi-Fi?

A startup called Plume is betting that the challenge of running a home wireless network good enough for ultra-high-definition television, video games, and the Internet of things means that consumers are ready to pay extra for high-quality managed Wi-Fi in their homes.

Plume, which launched Thursday, offers a different take on the Wi-Fi router. It sells highly designed, palm-sized routers that plug into outlets around your home, and controls those routers via a cloud-based brain that’s actively managing how your home network functions.

Plume sells its routers to consumers for about $49 each (or $39 if you pre-order and buy at least six). You connect one into your modem, download an app to create your network, and then plug the rest into their respective rooms. These other routers find the network using Bluetooth.

Fahri Diner, CEO and cofounder of Plume, says the company is also working with Internet service providers—he hopes ISPs might offer his routers and charge consumers about $10 extra a month.

The idea of paying extra for home Wi-Fi might rub many consumers the wrong way, but three factors could change their minds. The first is that people increasingly want high-quality bandwidth throughout the home. A few years ago they may have been content with great Wi-Fi only in an office by the router, but now people are placing Wi-Fi-connected cars in their garage, have video doorbells outside their house, and use streaming latency-sensitive applications such as video calls or games all over the house, and connections have to stretch further. Applications like virtual reality will require Wi-Fi  to work even harder.

The second factor is that it will be easy. Many consumers already pay their ISP for Wi-Fi because those providers have instituted modem rental fees that often include a router. A modem is the device that connects your home to the ISP’s service, while a router translates the modem’s signal into Wi-Fi. The two are often combined in one device. Customers are already accustomed to renting, and ISPs are in the business of enabling that, so Diner’s idea of selling routers to service providers could make sense.

A third factor is that not all homes can get good Wi-Fi even if they rent their modems and routers from an ISP. Long or tall homes might require additional gear. Interference can also cause issues in places where homes are close together, such as in a condo or apartment building.

So in a world where consumers need better Wi-Fi but can’t always get it, companies are looking to offer some kind of Wi-Fi as a service. Plume is one, but Eero, a Wi-Fi router maker that recently raised $50 million, is also eyeing paid services, according to Nick Weaver, Eero’s CEO.

Tim Chang, a managing director at Mayfield Fund, a venture capital firm, last week told a group of attendees at an investment conference that managed home Wi-Fi is the “next phase in delivering Wi-Fi.” Mayfield doesn’t have an investment in Plume or Eero.

But to build a subscription model for Wi-Fi, Plume had to change the way it is delivered. Most Wi-Fi routers have a radio and a small amount of brainpower in a processor to handle the packets flowing around the home. Plume’s routers have only a radio, with the computing in the cloud. It uses the cloud to handle the logic, which Plume’s CEO Diner says lets the service adapt quickly to changes in the network.

The company uses machine learning to understand the daily activity of a person’s network and discern patterns that could help it operate more efficiently. For example, it might analyze the network traffic and realize that one of the routers should be plugged in closer to the television for a better experience. It can make that suggestion through the mobile app.

The upside of Plume’s design means the routers will get smarter and faster as cloud services improve, and homeowners can spread more radios around their home for better coverage at a relatively low cost. The downside is that operating a service that requires ongoing investment in software and cloud servers means the company has to sell its hardware at premium that will support the business for the long term.

Several companies are rethinking the traditional router, including Eero, Luo, and Securifi, but it’s unclear if the mass market is convinced that its existing gear from an ISP or from the established vendors such as D-Link, Belkin, and Netgear is worth tossing.