One of NYC’s Free WiFi Providers Goes Kaput

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Is New York City’s free WiFi program in trouble?

A research group known as Gotham City Research claims that Gowex, one of the five organizations that former New York City Mayor Bloomberg had chosen to provide free WiFi service in the city’s five boroughs, cooked their books and vastly overstated its earnings. Based on this report, Gowex filed for bankruptcy.

Gowex had agreed to provide free WiFi service in Harlem, Long Island City, Queens, Brooklyn, Staten Island, and The Bronx, and had already set up 60 WiFi hotspots. The contract with the New York Economic Development Corporation (EDC) was worth $245,000 and Gowex had already been paid $185,000, according to the EDC.

Gowex’s Massive Fraud

According to Gotham City Research, Gowex made less than 10% of the revenue it reported on its financial statements and even though it claimed to have 100,000 hotspots worldwide, the actual number was close to 5,000. In addition, the company claimed to have a $10 million dollar contract with New York City, when in fact the contract was worth less than $300,000.

This was all part of Mayor Bloomberg’s Wireless Corridor Challenge, which he set up last year to provide WiFi access to 2,200 businesses and 320,000 people across New York’s five boroughs.

Bloomberg hoped that WiFi access would attract new businesses to some of the-less served neighborhoods in New York City, help improve the quality of life for lower-income residents, and attract foot traffic to struggling businesses.

The Problem with ‘Free’ WiFi

Gowex’s demise brings up a couple of important points:

The first is whether providing free WiFi to underserved communities is a viable business model. Gotham City Research initially looked into Gowex’s financial information because they couldn’t figure out how they were generating double-digit revenue growth when other companies providing the same service were doing far worse. According to Gotham City Research, up to this point, all for-profit attempts at providing free WiFi service on a mass scale have failed.

Providing free WiFi service to underserved communities is undoubtedly a good thing, but it will need to find a business model that actually works. Right now, it’s not clear that it does.

Number two, as we reported last year when this deal was announced, in order to log onto the “free” WiFi provided by Gowex, you had to agree to share personal information, as well as location information. In addition, we recently reported about the problem with social WiFi, which asks for your social media information, including your contact list and all of your personal data.

In short, in order to use a “free” WiFi service provided by Gowex, you have to agree to turn over some of your personal information. And once you do that, it’s available to whomever Gowex (or any other WiFi provider) wants to share it with. So we have to ask ourselves, is so-called “free” WiFi really that free?

And any public WiFi network is inherently unsafe, so once you turn over your private information for access, unless you are using a VPN like PRIVATE WiFi, anything you do online could by stolen out of thin air.

Gowex’s demise brings up a lot of important points, but the takeaway is this: don’t log onto public WiFi networks that ask for your personal information if you value your privacy. And if you must use public WiFi, do the right thing and protect yourself by using a VPN.

Get Private Wifi   Protect your personal information.
Get DataCompress   Cut your mobile data usage.

Kent Lawson

Kent Lawson is the CEO & Chairman of Private Communications Corporation and creator of its flagship software PRIVATE WiFi. He combined his extensive business and technical experience to develop PRIVATE WiFi in 2010. The software is an easy-to-use Virtual Private Network (VPN) that protects your sensitive personal information whenever you’re connected to a public WiFi network. Follow Kent on Twitter: @KentLawson.