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Is WiFi in Coffee Shops a leading economic indicator?


I spend a lot of time in coffee shops writing these days. I don't know why, perhaps many of you have experienced this, but I seem to have a very productive time writing when there is the smell of fresh coffee, the sound of cappuccino machines and the white noise of the coffee crowd to add to the ambience. Sometimes this environment triggers a burst of creativity that is second to none on the productivity front. My wife tried to fight this tendency for a while arguing that it was all in my mind and I could be just as effective at home sitting quietly in my office, but we've since come to an understanding on this matter. Besides - caffeine is a big part of my success at this juncture in my life.

I must not be alone in this, because the so-called "coffee culture" effect has been measured in many economies and can be seen as directly contributing to growth in both economic terms and in relative growth in the retail sector. However, there is an additional element here that I've noticed as a leading indicator of an economy's capability to absorb innovation.

Even McDonald's has free WiFi

In 2007 in the UK McDonald's announced that it was going to provide free WiFi in it's 'family restaurants'. The US, Australia and many other countries soon followed and by January 2010 most of McDonald's network in developed economies globally is already wired for WiFi. McDonald's figured out early that this was an easy win-win. Customers are increasingly dependent on WiFi access as they move around and if you provide this, it becomes a key driver for their decision to visit your store or outlet. Starbucks in the US has also realized that free WiFi is a big draw for customers.

Since the launch of BANK 2.0 I've been visiting many countries to speak on the future of banking, and I've seen a direct correlation between the progress of an economy as regards innovation and integration of WiFi in the local Starbucks or coffee chains.

The correlation of coffee shops and innovation

Take Australia for example. The Australian dollar is at an all time high against the US Dollar,potentially about to reach parity. Since the 1980s Australia has long held an extremely competent ICT industry capability, but this has been somewhat threatened by an ongoing exodus of many of the most talented resources often leaving for overseas opportunities (the so-called "Brain Drain") due to high taxation and lack of career growth locally. Australia's net permanent gain in immigration is still strong, but over time this effects the skill mix in innovative industries.

How innovative is Australia though from a global perspective? Research and Development is a dwindling segment in Australia. Long ago the government dismissed or made tax-breaks for R&D so difficult to attain that Australia has lost any competitive positioning it had in this respect. Certainly in respect to industries like software, telecommunications, internet start-ups, mobile platform development, Australia just doesn't have the capability to compete with many other countries like India, China, Hong Kong, Singapore, Korea, United Kingdom and Northern Europe.

So back to coffee shops. Today as I was walking around the CBD of Sydney, my goal was to find a coffee shop where I could relax for a few hours and get some blogging, writing, online research and emails done. My primary criterion for this was great coffee (which is not hard to find in Sydney fortunately), a comfortable environment and free WiFi. I tried 5 different coffee shops around Pitt Street and George Street before I finally succumbed to a Starbucks where I could pay for my WiFi with Skype credit instead of having to purchase an annoying, overpriced voucher for 10 minutes access at a time.

Here's the thing - maybe the reason I can't get very basic, coffee shop WiFi infrastructure in Australia is because Telstra still largely maintains a monopoly in Australia, maybe it is the fact that coffee shops are concerned about attracting droves of students who don't drink enough coffee (yes I was given this excuse), or maybe it's just that as an economy Australia doesn't get the need for innovation to be about the philosophy of being connected. WiFi is like water these days - it is a basic commodity, or at least it should be. You can't hope to drive innovation by stifling basic access to a resource that enables connectivity, curation, publication and collaboration.

Free WiFi is a basic resource for fueling innovation

10 days ago I was in Cairo, where I visited two separate hotels where Internet Connectivity through WiFi and broadband was provided free. The hotels I've stayed at in Australia this week have charged me A$29.00 a day for in-room or WiFi internet access at the hotel, and while in both Melbourne and Sydney I struggled to find coffee shops that had any WiFi capability, let alone free WiFi. In Hong Kong, my mobile provider provides me with unlimited wireless broadband internet access for free with my mobile account and WiFi is readily available wherever I go.

Why in some countries is such a basic 'fuel' of the innovation cycle still being used opportunistically by a cartel of organizations trying to eek out a small fortune in overpriced service fees? If leaders of industry and government don't get this and in your economy today you still can't get easy access to free WiFi in major cities, I contend that this is a leading indicator of the economy's ability to absorb or adapt to innovation opportunities. If you still find yourself struggling to get decent WiFi in your city and you're in the innovation might consider relocating to an economy who gets the big picture.



Comments: (3)

A Finextra member
A Finextra member 18 October, 2010, 16:17Be the first to give this comment the thumbs up 0 likes

Dear Brett,

The charging for free WIFI seems to go hand in hand with the marketing of mobile phone broad band services. Instead of using free WIFI network where you are, you are supposed to purchase a subscription for mobile broad band access typically for 39,95 Euros/month. Also most business hotels today charge  from 10 Euro and up per day for WIFI. The problem in Europe however is that when travelling outside your country of residence, the use of mobile broad band is very expensive - it cost me 60 Euros just to log on to our corporate web site when I am outside Sweden but in the European Union. Therefore customers travelling abroad are compelled to buy local WIFI access wherever it is offered, in hotels, airports, railways...It sure looks like the Empire is striking back and the force is no longer with us. The internet has matured and everybody are finding new ways commercialise it.

A Finextra member
A Finextra member 18 October, 2010, 17:16Be the first to give this comment the thumbs up 0 likes

a leading economic indicator for innovation, or a lagging indicator of unemployment--both!  I have noticed both things going on, people meeting at coffee shops, doing work, and talking with each other about thier work. A good opportunity for innovation.  Likewise, I have noticed the ranks of unemployed professionals, hanging out in coffee shops as their new office, doing company searchs, talking to others about who is hiring and working linked-in.  So, add this to your file, and it is being done in the US of A.

Brett King
Brett King - Moven - New York 18 October, 2010, 21:28Be the first to give this comment the thumbs up 0 likes


Interesting to see how the economics of coffee shops seem to imply much more than just lattes and cappuccinos. As an international traveler I often note how I am penalized because I can't get local data contracts, etc. Given the mobility of business people, and the mobility of workforce, connectivity is really becoming almost a basic right or need isn't it...

Brett King, Author - BANK 2.0

Brett King

Brett King

CEO & Founder


Member since

14 Apr 2010


New York

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This post is from a series of posts in the group:

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

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