You want MP3s with that?

McDonald's to use Wi-Fi network to deliver digital music files to fast-food customers

McDonald's Corp. plans to use the Wi-Fi network it announced yesterday 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 U.S. information technology, said the four-year Wi-Fi deal that Oak Brook, Ill.-based McDonald's signed with Wayport Inc. goes far beyond providing wireless Internet access to customers (see story).

Wayport, based in Austin, 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 $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.

In late March, the Los Angeles Times reported that McDonald's and Sony Connect, the digital music download division of Sony Corp., 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.

Lisa Howard, a McDonald's spokeswoman, said the Wi-Fi network rollout is not directly connected to this summer's Sony music promotion. But, she added, in the limited number of restaurants where Wi-Fi is available, customers will be able to download songs.

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 in the San Francisco Bay area, Portland, Ore., Boise, Idaho, and Raleigh, N.C., markets. 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 in Scottsdale, Ariz., 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 Inc. in Austin, which provides free access in 38 delis and restaurants in six states.

"Pay has to differentiate itself," Cravens said, "either by the quality of the connection or applications." She said public-access W-Fi providers also need to start serving different audiences besides business travelers, as McDonald's plans to do by targeting teenagers with music downloads.

Copyright © 2004 IDG Communications, Inc.

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