"We also have worked to make the units appealing to both Internet-savvy consumers and non-computer users by incorporating both a Touch screen and a keyboard," Basulto continues. "We also have a customizable, onscreen icon that entertains ans tells people hoe to use the unit. The icon comes with a volume control so that users who know how to operate the machine can turn it off."

These vendors provide network service (including remote diagnostic and rebooting capabilities), reporting capabilities, maintenance service, and security software to keep users way from selected Web sites.

The costs of technology.

Internet kiosks do not come cheap. Kiosks typically cost from $3,700 to $7,500 each; volume discounts are available. Some manufacturers will split the cost of equipment and installation with a PSP in return for a revenue-sharing arrangement.

In addition to the initial cost of the equipment and the installation, kiosk owners pay for a phone line, perhaps a digital subscriber line (DSL) connection, and monthly network service. (DSL connections can be difficult to obtain, even in major cities, but is highly recommended because dial-up methods are more likely to disconnect users.) Further, PSP's say that they have to train their technicians on basic software and hardware issues, which increases their costs.

"Providers also have to consider the software fee, the maintenance fee, the dial tone fee, and the broadband fee. It costs several hundred dollars per month to operate each kiosk," Agliata reports. "Plus, you're still in the vending business, so you're paying location owners a commission ranging from 15 to 50 percent on revenues, or you're paying a fee to rent the space. It's a capital-intensive business.

Some PSP's do not share revenues with the location owners, instead featuring the location owner's Web site as the first screen users see. In addition, many PSP's set a floor revenue that a kiosk must generate (generally in the $500 range) before revenues will be shared.

Since some locations charge rental fees to kiosk owners, Basulto recommends that PSP's target current customers so their initial investment will be as low as possible when placing their first units.

Just as some PSP's have joined forces to install ATMs and to sell payphone advertising, smaller PSP's that would like to enter the Internet kiosk business will likely need to find other PSP partners to share in the costs to make kiosk deployment a viable opportunity.

Where the kiosks are

Because the Internet kiosk business is still in its infancy, many keys to success are still being sought. From selecting the actual units to finding the right location to determining which business model to pursue, no standards exist yet, so PSP's at the forefront of this business are finding that they'll need tenacity and flexibility to make their investment pay off.

Basulto says his customers have seen great success with kiosks placed at hostels, hotels, casinos, malls and coffee houses. Since kiosks are basically a computer in a bigger package, outdoor locations are generally off-limits. Touch N Surf expects to have a weather and Humidity-resistant unit available later this year.

Making Money

While in years to come advertising revenue may help fill the coffers of kiosk owners, most in the industry today agree that PSP's should develop a user supported business model. "The kiosk industry does not yet have a common platform, which facilitates the creation of a critical mass, nor a proven value to show to potential advertisers." And, like payphone advertising, advertisers will likely want a wide geographic mix and large number of machines on which to sell their wares.

Some companies have seen limited success in selling system content. For example, a news section may list four websites and give the user the option of typing in a specific site. Often, a user will simply visit one of the four sites listed on the screen. These sites pay a premium of several hundred dollars per month for the privilege of being listed. For time-and resource-limited PSP's, kiosk that earn their revenues from consumer usage may make more sense.

Kiosk owners set their own rates for their machines. In remote locations, such as at resorts in the Caribbean, consumers will be more likely to pay higher rates, ranging from 50 cents to $1 per minute. At airports and truck stops, such rates would be prohibitive. On average, kiosk users are paying 25 cents per minute, with a $1 minimum fee.

Machines accept credit cards, calling cards, and bills from $1 up to $20, and they do not issue change - a policy that is generally stated clearly on the screen. Often, consumers receives extra minutes for "free" when they pay with cash; for example, $5 may buy consumers 30 minutes of use rather than 20 minutes.

Some promotions seem to encourage greater use. "We've found that charging $1 for 10 minutes of Internet usage increases use because consumers aren't rushing to complete a task in just a few minutes," Basulto says. "They'll tend to take their time and be more willing to insert another dollar once those 10 minutes expire."

Kiosks, depending on their locations, are averaging from $200 in revenues per month to more that $2,000.

Challenges to overcome

Any new industry is bound to experience some stumbling blocks, and for the kiosk industry, those hurdles have been public awareness and kiosk reliability.

"Signage is paramount," Basulto says. "We encourage kiosk owners to place signs throughout the location to direct people to the kiosks. Our units also feature customizable screens so that a kiosk placed in a mall or hotel will show map of the location. People walking by will stop to use the free directory, then they may decide to use the kiosk for other purposes. Plus, our kiosks include a 'proximity sensor.' When someone passes by, an icon appears on the screen and speaks to the person, inviting him or her to use it."