Wi-Fi: Will It Fly or Will It Die?

[Steve]

At the recent "Go Mobile, or Go Home" event held at the University of Georgia in Athens, I was asked by Dr. Scott Shamp, the director of UGA's New Media Institute, which wireless technology I though would have the most success over the next five years, Wi-Fi or 3G. At first I thought that this was just another version of the popular "Bluetooth or Wi-Fi" question that's been popping up lately. But as the day grew on I realized it wasn't, and that, in fact, it was an issue that I hadn't fully considered. While I confidently told Dr. Shamp that day that Wi-Fi would likely be king for the foreseeable future, I've begun to have my doubts, at least when it comes to public wireless networks.

Yes, Wi-Fi, or 802.11b wireless networking, is springing up all over these days, from local Starbucks coffee houses to McDonald's restaurants to RV parks. And there are good reasons for its proliferation. First, it utilizes unlicensed radio spectrum, so virtually anyone can set one up anywhere. Second, the hardware is both inexpensive and easy to install, at least when compared to running coaxial cable throughout a building. Third, it's relatively fast, depending on your backhaul method: cable modem, digital subscriber line (DSL), or T1 line. Bottom line, Wi-Fi can provide a near-magical high-speed wireless connection to the world with little time, cost or effort.

But there's a cloud lurking behind Wi-Fi's silver lining. For one thing, no one's really discovered how to make money, or even break even, running a high-speed wireless data service -- whether it be proprietary, such as the recently resurrected Ricochet network, or an open standard, like T-Mobile's Wi-Fi Hotspot concept. Also, coverage is far from ubiquitous; in fact, it's downright skimpy. And it's those two issues that are beginning to be attacked by the major telecommunications carriers hoping to sway consumers to its 3G networks for wireless data access outside the home and office.

Qualcomm executive Paul Jacobs believes public Wi-Fi is the latest overhyped technology and says that, as with the Internet boom, companies have lost sight of their missions. "For McDonald's and Starbucks, it makes no sense to offer Wi-Fi. It's like companies back in 1999 adding a .com to their name." (Source: Seattle Times)

That's not to say that cellular carriers are against Wi-Fi, they're not -- at least not in the home and office. But public Wi-Fi networks are a different proposition. It's their contention that public Wi-Fi networks are just not the best way to go, from either a cost or user experience perspective. (Although it's worth noting that Verizon plans to turn its existing pay-phone booths into wireless hot-spots, albeit for its current DSL subscribers only.) Wi-Fi networks cover little area (you actually have to go someplace specific, like a Starbucks, to use them), cost extra (T-Mobile charges up to $40 a month), and are highly fragmented (lots of different providers covering lots of different places). 3G, on the other hand, will eventually be ubiquitous (well, as ubiquitous as cellular networks can be) and the cost will be included as part of a flat-rate cellular plan.

Cellular carriers won't argue the merits of home-based Wi-Fi (provided your entire neighborhood doesn't piggyback onto your service) since home and office wireless networks must eventually pass through a gateway to an existing backhaul method, such as a digital subscriber line (DSL) or a T1 circuit leased through them.

But the biggest reason I'm starting to doubt the efficacy of public Wi-Fi networks is the lack of a solid business model. Ricochet failed. MobileStar failed. Others will soon follow. (Keep an eye out for Oingo-Boingo, which is nowhere near the 5,000 hotspots it projected by 2003.) And do people really want yet another paid monthly service, just to stay connected? Add a Wi-Fi service to your cell phone, cable TV, and home Internet access and you're talking big bucks.

Some analysts contend that a new model, based on free access, is what the Wi-Fi industry needs. This was tried by traditional dial-up Internet Service Providers (ISPs), including NetZero, but was not viable over the long term. (NetZero has since merged with Juno and moved to a fee-based service.)

But we needn't look far for an example of a "free" product that has flourished, despite its less than captivating business model: Linux. Some hope that Wi-Fi will enjoy the same grassroots groundswell that Linux enjoys, and one day we'll be clouded by a patchwork of private Wi-Fi networks, open to the public.

One thing's for certain: the world is going high-speed wireless. It's just a matter of how.

[tl615]

I think that the telecomms and their associated hardware makers will eventually develope "multiband" devices, able to access WiFi when available (for improved bandwidth) and 3G when you are not in a hotspot. In many ways the two technologies are complimentary. One offers high bandwidth but limited coverage, the other offers limited bandwidth but broad coverage. It takes apples and oranges to fill your wireless fruit bowl. (OK I promise no more food analogies)

[TinMan]

I don't think there will be ubiquitous WiFi coverage anytime soon. "Free" hot-spots are, in many cases, in violation of the operators ISPs' TOS (and don't think this doesn't get ISPs' attention). The pay model is flawed in several respects (commercial use of public spectrum, few people willing to pay, etc.).

It would be nice if WiFi could take off like the CB radio boom of the 1970s, but I don't see it happening (except for WLAN use, which seems to be growing all the time).

Unfortunately, 3G isn't nearly as far along, as was predicted just a few years-ago. Still, I can use my Sprint PCS Vision phone as a modem -- with adequate speed -- nearly everywhere I can get a Sprint PCS signal. And this isn't even true 3G yet. Trouble is, I'm not sure there's a decent business model to continue the full 3G upgrade path. I'm sure it will happen eventually; just not as fast as originally predicted--or more accurately, not as fast as I would like.


-Mike Lynch

[imported_argent]

Two words: "Software Radio". Software reconfigurable radio will let your handheld switch from Wifi to Bluetooth to GSM to CDMA to 3G to AM/FM to 900 MHz cordless phone, in one transceiver.

The big problem I see with Wifi hotsports is that they are trying to make it work like cellular, where you sign up for a flat rate service and use the hotspots when you get to them. That takes someone who regularly eats out at the same place to benefit from it, and that's a tiny market.

Last time I went to a Starbucks there were flyers advertising Wifi. Now I was going to be there for a while, I'd have happily paid for half an hour's access right then and there. But they couldn't do that... I'd have to sign up for a "plan" ahead of time. For something I could use once a month?

You don't go to starbucks.com and establish a Starbucks Card so you can buy coffee there. You drop in and buy coffee. A huge amount, maybe the majority, of their business depends on impulse buys... and they understand that. Why do they think this is any different?

[TinMan]

I ran into the same thing at Starbucks. I would think they could have come up with a better method to pay--even as an add-on to coffee. "Would you like whipped-cream and WiFi with that latte?"

-Mike

[Steve]

Mike,

Your point about the slow move of the carriers to true 3G wireless is exactly why I responded to Dr. Shamp that I believed Wi-Fi would be the hotter technology for the next 5 years. Maybe not in the long run, but the carriers don't seem to have a really compelling reason to upgrade. Great points you made about the flaws in the pay model.

Peter,

I live a block from a true social mecca -- yes, a Starbucks -- that's a hotspot. I do the monthly plan even though I have Wi-Fi and DSL (through Verizon Street) at home (which is also my office). I go to Starbucks to get out of the house and see people.

Do I see using Wi-Fi at a McDonalds or, heaven forbid, a Circle K? Nope. But I sure would like it in airports when I travel. I was in several airports in May, including SF, Oklahoma City, Memphis, Newark, NJ, Houston, and Tampa, and I don't believe any of them had wireless access. And there were a bunch of people using laptops and PDAs.

[Steve]

Originally posted by TinMan
I ran into the same thing at Starbucks. I would think they could have come up with a better method to pay--even as an add-on to coffee. "Would you like whipped-cream and WiFi with that latte?"

-Mike

LOL!

I can see myself now, "I'll have a grande Soy Vanilla Latte, and make it wireless!" Those Seattle-ites would have nothing on me then!

Thanks, Mike!

[imported_argent]

Originally posted by Steve B
Do I see using Wi-Fi at a McDonalds or, heaven forbid, a Circle K? Nope.

I would, if I could do it on impulse. Let's say I can swipe a credit card or bank card, or hand in old-tech cash at the register, and get an ssid and WEP key good for that day... I could see doing that at McDonalds or even at a Circle K or Walmart to check on something I wanted to buy online. It'd be even more useful in a mall, library, or (as you say) an airport.

But not if I need to enter into a year's contract with Veriscum to do it.

[imported_robman]

So many people are comparing WiFi coverage to cellphone coverage, and wondering how anybody is going to make money. This the wrong model for understanding the proliferation of WiFi.

A much better way to think about the "wifi revolution" is to compare it to the public lighting revolution that occurred around the turn of the twentieth century. Large business, restaurants, shop owners, municipal governments, landlords and private homeowners invested tons of money to provide public lighting for themselves, their customers, and the community. They didn't do it because they thought they would be able to turn a revenue directly from having a "lighted locale", but they recognized that public lighting was good for everyone.

WiFi gear has become so inexpensive that access points are popping up all over the place, most of them free and open to the public. Many neighborhoods have already established community wifi; soon municipal governments will provide "free" wireless internet access in the same way that they provide "free" lighting.

There are some technical details to be worked out, of course. Right now it's takes some knowhow to make your personal network secure from your WiFi network, so you can share your internet connection (but not your personal data) with anyone who wants to surf in. Furthermore, WiFi is not as plug-and-play, as say, lightbulbs. These changes are forthcoming, and will only help WiFi adoption occur more quickly.

The beautiful irony is, of course, that WiFi is light. Light is not a commodity. It's a public good.


Thanks for listening,
Robman

[TinMan]

Wow, that's some leap: from lighting to WiFi. Personally, I don't expect to pay, at least not directly, for in-store lighting.

Another thing:
Why the heck can't Starbucks work their own crowd?!

I mean, we're only talking about a single Access Point per location here. Surely, Starbucks could have handled this on their own. Instead we get a middle-man--when there is no room for one. Whew, got that off my chest.


-Mike