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

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.