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Dana Dana Blankenhorn has been a business journalist for over 25 years and has covered the online world professionally since 1985. He founded the "Interactive Age Daily" for CMP Media, and has written for the Chicago Tribune, Advertising Age, and dozens of other publications over the years.
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Moore’s Law defines the history of technology. It held that the number of circuits etched on a given piece of silicon could double every 18 months as far as its author, Intel co-founder Gordon Moore, could see. Moore’s Law has spawned constant revolutions since then, not just in computing but in communications, in science, in a host of areas. Moore’s Law applies to radios, and to optical fiber, but there are some areas where it doesn’t apply. In this blog we’ll take a daily look at new implications of Moore’s Law in real time, as it rolls forward to create our future.
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May 02, 2005

WiFi Ground War

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Posted by Dana Blankenhorn

remax balloon.jpgThe political battle over WiFi shapes up as a classic match between private interests and the commons.

But it is in fact a battle over real estate. (Thus, the balloon, which is the logo of a very innovative real estate brokerage.)

Verizon pulled a bait-and-switch on New York phone booths. It installed 802.11 equipment based on the promise of free WiFi service on adjoining streets, then pulled them all back into its paid network.

Politically this makes no sense. In real estate terms it makes perfect sense.

The challenge to this looks technological, but it's really political. You can see this challenge by simply turning on your WiFi equipped laptop.

What you'll find, in most cities, are multiple network options. The signal strength you see will vary based on how far you are from each radio. The conditions of network entry are also clearly noted.

If paid WiFi and free WiFi are both accessible you'll go for free. This is where the politics comes in.

telephone pole.jpgThe pole to the left is on acrylic, and is the work of Ruth Ann Laster, Falmouth, Mass.

Let's say the real estate owner in the building where you're sitting is part of a paid network. They are not going to be happy having free competition, even though it's allowed under the law. They might boost their own signal, or jam the competitor's, and when (if) taken to court claim they are only controlling their real estate. There is a lot of precedent to support real estate interests, and regardless of how things turn out in court (FCC regulation trumps other interests, real estate owners can't stop radio signals) there is also the political fight, because we're talking about a choice between economic interest and some trespasser -- that's what the free WiFi service will be called.

All that is by way of example. The real struggle is to see who will control the real estate. We're talking about whether paid Hotspot operators can turn store owners (apartment complexes, office developers, etc.) toward their networks with a promised share of revenue, whether they can control the real estate of telephone poles (where they currently have just right-of-way grants from local governments), whether they can pay municipalities to grant concessions to them, or simply prevent municipalities from competing.

It's all about real estate. Control enough real estate and you prevent competition from free services. You force people to pay for radio service in unlicensed bands the FCC meant them to use freely.

And if the paid guys ever seem to be losing, watch security rear its ugly head. Already free WiFi is being portrayed by security companies as a haven for hackers, crackers, and thieves. The software needed to stop this is expensive. It creates a higher barrier to entry for the market. There are liability issues as well.

Free hotspots sound great in theory, but I don't think they're going to survive. I would love to be proven wrong on this, but I don't see it happening. The politics of real estate has trumped that of the commons in the U.S. for too long for it to be otherwise.

Comments (1) + TrackBacks (0) | Category: 802.11 | Always On | Business Strategy | Internet | Telecommunications | law


COMMENTS

1. Jesse Kopelman on May 2, 2005 04:47 PM writes...

On the other hand, what about the success of Pannera, Starbucks, and even some urban MacDonalds at using free WiFi as an inticement into their stores. These companies have found that their are ways to make money off of internet access without charging for it directly. Meanwhile, from what I've heard, airports (the first to get into the paid hotspot business) have not done very well with their revenue model. If anything, I think 3G will kill the paid hotspot model, as why should I pay for the possibility of a hotspot when I can instead pay for the assurance of 3G.

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