TCS Daily

Whither Wi-Fi?

By Duane D. Freese - July 30, 2002 12:00 AM

With apologies to Stephen Sills and Buffalo Springfield, but there's something happenin' in the world of telecommunications, but what it is ain't exactly clear. Yet.

Some major players are now getting behind a technology called Wi-Fi, short for Wireless Fidelity, that is rapidly creating nests "Third Places" in cities around the country.

An estimated 18 million businesses and individuals now have established such networks. And on July 16, The New York Times reported that IBM, Intel, AT&T Wireless, Verizon Communications and Cingular Wireless were discussing creating a company to build a national network for wireless hot spots, places where people - for a fee - can connect wirelessly to the Internet. Computer and software makers - headed by Microsoft - appear ready to integrate Wi-Fi into computer programs much as they did browsers for surfing the net by wire. There are even some rather pricey digital cameras that will let people transmit pictures and videos in real time over Wi-Fi networks.

Such support suggests that Allied Business Intelligence's prediction of 60 million people using Wi-Fi -- or one of its brethren either in the 802.11 standards, Bluetooth or other unlicensed wireless networks -- by 2006 might prove an underestimate of its market penetration. After all, when Garry Trudeau begins parodying the pirating of signals from Wi-Fi home networks in his comic strip Doonesbury, as he did on Sunday, July 21, the mid-life crisis Baby Boom generation has got to already know and have some understanding of it.

Prices are dropping rapidly, as they are for other high tech goods. Access stations that used to cost more than a thousand dollars now sell for as little as $100. And the cards with their little antennas have dropped in price from about $300 to $500 to as little as $50. Your next notebook or computer upgrade is likely to include an internal antenna.

Further, as equipment makers are developing ways to combine all the standards on single cards and larger players get into the field to make the experience of Wi-Fi seamless, it's ease of use will become even more attractive. By letting people take and use their notebooks anywhere, Wi-Fi-ying increases the pleasure of the experience. It's not unlike springtime classes on a university quadrangle. And that could prove productive in the immediate future for cable and telephone companies' broadband.

Why Wi-Fi?

Consider the key question: Why get a Wi-Fi connection? Answer: To hook up to the Internet wherever you go in your home or office. And what is the connection you hook into with Wi-Fi? Answer: A cable modem, digital subscriber line or other high-speed wireline or satellite connection.

While Doonesbury pokes fun at pirating -- and cable and phone companies crack down on people sharing their high-speed lines with neighbors -- what Wi-Fi really is doing now is making broadband more accessible, affordable and richer. As a small business, you don't have to spend thousands of dollars wiring your office. As a homeowner, you can connect your spouse and children can make use of a broadband connection at the same time you do. In short, Wi-Fi looks to provide a boost for broadband as it makes it affordable to more businesses and more useful for homeowners.

Indeed, some see the losers in the deal being cellular wireless companies. They've already paid billions for licensed spectrum, and now will pay even more as the FCC on July 24 announced it will auction off more spectrum for wireless services by 2004, just a year and a half from now. The extra licensed spectrum will allow cellular companies to deploy their own so-called 3G, for third generation wireless, which unlike 2G, which is primarily just voice, will allow always-on data collection through a high-tech cell phone or other portable devices.

A year and half, though, in the telecommunications industry is like an eternity. And while some don't see Wi-Fi as competing with 3G, if it does, it has a leg up in the competition because it is spreading, as one commentator remarked, "like kudzu." Hardware and software firms are making devices to better and more securely utilize it, and the government finally is giving it some room to roam, with the FCC in May amending its rules to allow new products previously barred that utilize and share all the unlicensed spectrum.

Share and Share Alike

Sharing spectrum? This runs counter to the notion that the spectrum is some kind of a finite resource in its own right that needs to be allocated among competing users.

That's pretty much been the scheme since the Radio Act of 1927. It was enacted after Secretary of Commerce Herbert Hoover simply decided in July 1926 not to regulate radio, and the chaos in the resulting eight-month period led to Justice Felix Frankfurter concluding that "the radio spectrum simply is not large enough to accommodate everyone."

So, when Congress set up the FCC as an independent agency under the Communications Act of 1934, its primary mission was to police the airwaves for "public interest, convenience and necessity." That has meant doling out licenses for exclusive use of non-governmentally appropriate portions of the spectrum to radio and television broadcasters, and later, under the Balanced Budget Act of 1997, auctioning off most other parts to other users, including, in particular, cellular phone companies.

But what happens if spectrum can be shared? What happens if, as Yochai Benkler, a New York University law professor, has argued: "There is no ether out there, no finite physical 'resource' that needs to be allocated" and that the problem is a matter simply of more refined use of more discriminating equipment?

Suddenly, as Benkler argues, government moves from heavy-handed allocation schemes to a system of setting up rules for use of the airwaves - like air traffic controllers or, more precisely, highway patrolmen.

"Once we understand that the question is how to regulate the use of equipment, not of 'a resource,' we will be able to understand we have alternative regulatory models," Benkler argues.

Out With the Old

The intriguing thing about Wi-Fi and the experimental use of the unlicensed space is that if it proves that spectrum can be shared - and even enhanced by the sharing, according to scientists and communications consultant David P. Reed - then all the old method of allocating and auctioning spectrum should go by the wayside.

Continued quasi-ownership of spectrum by broadcasters (by congressional allocation) and cellular phone companies (by auction) would occur only if government decided it wanted to create an artificial shortage of air space so as to take in money from them.

But get rid of the shortage and what then will happen not only to government revenues but to the advertising and subscription models of doing business built on camping on the spectrum - or gaining, as cable systems do, a derivative use of it? If spectrum can be shared, becomes unlimited, and is free, who will gain and how will they make money?

I can't picture that quite yet, anymore than I could figure out all the uses to which people now put the Internet. Which is why even as I know something's happenin' here, but what it is ain't exactly clear.

Whither Wi-Fi? Is it just a passing wave or a communications tsunami?



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