The universal Net access pipe dream
Commentary: Municipal WiFi efforts unlikely to survive
By John C. Dvorak
Last Update: 6:34 PM ET Nov. 30, 2005
BERKELEY, Calif. (MarketWatch) -- Every few months we seem to hear about another initiative by a U.S. city to deploy free wireless Internet access.
The latest entry, New Orleans, is still struggling just to get the lights back on, months after Hurricane Katrina caused massive flooding, destruction and death.
Nevertheless, New Orleans looks to be the first and only big city to actually implement a WiFi plan.
This will provide great access for an entire (reduced) population. It should help New Orleans to recover. But the likelihood of it becoming a larger trend is nil and you can be sure it will eventually be killed there too.
If the Internet was struggling and it was impossible to make a buck by being the toll collector on the Information Superhighway, then free wireless (802.11/WiFi) access for the masses would be possible. As things stand today free access to the Internet, no matter how noble the rationale, will impinge on far too many vested interests.
Too many people are making money on connectivity.
This will come to a head when a newer form of wireless communications called WiMAX appears in the next two years. It's being pushed hard by Intel (INTC:
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WiMAX has a single point connection radius of approximately 10-30 miles. Thus it should become a favorite technology for municipal Internet connectivity. Many believe it will relegate the weaker 802.11x WiFi networks with their smallish 300-1500 foot radius to only local area network status.
In an ideal world you'd have a municipality covered by WiMAX for the connection to the Internet. That connection would then be redistributed through homes and offices with WiFi. The two technologies do interoperate.
In fact WiFi is now so entrenched in various pay-per-hour venues that it's unlikely that WiMAX will ever get a foothold. Powerhouses McDonalds and Starbucks, for example, are making money on the side with their WiFi connection schemes and the monthly fee they charge. With WiMAX someone could come into a Starbucks, buy a cappuccino and log on to the big municipal net with a WiMAX card thus cutting Starbucks out of the picture.
Starbucks and McDonalds are hardly the only players. T-Mobile has a WiFi roaming service they sell as do other cell phone carriers.
All the major hotel chains expect to make and extra $10 a night per guest for Internet connectivity too.
Whenever anyone offers free Internet access you begin to hear loud complaining about it. JetBlue's free Internet access in airport terminals is under constant attack, for example.
While the nation would benefit greatly from universal access with both Wifi and WiMAX there is just too much money to be made for this to ever happen. It may happen in other countries and investors should take note -- France sounds like a candidate to me -- but not in the USA.
The sad thing is that this would actually make the economy stronger and end any issues over the so-called digital divide.
The best effort to create universal free municipal access previous to New Orleans was in Philadelphia. These efforts were quickly foiled by Comcast (CMCSK:
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FinancialsMore CMCSKCMCSK26.00, -0.35, -1.3%) and Verizon (VZ: verizon communications com
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FinancialsMore VZVZ31.98, -0.17, -0.5%) , two companies that would have been hurt by local government offering free connectivity service.
Some years ago I believed that a net connection in a hotel, or anywhere for that matter, would be like running water or electricity. There'd always be a socket or faucet someplace where you could get a little of either for free. You do not pay an extra $10 a night in a hotel room so you can use the shower.
While there may be some ad hoc sharing here and there and a few stalwarts like JetBlue (JBLU:
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FinancialsMore JBLUJBLU18.44, -0.21, -1.1%) will try to maintain a free service for its customers, the trend is in the other direction. WiMAX may eventually become available for large municipalities, but it will cost money.
Perhaps small towns with less political pressure may mange to deploy some free systems. But it seems as if it will be impossible in the big cities.
To the citizens of New Orleans: enjoy it while you have it.
Dubi
