CABLE PROVIDER WAGES WAR AGAINST Wi-Fi FREELOADERS

Time Warner Cable in New York intends to stifle the practice of using Wi-Fi networks to provide free access to others on the cable carrier's dime before it has a chance to become a widespread phenomenon.

The carrier recently sent cease-and-desist letters to a dozen customers in New York who it claims are using the wireless LAN format to extend their cable modem connection and share it with other users.

Although the exact details of the letters were not released, a Time Warner Cable spokesman said the violators, also known as “sniffers,” are breaking their user agreements.

The company said it has no plans to take legal action yet. “At this point this activity is not a huge cottage industry where all cable systems are readying themselves to be protected from this,” the spokesman said.

In fact, Time Warner Cable found out about the 12 users only because the company was notified about the existence of NYCwireless, a Wi-Fi focused Web community in which members were chatting about their sharing activities.

“They broadcasted what they were doing as if to say, ‘Come get me,’” the spokesman said. “We are not suggesting others are not out there doing the same thing. Some industry observers always like to see this kind of thing as a David and Goliath passion play. But this is not a case of a big bad company going after an entrepreneur. This is theft.”

While there are technological ways to find out if cable modem users are extending services through Wi-Fi networks, few companies will spend the time and capital if it is not a widespread problem, he added.

Few broadband providers have even bothered with developing a formal policy for dealing with Wi-Fi sniffers because of the size of the threat, said a spokesman for the National Cable Telecommunications Association.

“Right now this is more of a market issue and not a policy issue, though it will be eventually,” he said. “It is a very nascent phenomenon.”

DSL provider Covad Communications, one of the first broadband providers to formally address the issue, tolerates users sharing their network connections via Wi-Fi, said a spokesman.

For cable operators, though, the issue will become more serious if users begin to redistribute video content. Such a move ultimately leads to carriers losing control of the broadband pipe and the attached revenue stream, said Martin Dunsby, vice president of operations with consulting firm Incode Telecom.

“Even though now a video signal is different than a cable [data] signal, the line is getting blurry,” he said. “If people can stream Internet traffic via Wi-Fi, they can just as easily do the same with video. This situation marks one of the first shots being fired in what potentially could be the shifting of the power base.”

Indeed, as the price of Wi-Fi equipment continues to fall, the sniffer problem is likely to continue growing.

“End-user innovation is outpacing the business model plans many companies had in mind for broadband,” said Kurt Scherf, vice president of research for Parks Associates. “With the number of software solutions and access points out there, end users have gotten ahead of ISPs.”