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Peace, Love & Wi-Fi

We're dangerous rebels,” Matt Westervelt joked. Westervelt, founder of the Seattle Wireless community users group, was telling the story of how a member of a San Francisco area wireless users group recently fell off of a roof as he was trying to deploy a Wi-Fi antenna. “The guy was all right,” Westervelt said. “It's just one of the challenges of working with the technology.”

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Overcoming a fear of heights helps, but facing the real challenges of independently deploying wireless LANs based on the 802.11b Wi-Fi standard also requires some understanding of wireless engineering and data networking. “It would be nice if Wi-Fi technology were easier to deploy,” Westervelt said. “Right now, there's a huge learning curve.”

Deploying Wi-Fi hot spots — small areas in private or public spaces that receive coverage from a Wi-Fi antenna — may not yet be a perfect science, but it is a rapidly evolving one, and it deserves attention from mobile and landline carriers. After all, there are good reasons why users in community groups such as Seattle Wireless brave the dangers of scaling rooftops.

There was once a smattering of wireless LANs around the country, primarily deployed by enterprise users for private use — networks that were useful for inexpensively communicating on a LAN basis and, less obviously, accessing the Internet. However, standardization and a seemingly insatiable hunger among users to access the Internet from anywhere have made the Wi-Fi market less a backwater fiefdom for proprietary technologies and more a legitimate commercial space.

Access point infrastructure and customer equipment (like wireless Ethernet adapter cards for laptop computers) have become much cheaper in the last few years. Pre-standard, a wireless LAN card modem would cost as much as $700, said Sky Dayton, founder, CEO and chairman of Boingo Wireless, an integrator of Wi-Fi hot spots and networks. More recently, it's been closer to $70.

“When I first bought one of these cards, it was $300. Now it's $47,” Westervelt added. “And we're already seeing 802.11 cards that are standard laptop offerings.”

The result of these trends is a snowballing grass-roots acceptance of Wi-Fi hot spots and Wi-Fi-based networks among community wireless users groups throughout the country. Whereas previous wireless LAN users were more interested in wireless for their enterprises, these community groups want Wi-Fi everywhere — the coffee shops, bookstores and public parks they frequent, as well as their own homes — and, taking a cue from the WLAN pioneers, they are not waiting for the mobile carrier industry to deliver on this Utopian ideal. With standardized, cheap Wi-Fi equipment available, they don't have to.

“What we're doing is built on standards,” Westervelt said. “It's not proprietary because if it were, the bankruptcy of one particular vendor could kill it.”

Among the growing cadre of community groups and independent users building Wi-Fi infrastructures, Seattle Wireless is forging an especially ambitious path. Rather than just encouraging group members to construct their own Wi-Fi hot spots, the group is trying to string together hot spots to build an alternative local loop wireless data infrastructure for the Seattle area using only off-the-shelf, but standard, Wi-Fi equipment.

And — hold your breath, carriers and would-be investors — they are not charging a penny for it.

Seattle Wireless is one of a handful of community groups throughout the world building so-called free networks and free-access Wi-Fi projects. Members of these groups track each other's progress through online communities such as FreeNetworks.org.

“We are building a local loop, rather than just one Wi-Fi Internet POP hot spot,” Westervelt said. “The people who are building Wi-Fi hot spots have a place in spreading this technology, but they are not part of the free networks movement.”

The idea of free networks is likely a troubling concept to carriers and other companies that hope to make money in the burgeoning Wi-Fi environment. The early success of independent Wi-Fi hot spots and the emerging free networks has inspired a flood of organized commercial interest.

Firms such as Wayport and MobileStar have attempted to spin Wi-Fi into national business models, entering partnerships with airports, hotels and even major retail franchises such as Starbucks to make Wi-Fi access available in their common areas and charging monthly fees or one-time flat rates for access.

Meanwhile, would-be network integrators have sniffed opportunity in the untamed wilderness of independent Wi-Fi hot spots. Dayton, who had some previous Internet success founding a little company called EarthLink, launched Santa Monica, Calif.-based Boingo last year to spearhead the integration of hundreds of Wi-Fi hot spots nationwide, as well as the integration of new ones.

“There are dozens of companies out there doing Wi-Fi, and many more coming, but it is kind of a patchwork quilt of different kinds of providers,” Dayton said. “What's hard is technically integrating all those networks so that users don't have a different kind of service experience on each one. The stitching of those networks is what we do, and it's not a trivial thing.”

Currently, Wi-Fi hot spots — especially random ones operated by independent proprietors of bars or coffee houses — can vary greatly in terms of pricing, customer service and overall service quality. Pricing can range everywhere from free to $1 per session on up to $9.95 per individual session from a national, commercial service such as Wayport. Customer service ranges from the nonexistent — some independent operators have makeshift antennas installed by friends and have no idea how the service works — to committed 24-hour technical service, again, as in the case of Wayport. Likewise, an access point from a company like Wayport may be state-of-the-art, whereas some independent operators have antennas made from hollowed-out Pringles potato chip cans.

Boingo brings some unification to the environment by charging users a $74.95 flat monthly fee, $24.95 per-10-day-session or $7.95 daily fee to access any Wi-Fi hot spot that is a partner in Boingo's national Wi-Fi hot spot database. Dayton said the database so far lists about 500 such hot spots.

Though the company had hoped to launch last year with as many as 750 hot spots, Dayton admitted that it has proved somewhat difficult to identify and partner with the wide array of independent operators. Still, Boingo plans have 5000 hot spots by the end of this year.

Dayton said the argument for small, independent operators to partner with Boingo should be clear. “We are another revenue channel for these companies building the networks, making them part of a national network and improving their capex for getting started in this business.”

But don't expect Boingo to begin recruiting operators of free networks, or for the grass-roots free networkers to align under the Boingo banner. Still, Boingo does list free networks in its database for informational purposes — as Dayton acknowledged, “There will be a lot of free and commercial providers as part of this whole ecosystem.”

Westervelt summed up the free network philosophy: “If I can get 11 Mb/s or can get it from a friend or get a hot wireless pass from my friend to a DSL or T-1 connection to the Internet, it's beneficial to all of us. Why would we want to charge for it?”

San Jose-based hereUare Communications is another company that sees the integration potential of independent Wi-Fi hot spots. Like Boingo, it is focusing on the need to perfect back-end billing and customer care processes. “We recognize that Wi-Fi equipment is getting quite cheap so that just about anybody can deploy it, but a lot of these independent operators don't know a thing about running a back office for a telecom service,” said Clark Dong, hereUare's co-founder and CEO.

But while companies such as Boingo and hereUare seek to grab the Wi-Fi trend by the tail, some efforts to commercialize Wi-Fi on a broader scale have so far met with spotty success — for example, San Jose-based Metricom, which counted a Wi-Fi-based service among its data offerings, went out of business last year despite strong user subscriptions.

Richardson, Texas-based MobileStar Network, meanwhile, was one of the first companies to come to market with a national Wi-Fi business plan. The company aggressively pursued partnerships with airlines operating elite flyer clubs inside airports, major restaurant chains and even Starbucks. The company trumpeted its relationship with Starbucks early last year, announcing a deal that initially involved bringing Wi-Fi access to about 500 of the coffee chain's locations around the country.

However, last autumn MobileStar fell on hard times and was forced to declare bankruptcy. Analysts suggested the company may have expanded too quickly and without a clear picture of what usage would be. They also have said that MobileStar was not clearing much of a profit margin on its highly publicized partnerships, a sentiment echoed by Dayton.

“If you look at the Starbucks deal, they were paying hefty fees to put their service in the Starbucks locations, with no clear [return on investment] for MobileStar,” Dayton said. “Their problems stemmed from how they approached the business.”

Dong added, “MobileStar tried to do everything themselves. They had this idea that you need to own the infrastructure and operate the service and control the back end. But independent operators can deploy equipment that they don't own and brand a service as their service, but not have to manage that service. It's a more convenient way.”

The bankruptcy of MobileStar focused something of a deathwatch on the other major national Wi-Fi operator, Austin, Texas-based Wayport. Similar to MobileStar, Wayport has a series of high-profile partnerships with airlines, hotels and retail outlets, including a major deal with the corporate owners of the Radisson and Wyndham hotel chains. However, Wayport officials insisted that their business plan is different.

Dan Lowden, Wayport's vice president of marketing and business development, said, “Our service focuses much more on the corporate business user and not on the consumer.” In fact, Wayport's marketing includes a corporate membership program enticing companies to sign up 50 or more users for one-year commitments at $19.95 per month per user.

Lowden also said that Wayport has renegotiated many of its partnerships to give it better terms. “Two years ago, Wi-Fi companies were throwing money into partnerships that didn't make sense,” he said. “Now, we are walking away from high-profile deals for that reason.” Just days ago, Wayport closed a $15 million financing round that Lowden said will carry the company toward profitability.

While MobileStar's bankruptcy still haunts the Wi-Fi industry, investors have not been scared away. Dayton said his initial investors, including New Enterprise Associates, Evercore Ventures and Sprint PCS, had already seen Wi-Fi as the next big thing. In fact, NEA and Evercore are backing multiple Wi-Fi ventures: Both have written checks to Wayport, and NEA has backed makers of Wi-Fi semiconductors and access points as well.

With investor support and new commercial ventures popping up, it's worth wondering why major mobile carriers and even telcos have not begun to exploit Wi-Fi themselves. As a high-speed fixed wireless data medium, the spread of Wi-Fi is believed by analysts to have the potential to undermine mobile carriers' efforts to advance their 3G strategies.

U.K.-based consulting firm Analysys indicated in a recent study that the prevalence of Wi-Fi hot spots in the U.S. may push wireless data users toward Wi-Fi before 3G becomes widely available here. The report stated that while the Wi-Fi market is now a $1 million nugget based on access from roughly 3700 locations, it will be a $3 billion market with potentially 41,000 access points by 2007.

Few carriers seem alarmed by that potential, and even fewer seem to have taken notice of the Wi-Fi market at all. VoiceStream Wireless is the exception. The Bellevue, Wash.-based mobile giant quickly snatched up MobileStar's assets when they were put up for sale last November. Although VoiceStream so far has not clearly indicated its plan for the MobileStar properties, it continues to serve existing MobileStar users and appears to have kept the Starbucks partnership intact (for more details, see story on page 56). A company spokeswoman said VoiceStream soon will make a major announcement regarding its Wi-Fi strategy.

The mobile carrier's intentions in the market are a topic of some discussion among Wi-Fi users. “VoiceStream's involvement in Wi-Fi is kind of weird,” said Westervelt, himself a VoiceStream mobile voice user. “But mobile has dead spots, and this is one way of dealing with that, I guess.”

Meanwhile, no other mobile carriers or telcos have invaded the Wi-Fi market. Even Sprint PCS doesn't discuss its investment in Boingo. A Sprint PCS spokeswoman said the company invested seed money in the venture that eventually became Boingo, but has not otherwise been directly involved in the company's development.

Westervelt said carriers may still hold the Wi-Fi market at arm's length because of its uncertainties, acknowledging that Wi-Fi is not reliable. “Wireless technology in general is kind of flaky, and what we have is as inconsistent as anything else,” he said. That's why he thinks that landline telcos probably would not be interested in Wi-Fi as an alternative network solution. “They wouldn't be able to offer SLAs or a promise of reliability.”

Because Wi-Fi technology uses unlicensed spectrum at 2.4 GHz, it is not regulated. This is both the chief enabler and the primary bane of its existence: Anyone can work with Wi-Fi without running afoul of regulators or companies with rights to the same spectrum, but interference is a frequent problem. “Carriers may be looking at this stuff and getting curious, but we're not getting any flak from them,” Westervelt said. “I'm kind of under the belief that telcos wouldn't want to do what we're doing.”

However, Westervelt is still sensitive to critics who believe Wi-Fi would realize its greatest potential as a regulated and commercialized service. “We're not hackers. We're not stealing bandwidth from telecom companies. We are creating data bandwidth where there was none before, and the more people that know about it, the better.”

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© 2014 Penton Media Inc.

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