NGN: VCs debate carriers’ Wi-fi significance

BOSTON--Could carriers be missing out on Wi-fi’s growing success, and does it matter? That two-part question has been on the minds of everyone from carriers to the Wi-fi free usage community. Attendees of the Next Generation Networks conference today saw venture capitalists argue that question in a panel entitled “After the Party’s Over: Investing in Networking Today.”

As it turned out, David Helfrich of ComVentures, Roger McNamee from Integral Capital Partners and Krish Prabhu of Morgenthaler, talked less about networking investment opportunities in the public wireline market, and more about the enterprise and wireless spaces.

“There’s definitely some reluctance today to put money to work in networking,” said Helfrich. “We like the enterprise and the changes it could drive in the carrier market.”

McNamee added, “The carrier market looks scary for the foreseeable future, but enterprise investment opportunities continue to be available, and if I picked just one to invest in today, it would be in wireless.”

All three panelists agreed that wireless, and specifically all variations on the 802.11 Wi-fi LAN standard, is the hottest new investment area. But, while Prabhu, a veteran of public network vendor Alcatel, said carrier involvement is essential to the success of Wi-fi, McNamee said investors do not need to look for Wi-fi opportunities that involve carriers.

“Wi-fi is already the next wave, with or without carrier support,” said McNamee. “The Internet succeeded without carriers figuring out what role to play. Maybe [the existence of Wi-fi hot-spots in Starbucks store] means Starbucks becomes the next big carrier. Who cares? The Wi-fi users don’t.”

Though McNamee’s comments about Starbucks were applauded by panel attendees, Prabhu disagreed. “The carriers are very important because someone has to invest in Wi-fi becoming a reliable public service. You need carriers for any wireless service to achieve a major market penetration.”

NGN co-chairman John McQuillan actually questioned the panelists’ hot interest in wireless at large, saying that an industry controlled by large consumer electronics companies and large service providers does not leave much room for small start-ups in which VCs might invest.

“Wireless is creating enormous social change, but it will be difficult for small companies to have a part of that,” McQuillan said.