Why Wi-Fi Wont Fly - Page 3

Hot Shops

In the absence of the financing required to build a national Wi-Fi network, many in the industry are relying on the efforts of hundreds of mom-and-pop coffee shops, pizza parlors and cafes to put in their own Wi-Fi hot spots. As the price of 802.11b base stations has come down, that initiative has gained some momentum. Boingo Wireless is offering "Hot Spot in a Box," an $895.99 kit that includes the base station and 10 "Boingo Here" stickers to put in the storefront window. All the retailer has to do is pay for a T1, DSL or cable connection, and it, too, can offer Wi-Fi service as part of the Boingo network. Boingo provides the client software, monitors usage, does the billing and splits the proceeds with the retailer.

As simple as this approach seems, it is fraught with problems. The owners of these shops may know how to make a mean double espresso, but theyre typically not as good at installing and managing wireless networks. If they happen to put the base station in the back room on the other side of the wall from their microwave oven, or next to their cordless phone, the service could go down every time they get a call for a pizza delivery, or warm up a can of soup. Thats because 802.11b uses the same 2.4 GHz unlicensed spectrum as microwave ovens, cordless phones and other devices, something that can create problems for even the most expert operators.

"Most of the wireless networks Ive seen are far from bullet-proof," says Phillip Windley, CIO for the state of Utah. "They are far from what Id be willing to pay money for. They will have to be at least as reliable as the cellular network, and that isnt very reliable." Windley is just now installing Wi-Fi networks in state buildings. "Im not 100 percent convinced that any network in the unlicensed spectrum can be reliable for a public network," he says. "Ive no doubt we can do it inside our own building, but out in public it is tough."

Today, public Wi-Fi networks are still few and far between. That is why there are only 7,000 subscribers, according to research firm In-Stat MDR of Scottsdale, Ariz. Most of the people using public Wi-Fi networks like WayPorts do so on a pay-per-use basis. WayPort charges between $6.95 and $9.95 per day. Vucina estimates that 38,000 people connect to WayPort this way each month.

The public Wi-Fi market is not going to take off until it becomes ubiquitous, until people know they can easily find a hot spot or hot zone. That means getting into all the major airports and hotels, as well as nationally-known retail establishments—companies like McDonalds, Starbucks, Kinkos, 7-Eleven, Shell and Holiday Inn. And that is going to require large capital investments, either by major carriers or the hotels, airports and retail establishments themselves. Until that happens—and dont expect it to any time soon—the public Wi-Fi market will remain largely a curiosity, and an endangered one at that.

Meanwhile, just as I was completing this column, I heard that hereUare Communications, the company that operates WiFi Metro, announced it had failed to raise additional financing and was up for sale. If the company doesnt raise more money, it will shut down. Turns out my "very cool" service may have been just too good to be true.

Eric Nee, a longtime observer of Silicon Valley, has served in a variety of editorial positions at Forbes, Fortune and Upside magazines. His next column will appear in November.