Gimmicky WiFi Networks No One Needs

from the millions-of-dollars-down-the-drain dept

In the mad dash to build out WiFi networks as a broadband network, there are an awful lot of questions that have remained unanswered. There’s the question of whether or not the technology is really right for the job. There’s the question of whether or not the incumbents will actually let the networks exist. However, perhaps the biggest question (and one discussed the least) is whether or not anyone actually will use these networks? Last year we got worried that too many cities were rushing to offer muni-WiFi just because everyone else was, and not because of any evidence of need. This may be playing itself out in Taiwan, where a well hyped WiFi network apparently isn’t getting very much usage at all. It seems that people just don’t see the value — though, some may start to use it as a backup.

With that in mind, it’s interesting to note (with skepticism) the latest announcement from the massively overhyped, extremely gimmicky “FON.” The company, as you’ll recall, wants people to share their WiFi connections to build an international network of WiFi built on the backs of individual accounts. If you contribute to the network, you can use the network for free (basically wiping out the revenue potential from those most likely to use it). There are numerous problems with this plan, many of which we’ve outlined in the past — leading off with the fact that almost no ISPs allow their users to share WiFi. Another issue has been that users need to set up a special router — which most people probably weren’t will to do. To get around this the company has now announced plans to sell pre-configured WiFi routers for only $5. In exchange, you need to agree to leave your router open for the network for at least 12 months (though, of course, most people doing so will be breaking their ISP’s terms of service). This, apparently, is what the $20 million plus that the company has raised is going towards — but doesn’t do much to explain how they’re actually going to make money. On top of that, if you add in the incredibly dispersed nature of this network, combined with the idea above that there just might not be that much interest in these types of networks, and you have to wonder if some VCs just bought a bunch of people super cheap WiFi routers for no good reason.

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Comments on “Gimmicky WiFi Networks No One Needs”

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Jean Thibaudeau (user link) says:

If people can get access anywhere to wifi and someone makes money outta it is great because it will be sustainable. That’s the kind of business model I want. Of course the ISPs will try to block this, but this kind of terms of service may drive me to a smaller, friendlyer, more permissive ISP. Wheel of retaining, it is called.

Wolfger (profile) says:

ISPs loose a customer if you and your neighbor decide to split the cost and share internet access. It’s like going to a restaurant and getting the all-you-can-eat buffet, and giving a meal’s worth to your friend under the table.

Or maybe ISPs *gain* a customer because neither you nor your neighbor is willing to pay up the full price for a service you will only use a fraction of!

And this is in no way like “all-you-can-eat”, this is more like “dude… wanna split a large pizza with me? Cuz I can’t eat all of that by myself.” Broadband customers are buying a finite amount, and, in most cases, that finite amount is far more than they’re going to actually use. The ISPs, of course, want us all to buy the large pizza and just throw away what we can’t eat, but smart customers will invite friends to share and contribute to the cost.

Doug G. says:

Capitalism rocks

This is the beauty of capitalism. This idea may seem like a waste of effort to many, but someone out there apparently thinks it is worth spending $20 million on. Hey, it’s their own money, let them take the risk. Some of these seemingly crazy ideas turn into massive successes — I know of a couple of college kids who thought it would be a good idea to download the entire internet onto their laptop so they could index it. It sounded silly, but now it’s Google. Without capitalism, these ideas would never have a chance.

Tellman says:

This is an example of bad journalism. Author of the post clearly have not done his research. Make sure you reed WHAT the business plan of FON is and how it is trying to work with ISP to create a new system – not “steal” access and customers.

And second shortsightedness of this article is to claim “uselessness” of WiFi networks based on ONE example of a specific implementation of the network access by one specific company/city government. What are the reasons it is not used? How come those details are not mentioned? Maybe there is something wrong at core with that specific implementation (e.g. all traffic is monitored and decrypted, and you have to agree with such T&C)?.

Why not take as example cities like New York or Chicago.

Any who, it is such sensationalist postings, which hinder credibility for a blog. IMHO.

Mike (profile) says:

Re: Re:

Make sure you reed WHAT the business plan of FON is and how it is trying to work with ISP to create a new system – not “steal” access and customers.

Yup. I read it, and wrote about it in the past. Where are these ISPs? So far, it doesn’t seem like very many are rushing to sign up with FON. So, until we see them, it seems reasonable to question this part of the plan.

The fact that this new plan is to sell routers directly to consumers suggests, in fact, that the plan to partner with ISPs hasn’t gone very well.

And second shortsightedness of this article is to claim “uselessness” of WiFi networks based on ONE example of a specific implementation of the network access by one specific company/city government.

Perhaps I wasn’t clear. I’m not saying that all of these networks won’t get usage — but it’s a very real question to ask whether or not these networks are actually wanted/needed by people. So far, no one seems to be asking that question. They just assume they’re needed.

Why not take as example cities like New York or Chicago.

Um. We have. If you follow the links, one of the other articles was about NYC and noted that it didn’t seem like NYC needed muni-WiFi, yet it was trying anyway.

So, which part wasn’t credible?

Linguistical says:

Not Like All You Can Eat

Sorry Neil, his analogy was correct. Your ISP gives limits your bandwidth and allows you “unlimited” access, just like an all you can eat restaurant limits you to a plate and often restricts the amount of time you can be there.

ISP’s like most businesses including all you can eat restaurants, base their pricing on what an average user will use. If you shared your Internet access with your neighbors you would be using well over what is expected, which would limit the bandwidth and performance that other paying customers would receive. Then the ISP would have to change its pricing to be usage based, which would again hurt other paying customers.

There’s a fine line between making a statement about pricing that’s not fair and stealing. We all bitch about telcos, the RIAA, and the MPAA and righfully so, but in the end if we don’t agree with what they do we can just not buy their product or get service from somebody else. If we really want to change something we should find a way to steal gas. That’s unfortunately one product we can’t stop buying or get it from someone else because they all gouge for it.

Peter (user link) says:

Wi-Fi for Public Service Needs

Some cities, like Minneapolis, MN where I live, are going for muni-wireless to reduce city worker costs including police, fire, and various inspectors. Since the network will be in place for them, why not also open it up to residents to use for Interntet access. This does seem sensible.

Whether they will realize the projected savings or not is another question.

WirelessGuy says:

Just don't see it making any money

Well, I really don’t know if the ISP will ever know, unless they drive around and see who is open. Sure, they can put down on paper that you can’t share, but how do they know if it is open? can they require you to close the system down? Not really sure if they can force you to use encryption or MAC layer filtering. Then if people use VPN’s over the open WiFi, they will never be able to sniff the packets going across.

This is the plan on most UMA type offerings, to use IPSEC so that all traffic looks like VPN traffic, so ISP’s won’t be able to block it as if they would if it was going across as h.323, SIP, etc….

However, what they business model is who knows. I lived in the dot.bomb days in broadband wireless and saw millions poured into holes when the companies felt they were going to print money. They are all gone now. Wait, here comes one from the grave…welcome back clearwire….

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