Carrying On: Carriers: It's Time to Embrace Wi-Fi

Smart carriers will start to realize the future is in integrating Wi-Fi and cellular services. Customers are ready, willing and able to pay fair prices for them.

March 10, 2005

3 Min Read
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For one thing, there are many alternatives to 3G. There is broadband in the home, hotel, airport and mall. There is Wi-Fi at Starbucks, McDonald's and thousands of other retailers. The number of locations where I can't find a connection gets smaller every day. If you're in Vermillion, S.D., or Enid, Okla., you can easily find a hotspot--all you gotta do is look.

While cellular data services may be convenient, they are not cheap. Do carriers really expect you to pay $60 every month? Even worse, what about when they charge for usage without a cap on fees? The service is so addictive that it's easy to run up a huge bill. But the month you get a $300 charge for cellular data usage is the month you throw the card into the trash, hide the bill and swear off 3G forever.

Another challenge is high-speed coverage. Although 2.5G services are generally available, they are little faster than dial-up, and you can count the number of U.S. cities with true 3G on your fingers. By 2006, you might need to take off your shoes. The Europeans are years ahead, even in the "undeveloped" east --right now, people in Moldova are snickering at how pathetic we are. And let's not even talk about the Japanese, where wireless is as much a part of the culture as Hello Kitty.

Because the carriers are slow, corporate America is flocking to Wi-Fi. It's rapidly replacing analog dial as the principal method of corporate-provided mobile access in the States: 59 percent of U.S. companies will have more than a quarter of their users using Wi-Fi remote access by 2007, according to a Meta Group study. By comparison, only 40 percent of companies will take cellular data to that level.

There is still hope for the United States to gain some wireless bragging rights, but Wi-Fi must be central to the strategy--in part, because it is already here, and cheap. At least a third of the 15,000 Wi-Fi locations offer the service free.Yet paid subscription models still make sense: Companies routinely reimburse traveling workers $10 for a single day of hotel Wi-Fi, so $30 a month for nationwide service is an easy sell. Even better, charge $50 a month for Wi-Fi with cellular and you're onto something big. Smart carriers will realize that their future is not in using either Wi-Fi or cellular; it is in integrating the two.

Free Market?

Free enterprise is core to America. Carriers are businesses, not charities or government institutions. They have a right to make money, but not to public protections on their investments. Yet newly proposed laws in at least 10 states would prevent cities from offering Wi-Fi services in competition with incumbent carriers. If cities find a reason to build their own municipal Wi-Fi services, they should be allowed to do it. Carriers, and the courts, should have no say in the matter. In return, buyers don't have a right to complain when carriers go where the money is.

The reality is that Wi-Fi is here, and carriers need to embrace it rather than block it. There is value in having consistent and convenient services, and customers will be willing to pay a fair price to get them.

David Willis is a vice president of Meta Group's Technology Research Services. Write to him at [email protected].0

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