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Free WiFi in the US - Google and Microsoft hope so

by Josie Sephton | Feb 25, 2013

Earlier this month, the Federal Communications Commission (FCC) in the US approved a proposal to create a country-wide WiFi (also called Super WiFi) network which would offer free WiFi access in virtually every metropolitan area, and many rural ones to boot. The concept of a super WiFi network for the US has been simmering away for years; however, its creation is looking a lot more likely than it did before.

These proposals have been given the support of the seemingly archrivals - Google and Microsoft - who are perhaps better known for competing against each other in fields like software development, website advertising, mobile OS, social media, connectivity initiatives and hardware development, fighting for clients over the internet and on mobile.

So why is the FCC proposal so interesting to these two?

The problem of unmet expectations

Over the last few years we have seen unprecedented growth in both the number of mobile internet devices and users of mobile voice and data. This rapid growth has, naturally, put a lot of pressure on the mobile phone operators to provide faster and more reliable internet connections, and with larger data allowances that don't require users to take out a loan to pay for them. To meet these expectations, mobile operators have been investing increasingly more financial resources in the development and implementation of new technologies to increase the networks' capabilities and speeds, which in turn has brought about the introduction of 3G, HSPA, HSPA+, DC-HSPA/+, and finally the 4G LTE. The infrastructure has changed a lot over the last 5 years, but equally, so have consumers' expectations, which are still not met by services offered by many mobile operators.

So what do mobile internet users want? First of all, they want internet access to be available from any place, not only on the ground, but also underground, in the air and even in the middle of the ocean. They want to be able to connect to the internet with any mobile device, not just a smartphone, always and everywhere. They want the internet access to be cheaper and faster. They want to access internet without a fear of hidden charges and costs they are not aware of until the next bill comes. They want to use internet freely without having to sign yet another long term contract and commitment. And finally, they don't want to be locked out of the internet because of "traffic congestion".

By any stretch, this is a big ask, and mobile operators are simply unable to meet much of these needs quickly enough, for a number of reasons. First and foremost is the cost to acquire and maintain the frequencies used for mobile networks and the cost to build and maintain the mobile network infrastructure. Added to this, every upgrade to new technology takes a lot of time and money - and users' demand for data over the last 4-5 years has consistently outgrown the operators' technical capabilities. There are also issues that users are not always aware of, like restrictions imposed by national telecoms regulators, national competition authorities, international rules and regulations, and many other legal restrictions that assure competition on the one hand, but on the other, don't allow for a quick transition or implementation for big businesses like telecoms operators. Furthermore, mobile operators face pressure from their own shareholders (corporations, retirement funds, individual investors) to deliver profits, pay dividends, grow organically, and expand internationally. Naturally, the funding for this comes from operator revenues, which means that prices for mobile services and devices will not go down as quickly as many users would want.

A possible solution?

A number of experts have stated that the fastest (and relatively cheap) way to improve data transfers over the mobile networks is to provide a WiFi network, which would complement the mobile networks. This has been discussed in Strategy Analytics' report "WiFi Offload - Roadmap to Seamless Mobile Interoperability". WiFi basically offers a wireless data exchange for devices (including high speed internet) via access points. WiFi can be used as a "back-up system" to off-load the main 3G and 4G networks when those are getting congested with too many users and/or too high data demand. Mobile operators in China, Japan, South Korea and the USA have led this trend, with China Mobile perhaps the most notable example: it has installed over 3 million WiFi access points which carry 80% of its mobile data traffic. In many other parts of the world, however, it is still early days for WiFi offload, but WiFi is certainly a key element in the medium term network planning of the average mobile operator.

Where does Google and Microsoft fit in this picture?

The idea of using a WiFi network as a means to provide internet access is an attractive one for Google - unsurprisingly, given its business model, which is hinged around internet access. In 2008, the company approached the FCC (US telecoms regulator) for the first time to ask about access to unused frequencies known as TV White Space (TVWS), with a view to converting them into a WiFi network. Soon after Microsoft joined Google and few other major companies (i.e. US equipment manufacturer HP) and became a major player in the TVWS re-farming movement. Since then, both Google and Microsoft have participated (although separately) in some "local level" developments around WiFi, but not in major scale projects. However, over the last 5 years, both companies have had a chance to experiment with the idea, the capabilities, and the possibilities of the WiFi infrastructure.

Of course, the situation has changed quite dramatically since 2008 as internet connectivity is more in demand today than ever before. From both Google's and Microsoft's perspective, given they make money from selling content over the internet (Google more so than Microsoft), the issue of internet access is paramount. However, with the high costs of mobile internet usage in the many countries (especially in the US) combined with a relatively small data allowances (at least for cheaper plans, which tend to be used by the majority) - essentially stifling potential growth in both companies' businesses - the two have lobbied the FCC to allow them the access to the TV White Space (TVWS). They would like to see US residents able to connect to the internet for free from anywhere in the country, via a simple and reliable mobile internet connection that doesn't come with complicated log-ins, data plans, access restrictions, contracts, etc. The precursor to this, of course, is that all devices need to be WiFi enabled.

The big question is who is going to pay for this, once it is up and running? It will be the users, no doubt, but not using traditional models like monthly contracts or daily/hourly access passes. We will pay by browsing commercials, viewing ads, opening links, searching websites, making payments, looking at ads and watching movies. Basically users will pay for the network by generating more traffic, and consequently more revenue for companies like Google and Microsoft.

Unsurprisingly, the US mobile carriers are opposing the initiatives, as it threatens their business model and revenue streams. And it is a serious threat. There is a speculation that both Google and Microsoft are working on new types of phones that will work only over WiFi networks (without the need of ever connecting to the traditional 3G or 4G networks). Considering that Google acquired Motorola Mobility and Microsoft acquired Skype (which offers internet-based calling), the promise of WiFi-only phone seems realistic. If realized, it could spell the demise of the current business models employed by mobile operators, and something they will need to react to.

Are we on the verge of a new technological revolution? The outcome and full intention of Google and Microsoft's joint lobbing is not fully known to the public. However, the initial tempter of a free US-wide WiFi network is an attractive one for users. Even if this goes ahead, however, it is likely to face a lot of hurdles before it becomes a reality. On a final point, this might not just be restricted to the US. Both Google and Microsoft have petitioned UK telecoms regulator Ofcom for access to UK's undeveloped spectrum, to convert it into free WiFi network as well. Interesting!

And if you are interested in finding out more about the TV White Space potential, Strategy Analytics' Wireless Operator Strategies Service will be publishing a detailed assessment of TV White Space technologies and opportunities in March 2013.

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