Wi-Fi is Evil

One of the dirty little secrets within the telecom industry, particularly in the wireless and Internet access markets, is the growing fear of Wi-Fi. No one talks about it but the last thing the telecom industry wants to see is ubiquitous Wi-Fi. Why? If Wi-Fi was widely available at no or little cost, people would be able to jump on a Wi-Fi network, and bypass all those expensive 3G and Wi-Max networks being rolled out by carriers. This explains why the carriers are freaked about the rapid growth of municipal Wi-Fi, and why so many wireless devices have their Wi-Fi turned off or emasculated when they’re launched in North America. A good example is the Blackberry 8800, which has been criticized for not having Wi-Fi.

Another threat to carriers is Wi-Fi advocates such as FON, which encourages people to share their Internet access. (FON, by the way, has received venture capital from Skype’s Niklass Zennstrom and Google.) So, you have to sit up and notice about a deal between FON and Time Warner Cable, which will let its 6.6 million high-speed customers share their networks. This is a major development given FON has made little progress so far in North America, and it could provide people with a cheap or no-cost alternative to the outrageous fees charged by wireless carriers for Wi-Fi access.

Without being too over the top, the FON-Time Warner deal is yet another sign the cablecos have telecom carriers on their heels. Other than analysts such as National Bank’s Greg MacDonald, few people are talking about the fact the cablecos have a superior plant than most carriers (other than perhaps Verizon, which is spending billions on fiber-to-the-curb). And now they’re starting to aggressive leverage it in market such as high-definition TV and Internet access.

Of course, the cablecos aren’t going to be totally user-friendly. While Time Warner is happy to let FON into its network eco-system, you can expect to see bandwidth caps to keep things in control. Rogers, for example, recently a survey to users in Canada asking them what they thought about a bandwidth limit of five gigabytes/month to “limit excessive user of the Rogers Internet network”.