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What Would Happen If America Got Free, ‘Nationwide’ WiFi? Google Wins, Carriers Lose

free-wifi-attFT2Source Forbes by Parmy Olson, Forbes Staff
 
If you’re seeking an example of economic disruption, look no further than the Federal Trade Commission’s designs for Wi-Fi networks that cover large swathes of the United States. A proposal pending before an FCC panel aims to make access to the Internet and phone calls free and easy for millions of people across the United States. There’s a big if here. Having already run the political gauntlet for years, the proposal would face a logistical nightmare if approved.

But traditional mobile network carriers are apparently not taking any chances.

According to a much-hyped story in the Washington Post today, lobbyists representing the $178 billion wireless industry have been counteracting the proposal, with the primary detractors reportedly being AT&T, Intel, T-Mobile and Qualcomm.

The FCC’s project has been in the works for some time — known less dramatically as the White Space proposal — but the Post’s story highlights direct lobbying efforts by nervous detractors in the wireless industry. Which means someone somewhere is taking the FCC’s attempts seriously.

In a nutshell, the FCC is proposing that free Wifi be extended to nearly every metropolitan area in the United States, along with “many rural areas,” according to the Post. There’s not much detail on how it would accomplish this, other than that it would force local TV stations to sell chunks of airwave spectrum rights to the U.S. government, which would then use them for public Wi-Fi networks. The proposal is being considered by a five-person panel and still requires approval to move forward.

Idealistic echoes of free, nationwide healthcare aside, such a move would dramatically alter the corporate dynamics of mobile communication if it actually worked. It would draw a clearer battle line between traditional cellular networks and Internet companies. On the one side, carriers want to cling on to financial control of the airwaves, while on the other, Internet giants like Google want it free and increasingly populated by people using their services.

The carriers’s contentions are clear: the spectre of free calls over the Internet would cripple their traditional business of enabling calls over their own network and spectrum. It would follow the bleeding that’s already happening in SMS revenues. Thanks to the rise of mobile messaging services like WhatsApp, Pinger and GroupMe, which use the Internet to send free text messages, carriers like AT&T and T-Mobile have already lost hundreds of millions in potential profits. They still make money data transfers for those messages, but nowhere near as much as they once did with traditional texts.

Why is Qualcomm — a mobile chipmaker whose fortunes are largely twined with those of handset makers like Samsung and HTC — joining in the critics? Because its flagship Snapdragon chip is currently the only mobile processor that integrates LTE functionality on the chip. Qualcomm’s fortunes are thus also tied with the move to LTE, or high-speed 4G data transfer, as a standard for mobile communication.

Now for the advocates. Google and Microsoft are both part of the Wireless Innovation Alliance, a support group for the FCC’s initiative which also includes Dell and the New America Foundation. Google stands to benefit significantly if more people start using its services to browse the web over sprawling, free Wifi networks, or make phone and video calls calls via free services Google Voice or Google Hangouts.

Google has said publicly that mass, free Wifi would spark an explosion in innovation. Of course it would also lead to a bigger financial opportunity for selling ads, both through search or in other innovative ways. Just imagine what faster, nationwide Wifi could mean for live broadcasts online, via Google Hangouts, which could include nationwide ads that are “televised” over that the Internet to tablets and smartphones.

Then there’s Google’s self-driving car project. The Post reported that “the new Wifi networks would also have much farther reach, allowing for a driverless car to communicate with another vehicle a mile away.” This is conjecture, but if Google has been in talks with the U.S. government about developing the network infrastructure for self-driving cars on U.S. roads, free, nationwide Wifi would boost such a project.

Despite their lobbying efforts, carriers will be particularly unnerved by Google. The planet’s largest Internet company has a loud voice in Washington, D.C., and it has already been conducting experiments with Google Fiber in Kansas City to provide broadband and Wifi coverage that is faster than that of traditional carriers. The endgame sees Google and other Internet companies gradually pushing traditional carriers out of their coveted role in mobile telecommunications. A big key to unlock that is the prevalence of free Wifi.

“Carriers have a super important role, but Wifi has a super important role that’s growing,” said David Morken, CEO of Republic Wireless, a company selling smartphones that natively make calls over Wifi (when it’s available) before switching to the Sprint network when it is not. “We shouldn’t have to spend the outrageous amounts we have to spend today, and we shouldn’t be limited in the user experience that we’re limited to. Let’s all be honest, we have Wifi most of the time.” If the FCC’s plan goes ahead, we’d have it all the time.

There are reasons to be skeptical. The FCC ’s proposal is not new, and has been running the political gauntlet since around 2004, and the federal agency has not released practical details of its proposal. Dan Frommer of SplatF says the news is more in the realm of “science fiction,” and Dylan Tweney of The Verge points out that the logistics of a nationwide Wifi would be a massive undertaking:

This idea also has an enormous logistical barrier to overcome. Municipal Wi-Fi projects, which aim to blanket entire cities in wireless signals, have often foundered on the complexities of deploying usable signals across just a few square miles. As anyone who has attended a tech conference knows, it’s possible — but surprisingly rare — for a well-managed Wi-Fi network to serve just a few hundred people. Expand the pool to a few million or a hundreds of millions and you may face technical challenges that have not even been imagined yet.

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