Too Cheap To Meter

One very common myth about wi-fi is finally starting to evaporate -- it turns out that when you have free spectrum and nearly free silicon married to a cheap DSL line, it's more of a bother to charge your customers than it is to procure and run a wireless network. The following should terrify anyone trying to build a pay hotspot network:

Schlotzsky's lets anyone sign up and use its network free, even if they don't come in for a sandwich. The chain advises its 600 franchise owners to beam Wi-Fi signals through the walls into nearby hotels, parks, and college dorms.

Companies trying to blanket the ground with hotspots may do well to look to the sky for a history lesson.

Even as some myths persist, others remain. Analysts are, for example, increasingly fond of saying that 3G/4G data services and wi-fi will happily co-exist. In Asia and Europe, where users eschew PCs and email for phones and SMS, this may well be true. In areas starved for voice capacity, 3G is the answer. But in the quest to provide high speed data in urban areas, a $10,000 3G picocell using closed spectrum can't compete with a $300 standards-based wi-fi cell on free air. 3G cell coverage may be better for less dense areas where wi-fi can't reach, but when's the last time you saw an expensive telecommunications build-out succeed on the backs of heavily-subsidized rural subscribers?

Right now the talk is all about the coming data services nirvana, with 3G complementing wi-fi. Watch for talk in the coming months and years about 3G vs. wi-fi, and about companies going out of business while waiting for payback on capital investment. Hint -- people providing free access to sell burgers, and financing their equipment from Best Buy, can usually outlast people charging by the megabyte and financing their purchases through junk bonds.