Wednesday, September 06, 2006

Will regional WiFi networks change the US broadband landscape?

Today's New York Times reported on an initiative by IBM, Cisco and others to create a regional WiFi network in Silicon Valley. The consortium will offer free basic WiFi (up to 1Mbps) and cover 1500 square miles and 2.4 million residents.

The typical US residential customer has two broadband options: cable modem service through their cable operator, or DSL service through the landline phone company. Prices are as low as $17.99 per month for very slow (768Kbps) service, and go up to $40-60 or more for 6 Mbps service from the cable companies.

Meanwhile, residents of other countries, such as South Korea, enjoy speeds of up to 20 Mbps at competitive price points. There are lots of factors at play, including high population density in South Korea making wiring broadband more efficient. But greater competition is also a factor.

So, will these regional wireless networks be the answer to Americans' need for more broadband options?

There's room for optimism. Municipalities across the country such as Philadelphia and San Francisco are embracing WiFi for city-based networks (see for a running status on these and other municipal initiatives). Large companies such as those named above, as well as Intel, are investing in these networks to create markets for their equipment and services. Sprint owns a swath of spectrum on which they plan to run a wireless broadband network. So the proper tailwind is there for WiFi and WiMax, as they emerge.

Technical problems will follow. They always do with new technologies. Let's hope that the consortia sponsoring these networks, and the munipalities and companies that are hosting them, persist through the obstacles. For broadband customers, the more options the better.

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