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The rise and fall of muni-Fi (and rise again): Clearly, the largest story involving Wi-Fi in 2007 was the at-first continued growth in cities awarding contracts with no money involved on their part to have service providers build Wi-Fi networks--and the subsequent failure of these networks to be built. Starting quietly in late 2006, the market shifted for metro-scale Wi-Fi. During 2007, providers decided that bearing the full cost of a city-wide network without city contracts wasn't financially sensible.
The full scope of the low uptake rates in cities that had large portions of the network built out also became clear: rather than 15 to 35 percent of residents subscribing, just a few percentage points would put a network in the top tier. Revenue is apparently also pretty minimal even in cities like Taipei, Taiwan, the network provider for which was predicting 250,000 subscribers by the end of 2006, and had just 30,000 regular users each month at last public report in early 2007.
MetroFi started to tell cities that without an advance service commitment at a minimum level -- an anchor tenancy -- the company couldn't proceed on networks. In 2007, MetroFi lost half a dozen bids or saw contracts canceled due to this change. Its work in Portland, Ore., the biggest network it was building, won't be extended beyond current limited dimensions until additional capital or a city commitment is obtained; the city has said it won't commit to service fees, however.
Meanwhile, EarthLink lost its CEO Garry Betty in January due to cancer. A strong backer of new initiatives to change EarthLink's core business, his death was certainly one of the causes in a quick re-evaluation of the municipal wireless division. New CEO Rolla Huff pulled EarthLink out of new deals, suspended existing ones, laid off hundreds of employees while gutting the metro Wi-Fi division, and appears poised to leave currently built or underway networks, including their flagship Philadelphia effort. They may sell the division, but it's hard to see much worth in it given the current state.
In a smaller bit of news, Kite Networks, formerly known by various names, was sold by parent MobilePro to Gobility with conditions that according to SEC filings by MobilePro weren't met. Kite was once high flying, in the company of EarthLink and MetroFi as one of the major U.S. Wi-Fi network builders. Now it's still in that company, with work on its Arizona networks apparently halted. A suitor has emerged in the form of a regional telecom that specializes in the Hispanophone market (double entendre intended), and which thinks it could boost Tempe subscriptions from the current several hundred to about 300 times that number. Hope springs eternal.
And while AT&T was able to launch a Riverside, Calif., network with MetroFi handling the installation and operation, it backed out of St. Louis, Mo., due to a utility pole problem, and the bidding in Chicago, too. The Metro Connect consortiums in Sacramento and Silcion Valley were unable to raise financing despite the apparent blue-chip participation by Cisco, IBM, and Intel.
County-wide Wi-Fi was also hit again and again by providers who pulled out--CenturyTel in Pierce County, Wash., for instance--or problems with technology or utility poles. In a few scattered areas, Wi-Fi across counties has been built out, but it's not an idea whose time has yet come.
Muni-Fi isn't down for the count. While these high-profile networks in large cities and county-wide networks have mostly hit the skids, more modest networks with well-defined goals continue to be built with a focus on public safety and municipal uses in hundreds of small and medium-sized towns. Brookline, Mass., may be a good example, in which a public safety/public access network was built relatively quickly and with no reported problems.
And there's one big city success story: Minneapolis, Minn. While local provider US Internet wound up spending more than they'd intended, reports from the ground indicate that service works quite well, and subscriptions and interest are quite high. The company was able to respond almost instantly to the bridge collapse a few months ago by deploying additional mesh infrastructure to add network capacity in the area. And it says that it could reach positive cash flow in early 2008. One of their advantages? They secured a substantial commitment from the city for the services they built.
Other trends of the year gone by: Music and Wi-Fi are clearly more aligned, with the new Zune models and firmware from Microsoft allowing wireless sync (but not yet Wi-Fi purchases), and the introduction of both the Apple iPhone and iTunes touch, which allow music purchases over Wi-Fi but not synchronization. (While the MusicGremlin preceded both the Zune and iPhone/iPod options, it didn't seem to gain any market traction in 2007.)
Security continues to be a concern in 2007, although less of one as home users have clearly accepted WPA Personal, at long last, and networks are increasingly encrypted through better software from major hardware manufacturers. Wizards make encryption a no-brainer, when they work. Corporations stung by reports and by requirements from credit card issuers are also clearly protecting their networks better, although I'm sure we'll still see breaches at those firms that didn't cross every "t."
The 802.11n standard's emergence into an interim certified Wi-Fi state was also a significant milestone for faster wireless networking. Shipments of Draft 802.11n products in 2007 increased significantly, while prices dropped so much that it makes perfect sense to purchase a $50 to $80 Draft N router than a comparable G unit. Manufacturers made it clear as the year progressed that hardware sold today should generally be firmware upgradable to whatever the final, not much changed 802.11n standard is when approved in 2008.
Gadget-Fi continued on the rise, as an increasing array of devices included Wi-Fi as a connectivity option. Most notably, T-Mobile launched its HotSpot@Home service, the largest scale offering of converged cell/Wi-Fi calling. By year's end, they had four handsets for sale--two plain, a BlackBerry, and a clamshell--but subscriber numbers are unknown.
What's coming in 2008?
In-flight Internet (over Wi-Fi): 2008 is finally the year. It was supposed to be 2005. Or maybe 2002. But we should see a number of planes, mostly flying over the U.S., equipped with either in-flight Internet access or in-flight text messaging and text email. Connexion by Boeing's failure fortunately didn't discourage a half a dozen competitors who were in the R&D phase when Boeing wrote off its satellite-based Internet access venture.
AirCell, Row 44, OnAir, Aeromobile, Panasonic Avionics, and a T-Mobile consortium are among the announced or nearly announced firms with commitments or trials underway. AirCell and Row 44, focused on the U.S. market, plan to deliver Internet not voice to fuselages; OnAir and Aeromobile are working on mobile-based services, including voice, via existing cell phones and devices.
In 2008, American, Alaska, and Virgin America will launch trials over the U.S., and potentially move into production. OnAir should be expanding in Europe beyond the single French aircraft that's equipped in a trial now to RyanAir's fleet. And Aeromobile's Qantas trial could turn into real usage. There's likely action that will happen in Asia and the Middle East, too, that's not yet disclosed.
Other trends to watch
Wi-Fi in every smartphone with better integration. The iPhone was the leading edge, pun intended, offering 2.5G EDGE cell networking as part of the subscription price, along with seamless roaming to Wi-Fi networks. With RIM finally offering BlackBerry models with Wi-Fi, it's unlikely that any future smartphone model intended for serious users would lack the option.
Wi-Fi everywhere. Despite the setbacks in municipal Wi-Fi, wireless networks continue to expand, with better and better coverage found across larger areas and more locations. 2008 might be the year of hotspot saturation.
WiMax arrives. In 2008, we'll finally see production mobile WiMax in action in the U.S., and the questions about whether it works well enough and fast enough at the right price to beat current generation cell data networks, and make money for the disorganized Sprint Nextel will be answered. More certainly, Clearwire, with WiMax as its only option, will push aggressively to steal customers away from fixed, wired broadband, especially in markets with little competition.
Gadget-Fi a go-go. Wi-Fi will become an expected part of gaming consoles (already found in a few), cameras (found in crippled form in just a handful), regular cell phones (in dozens and dozens now), and music players (with more full functionality).
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