I also like the style of Google’s lobbying effort. They may be spending millions on back-room lobbying of the Federal Communications Commission members for all I know (who are scheduled to rule on whether the spectrum becomes free for unlicensed use or not), but they are also putting up videos featuring actual human beings talking about the benefits of widespread Internet access, including some non-profit agencies. The company has a relatively unbiased explainer video featuring Google product manager Minnie Ingersoll, who describes the process by which the spectrum became available in simple terms, complete with ums and ahs, just like a real person. It’s a lot better than the slick videos the broadcasters would probably come up with.
This would put the Big Smoke in the same league as Philadelphia, which gave Earthlink a contract to provide wireless that covers the city, and several California cities such as San Francisco, where Google and Earthlink have joined forces to provide municipal Wi-Fi coverage. Such efforts have come despite resistance from telecom players such as Verizon, which successfully got legislation passed in an attempt to block the Philly plan. New Orleans and Chicago are working on similar proposals.
The big question, of course, is what Toronto’s Wi-Fi will cost. Ever since coffee shops started adding wireless access and providers such as Spotnik and Fatport tried to turn it into a business, people have been wondering how to make money from Wi-Fi. If you’re a retailer, wireless is close to becoming a condiment – meaning something you have to have, like cream and sugar or public washrooms.
Will Toronto Hydro charge a monthly fee that can be added to your power bill? Will you be able to use PayPal, or tack it onto other city charges such as water or parking? And will it be $10 a month for all you can eat, or $40 a month for limited bandwidth? Those questions and more will hopefully be answered tomorrow.
More details about the plan here – it involves covering a big chunk of the downtown core, with 54mbps by the sounds of it, but no prices were given. Mark Evans has a great quote from Toronto Hydro on his blog.
Come to think of it, Skype might be a little nervous at that idea too – not to mention the company that paid as much as $4-billion for it. But think about a carrier such as Verizon or AT&T. Their game up to this point has been selling mobile phones and services as fast as they can, in order to make up for the fact that regular old wired phone service is a moribund business. What if even a small percentage of those users (particularly the free-spending business types) could suddenly make free voice calls over Wi-Fi?
If I were a telecom player, that would certainly keep me awake at night. According to one British telecom analyst, voice revenues are set to plunge. “The premium for wireless voice, without mobility, will disappear as wi-fi networks spread,” Westhall Capital analyst Cyrus Mewawalla said. “By our estimates, that puts 75% of the market for mobile voice revenues at risk of a substantial price downgrade (in the order of 50%-80%). For some international calls, prices could fall by 90% or more.” And Nokia has made it clear it is determined to support VOIP over Wi-Fi: “Internet voice is going mobile,” said Nokia head Jorma Ollila.
The telecom companies aren’t completely powerless in all this. Nokia, Microsoft, Motorola and Research In Motion want access to their customers and networks, and they also want the carriers to subsidize their devices so that more people will buy them. That gives them leverage – but it may only allow them to slow the speed with which VOIP eats into their business, not stop it altogether.
Looking at what Mr. Varsavsky said on his blog, he referred to being “pleased to announce today that we have obtained the support of two significant ISPs for FON. In America, Speakeasy has said that they welcome FON and in Europe, Glocalnet and FON have signed an agreement.” While he doesn’t specifically say that FON has a deal or has signed anything with Speakeasy, he makes it sound as though the company has pledged its support in some fashion.
According to Glenn, Speakeasy said that it supports sharing of Wi-Fi (one of the few ISPs that does) but that doesn’t mean it supports FON. In fact, the company says that FON’s plan sounds like something Speakeasy came up with in 2003 called NetShare, which also involved revenue sharing with those who allowed others to use their wireless connection. Although Speakeasy says it has reconsidered its initial plan to take legal action against FON for the statements, it is obviously less than pleased.
Needless to say, this kind of thing doesn’t bode well for the success of FON. It’s possible that Mr. Varsavsky misspoke, or that he was over-eager, and wanted to show more support than his company actually had. Whatever the case may be, it doesn’t look good to be claiming relationships you don’t have when you are trying to get something as ambitious as FON off the ground – and I would argue that it’s not likely to help other ISPs feel particularly comfortable about negotiating deals with the company either.
According to comments Martin sent to Om, the company is trying to bring ISPs on-side, but has so far only managed to strike a deal with Speakeasy (Update: According to Om, Speakeasy says it has no arrangement with FON). Alec Saunders of Iotum says that most ISPs don’t enforce these agreements, and that’s true – but they might decide to change their minds about that if they find widespread sharing of the type FON has in mind.
Glenn Fleishmann of Wi-Fi Networking News, who has been a major skeptic on FON, says the investment by Google and the Skype gang (as well as Index Partners, which made a bundle on its investment in Skype) makes him a little less skeptical, but he still has concerns – including the difficulty of getting ISPs on-side, but also the difficulty of building out a robust enough wireless network to make what the company has in mind actually feasible.
Not only that, but how many people are going to feel the same concerns over security that the commenter on Scoble’s post feels? FON has a response here, but that might not satisfy enough people to open up their networks – especially after everyone has been telling them to lock them down so no one piggy-backs on them. FON has a response to the ISP question too, but that amounts to trying to convince the ISPs they will share revenue with them (assuming there is any). Like my friend Rob Hyndman, I think many providers (particularly in Canada) would be skeptical.