Will Abundance Lessen Value of Federated Wi-Fi Networks?

Lots of commercial firms have been trying to leverage Wi-Fi to support new business models. Networks such as Boingo, Fon, Republic Wireless, Cablevision Systems Corp., Comcast, Google and many others are trying to create revenue and business models from a “no incremental cost” service based on unlicensed spectrum.

AllCity Wireless, for example, has introduced an enterprise-class  ÜberWi solution that allows businesses to quickly and economically manage and monetize their Wi-Fi networks by enabling customer engagement features.

Comcast has created a huge network of public Wi-Fi hotspots by leveraging its base of residential high speed access customers. Many mobile service providers, including now Google Fi, aim to reduce costs and retail prices by leveraging Wi-Fi access as much as possible.

Some might argue all that activity will reduce the potential value of Wi-Fi access as a substitute for mobile or other commercial purposes, as more providers of Wi-Fi try to monetize it.

In other words, as Wi-Fi network suppliers such as Comcast, aggregators such as Boingo, or end users such as hotels try to put Wi-Fi access behind a paywall, the ability to use such federated networks as a cost reduction, or demand reduction method, is diminished.

That is true in one sense. Fewer networks are truly unsecured and therefore open to anyone to use.  In another sense, the ability to wring additional value is created by the ability to federate access to large networks of hotspots.

If new value could not be created by federating hotspots, Boingo and Fon could not exist, and Comcast would not invest capital to create its own network of hotspots.

On the other hand, the value of such federated networks always is subject to the scarcity and price of other access alternatives. In fact, one might argue that, at some future point not too far off, when fifth generation networks are ubiquitous, there will be so much mobile network capacity, at reasonable enough cost, that the value of federated Wi-Fi networks could diminish.

For mobile and other service providers, value tends to hinge on “scarcity.” That being the case, “abundance” can disrupt business models.

As hard as it might be to imagine, the value of federated Wi-Fi networks could decline, in future years, if mobile bandwidth is more plentiful, and therefore the value of offloading is lessened.