IN DEPTH: TECH NOW: Wi-Fi to broadband, connectivity's hot in Houston
By Al Massey
Houston Business Journal 5/23/03

Like legions of others in today's highly mobile work force, Eric Wood, senior consultant at Microsoft, experiences the joy of mobility thanks to a rapidly expanding technology known as Wi-Fi (short for wireless fidelity). During a morning coffee break at It's a Grind on Eldridge, Wood routinely checks his e-mail and logs onto the 'Net.

Sharing an unregulated radio spectrum with a wide array of other devices, including personal digital assistants, laptop computers, cordless telephones, baby monitors, garage door openers and digital cameras, Wi-Fi networks, known as "hot spots," are popping up everywhere.

"We like to think people come here because of our great coffee, but a lot of our customers also like to use the shop's Wi-Fi connection to check their e-mail and log onto their corporate VPNs (virtual private networks) to conduct business every day," says Ahmad Yahya, one of the owners of It's a Grind.

"Logging on here has surpassed the novelty stage," Yahya says, "and is rapidly becoming a part of their daily routine."

Hot spots, such as coffee shops, convention centers, hotels, airports and, soon commercial airline flights, have quadrupled to over 5,000 locations nationwide in the past year, according to one recent study.

More important, particularly in the Houston area, which came in as No. 14 on Intel Corp.'s recent list of U.S. cities that have the greatest wireless Internet accessibility, Wi-Fi is rapidly becoming a viable alternative to more conventional cable and SBC DSL (digital subscriber line) broadband high-speed Internet access.

Broadband
While the ability to access the Internet from anywhere at any time has been described as the Holy Grail of modern computing, Wi-Fi will never replace Cable or DSL broadband.

"It's not so much a replacement as it is an enhancement," says Verizon Broadband and Internet Services representative Bibbi Henson. "For all of our DSL broadband customers, we sell and service a complete line of Wi-Fi routers and products so that they can expand their networks at home or office. They can take advantage of high-speed wireless and become much more productive."

Houston is fertile ground for broadband service providers that, until recently was the almost exclusive domain of SBC DSL and Time Warner's RoadRunner cable. That's primarily because SBC holds title to the "last mile" of telephone cable and RoadRunner is the only cable game in town.

However there is some movement as SBC tries to figure out a way to stay profitable while adding more DSL customers. The problem lies in the fact that one phone line can handle voice, fax and high-speed DSL, so a customer who switches to broadband might cut off a second residential line that had previously been used for an Internet connection.

Last mile
That and the fact that last-mile competition is heating up as well.

One competitor, Logix Communications, provides local telephone services, long distance services, Internet access and enhanced data services to small and medium-sized businesses.

Logix President and CEO Ron Henriksen, a 20 year-veteran of the telecommunications industry, says, "CLECs (competitive local exchanges) have an opportunity to provide stiffer competition to the regional Bell operating companies by giving better pricing and better service. SBC has been trying to slow competition down because they want to preserve their monopoly. However, in doing so, SBC is ignoring the vast majority of customers who want better service and lower pricing."

Those sentiments are echoed by Matt Asmus, Logix's chief operating officer.

"We recognize that we can't be all things to all people so we limit our appeal to those small to medium companies that tend to fall through the cracks with SBC. For that reason we have elected to offer unique, high-quality service at a competitive price to small to medium business customers with 10 to 200 employees," he says.

"Competition is the only thing that gets the Bells to innovate or lower prices," says Henriksen.

"Anything that counters the competition, such as the so-called 'win-back' bill recently signed by the governor, hurts both consumers and business," he says. "Because the ultra-low promotional win-back rates cannot be reasonably matched by competitors and would apparently be subsidized by rates paid by SBC's existing customers, these customers lose any chance of competitive choice with the passage of the bill. The net effect is death for competition."

Regulation
Regulation, particularly federal regulation, is a thorny issue for broadband providers, especially telephone companies. Telcos offering high-speed broadband DSL are heavily regulated while their cable and wireless cousins are not. Consumer groups argue that this disparate regulatory treatment harms consumers, contributes to higher prices, and in many cases, denies them a choice of provider.

The crux of the argument is the belief that current regulation raises the cost of providing DSL lines, which is then passed on to consumers. Removing regulations would make the service more competitive and rejuvenate the market, making DSL more competitive with other offerings like cable, which in turn would create pressure on cable operators to lower prices.

'Fixed wireless'
The already murky telecommunications waters, phone service, broadband, cable and satellite, are set to get even more cloudy as long-distance carriers team with cable companies to deliver a new technology dubbed "fixed wireless," to provide phone services over the Internet.

For a telecommunications industry that has been plagued with a morass of economic woes of late, Wi-Fi has the potential to evolve into this decade's "killer app." Just as cell phones made the phone booth redundant, Wi-Fi has the potential to unplug computers.

Perhaps the biggest problem facing the industry is the disarray in which it finds itself. At the root of the problem is the fact that in today's market, competition is more about technology than it is the companies involved. In the past couple of years, some reports estimate that as many as 6.5 million wireless phone customers have abandoned traditional phones.

© 2003 American City Business Journals Inc.