Can Wi-Fi Take Us the Last Mile?

New FCC rules make it harder for DSL upstarts to compete with the Baby Bells. But the wireless revolution might keep the big guys honest.

By Cory Doctorow, Business 2.0

So much for consumer choice. The Federal Communications Commission has turned its back on the public by abandoning rules that require the Baby Bells to accommodate competition in broadband services. Until recently the Baby Bells — heirs to the nation’s local telephone lines after the AT&T (T) breakup in 1983 — were required to share their lines with new rivals at set prices. This created a competitive marketplace that allowed nimble players like EarthLink (ELNK) and Covad to roll out flexible, low-cost alternatives to the Baby Bells’ highly restrictive DSL plans.

Entrepreneurs have taken advantage of these rules to nurture new services and technologies. Speakeasy, a national ISP based in Seattle, allows customers to operate personal Web servers and wireless access points so neighbors and passersby can share their Internet connections. The Baby Bells absolutely forbid residential customers to engage in that sort of thing.

The new FCC regs will allow the Baby Bells to price broadband competitors out of the market. The feds have thrown the rate-pricing question back to the states, saying, in effect, You figure it out. That means that in some states we might get vibrant markets, while in others — places where the phone company is in bed with the local government — we’ll get no competition.

The outlook is especially grim for the burgeoning market in voice-over-Internet technologies, which allow anyone to make local and long-distance telephone calls via the Internet at a fraction of the telecoms’ rates. It’s hard to imagine the Bells voluntarily allowing customers to sidestep their core line of business. More likely, they’ll use blocking and sniffing technology to hinder the use of Internet-protocol-based telephony services.

"Open wireless" is also likely to end up in the Bells’ crosshairs. Open wireless networks allow passersby to connect to the Internet for free with a laptop and a wireless card. Community groups like the NYCwireless collective have inundated public spaces such as Bryant Park with free wireless, and the group also contributed to Manhattan’s disaster relief effort after 9/11 by creating a network of open wireless access points for struggling local businesses. Yet the Bells’ service agreements don’t allow customers to operate public networks. If niche players like Speakeasy are frozen out of the residential DSL market, open wireless access points are likely to become increasingly scarce.

But all is not lost. Tim Pozar of the Bay Area Wireless Users Group has embarked on an ambitious plan to install high-speed wireless access points on the peaks of San Francisco’s famous hills — a move that is legal under the same FCC data-communication regulations that gave rise to the Wi-Fi revolution. Under Pozar’s plan, anyone with a directional antenna (a surplus satellite dish or even a modified Pringles can will do the trick) would be able to aim it at the nearest hilltop and connect to the Web for free. Such "wireless ISPs" (wISPs) have serious commercial potential: Instead of needing the Bells’ expensive last-mile wires to reach customers, wISPs create sprawling, low-cost networks serviced by strategically placed antennas.

Now that the FCC has abandoned any pretense of giving the public the best possible deal for Internet service, such wireless experiments may well be the last bulwark of competition the Baby Bells face. Pozar and others won’t displace wireline DSL anytime soon. But their presence may be enough to keep the Bells honest — encouraging them to treat users like customers rather than passive "consumers." America has been waiting for 20 years for the phone companies to act like real businesses. Under the new regime, entrepreneurial and philanthropic efforts may be the only ways to make broadband service ubiquitous and competitive.

Cory Doctorow is the author of the science fiction novel "Down and Out in the Magic Kingdom" and co-editor of the Boing Boing weblog at http://www.boingboing.net.

http://www.business2.com/articles/mag/0,1640,47997,00.html