Tech sector’s hot spot: Wi-Fi – SBC makes plans for thousands of access points

Equipped with her laptop and a latte, the Humboldt Park resident was spending a typical day sending e-mail and working on projects for clients. "This is my office," Stewart said of Atomix, a cafe near Chicago and Damen Avenues. "It’s my home away from home."

By Jon Van and Kevin Pang
Chicago Tribune staff reporters

Equipped with a wireless Internet connection, Stewart is part of a growing base of computer users tapping into the Web from just about anywhere. Known as Wi-Fi, the technology is popular among road warriors and starting to pick up everyday computer users who like to surf the Web from the back porch.

The downtrodden technology sector–desperate for a hit–has taken notice. On Wednesday, telecom giant SBC Communications Inc. will announce it is installing thousands of high-speed wireless connection points–called hot spots–across Illinois over the next two years.

By 2006, SBC hopes to have 20,000 hot spots spread over its 13-state region. A wireless hot spot enables a user with a properly equipped laptop computer or hand-held device to access the Internet at speeds faster than a traditional dial-up connection.

Although not the first giant to join the Wi-Fi stampede, SBC said its offerings will be the most aggressive. The company, which isn’t yet providing marketing or pricing information, will bundle Wi-Fi with its home DSL products, business broadband offerings and with cell-phone partner Cingular Wireless.

"What sets us apart from other companies is the breadth of our deployment strategy," said Edward Whitacre, SBC’s chief executive.

SBC is joining heavy-hitters including Verizon Communications, AT&T Corp., IBM and Intel Corp. with big Wi-Fi plans.

To attract customers, businesses have started to offer Wi-Fi connections for free. On Tuesday, for example, Panera Bread Co. said it will expand its free Wi-Fi offerings, making the technology available in all its outlets.

"We don’t believe that our customers should have to pay for Wi-Fi," said Ron Shaich, Panera’s chief.

Other establishments, including many Starbucks and some McDonald’s locations, offer Wi-Fi connections. Both those franchises charge for access.

The current mix of Wi-Fi for free in some spots and for a fee in others is confusing computer users, said Jeff Kagan, an Atlanta-based telecom analyst, and the entrance of giants like SBC will help sort that out.

"With the majors like SBC and Verizon jumping in, you know that Wi-Fi is for real," Kagan said. "But it’s still a work in progress. Some hotels that once charged for Wi-Fi now give it away. It’s like air conditioning."

While it will be months before SBC begins installing hot spots, the use of Wi-Fi is accelerating rapidly. A recent survey by In-Stat MDR found that 16 million notebook computers will come equipped with built-in Wi-Fi connectivity this year.

The decision by the dominant computer chipmaker, Intel, to push Wi-Fi is one reason that Gemma Paulo, an In-Stat senior analyst, said that by 2005, 95 percent of notebook computers will be so equipped.

A Jupiter Research survey found that while 70 percent of the public have heard of Wi-Fi, only 6 percent have used it, said Julie Ask, a Jupiter senior analyst based in San Francisco. Only 10 percent said they might pay to use Wi-Fi.

"Wi-Fi’s not a stand-alone business," Ask said. "It has to be part of a larger strategy."

That’s because its unclear if anyone can make much money with Wi-Fi, analysts said. SBC’s strategy to bundle the Wi-Fi service with other products makes sense because it could give SBC an edge at a relatively low cost.

But not everyone is sold on Wi-Fi, which relies on unlicensed radio spectrum that is free for anyone to use.

"We haven’t found an economic model that says this is a moneymaker," said Richard Notebaert, chief executive of Qwest Communications, the Denver-based firm that is the dominant local phone provider in 14 Western states.

"Wireless is a wonderful thing," Notebaert said, "but often the technology moves faster than people’s economic models. I haven’t met anyone who’s solved the economics of this."

An expensive aspect of Wi-Fi is supplying wired Internet connections to the radio base station that can send signals up to 100 yards away. Because it owns the phone network, SBC can supply wired connections at lower cost than anyone else, said Charles Golvin, a senior analyst for Forrester Research.

By offering Wi-Fi as a bonus to SBC’s home DSL customers, the firm may obtain an advantage over cable television systems that also sell high-speed Internet connections.

"Cable firms don’t have the network infrastructure to provide Wi-Fi" hot spots, said Golvin. "So SBC can leverage this to its advantage."

For businesses that offer Wi-Fi to customers, the technology can be a big draw.

At Atomix, the coffee shop offers Wi-Fi access provided by a third party, and customers pay up to $20 a month to tap into the network. Stewart, who often puts in 7-hour workdays at the cafe, considers that a bargain.

"If there’s a problem, you can address it right there," she said, pointing behind the counter.

"I see Wi-Fi as a really unique service–it’s good for the community because it’s cheap," said Adam Paul, the coffee shop’s owner. "A lot of [Wi-Fi users] are people who come in anyway. But there are some faces I haven’t seen before that come in specifically because of the Internet."

Atomix added the Wi-Fi service late last year.

And for customers like Kristine Wells, who lives nearby, the chance to get some work done with a cup of coffee is ideal.

The service "works wonderfully," she said. "I’ve never had any problems."

Copyright © 2003, Chicago Tribune

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