Wi-Fi generates opportunities, threatens status quo

Computerworld - Wi-Fi, a wireless LAN technology, is creating opportunities for entrepreneurs and threatening carriers' business models because it's unregulated, cheap to install and provides excellent last-mile bandwidth without the need for cables.
Universal Mobile Telecommunications System/third-generation (UMTS/3G) wireless networks offer large-scale coverage but are expensive because of the high prices carriers paid for wireless spectrum. An alternative technology called Wireless Fidelity, or Wi-Fi, which is based on the IEEE's 802.11b standard, uses the unregulated 2.4-GHz band to provide wireless data connections of 11M bit/sec. Other related standards are 802.11a and 802.11g, which operate in the 5- and 2.4-GHz bands, respectively; both provide connections of up to 54M bit/sec. If you're using a Wi-Fi-enabled laptop in a Wi-Fi-enabled cafe, you can get a network connection that's just as good as the one in your office.
Wi-Fi has taken off in a major way for a variety of market segments. Coffee shops such as Starbucks now offer Wi-Fi access for a fee. At a recent conference at HP Labs in Palo Alto, Calif., faculty members from leading universities such as Carnegie Mellon, UCLA, UC Berkeley, MIT and the University of Illinois reported various stages of Wi-Fi rollouts on their campuses.
The home market, according to In-stat/MDR, is expected to grow from 123,000 units in 2001 to almost 2.5 million by 2006. This explosive growth is due in part to the fact that low-priced, simple-to-install Wi-Fi hardware is available at consumer electronics stores.
And now, entire cities have jumped into the act. Long Beach, Calif., which is spending $3,000 a year for a Wi-Fi cloud, now offers free Internet access with the hope of attracting business and tourism.
For the business traveler, continuous connectivity via Wi-Fi will soon become a reality. Hotels are rapidly being equipped with Wi-Fi. For example, Marriott International Inc. is creating Wi-Fi clouds at 400 hotels, and BDL Hotels is having wireless "hot spots" installed at Holiday Inn and Crowne Plaza hotels in England. At some airports and conference centers, business travelers can use subscription-based Wi-Fi services.
According to Dataquest Inc., there will be 300,000 Wi-Fi hot spots by 2006. That could result in a very attractive, but confusing, market.
For starters, the owners of the physical spaces that host Wi-Fi clouds could attempt to make money on the control of their captive customers. Internet service providers (ISP) would have to go through the Wi-Fi cloud owners. In addition, a retail cloud owner could offer discounts on goods sold in the store. A McDonald's, or even a corner store or