Wednesday, February 1, 2012

Cellular Verse WIFI, The Heart Of The Issue

What a great editorial in today's Wall Street Journal called The Wireless Equivalent of Fracking. In a wonderful analogy to the fracking process to release more natural gas, he offers a wireless comparison. "The mobile equivalent of fracking is Wi-Fi. Wi-Fi is free, unregulated spectrum, separate from the regulated spectrum that mobile operators buy from the government." And the most serious question he asked, why did the government need to block a cellular merger when access to WIFI is cheaper and becoming more abundant.

Web streaming is growing more steadily. Larger data files are being downloaded. Cellular monthly bills attempt to charge more for exceeding caps on usage. And these same companies remind us to use our WIFI often so as to not exceed their own caps. But be careful what you push; as WIFI becomes more prevalent and easier to stay constantly connected, consumers might just drop their cellular companies and communicate solely via WIFI. Hello Skype, goodbye AT&T cellular service.

Need a connection, sit down at your Starbucks. Waiting at the train station, chat through a Comcast or Time Warner Cable WIFI connection. In fact, a great added value for broadband cable customers to access the web away from their home. As more free wireless hot spots pop up, the need to be on 3G or 4G diminishes. Such a relief to listen to Pandora or watch a movie on Netflix without running up a cellular usage bill.

"Cellular operators offer the highest-cost path to the Internet; customers have both motive and opportunity to shift demand to other paths. The operators themselves have not been slow to figure this out. AT&T, the nation's second-biggest cell carrier, is also its biggest operator of Wi-Fi hot spots because it's a cheaper way to meet the data demand of its iPhone customers." So why worry that AT&T wants to buy T-Mobile? The cellular industry, like the cable industry, an oligopoly with fewer and fewer companies. But technological changes have meant that the cellular industry now has new competition from cable, and perhaps soon, Lightsquared. Rather than stopping the merger, the government should be working with other industries to encourage more investment in wireless alternatives. Cellular vs. WIFI, as costs for cellular usage rises, consumers continue to embrace their cheaper WIFI hot spots.

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