September 30, 2002
No barrier to entry

Just a brief summary of Wireless Networking Business Basics as I understand them.

The fact that Organic's idea so resembles what one hears about Boingo and the further fact that this idea seems so highly copyable reminds one of the early internet. The promises are the same, and may be summarized as Pure Network Effect. The business problem could also be the same : There is no barrier to entry, so a stampede effect at any sign of momentum is a very real danger. Basically there is no first mover advantage in pure wireless IP traffic. IP is the great equalizer of networks, which is of course both a blessing and a curse.

The winner would be anybody able to leverage a platform advantage in any way shape or form. For a while there the mobile phone networks looked as if they might be that advantage to their owners, having a solid network already established of radio transmitters and receivers. They are presently aggresively squandering their advantage by asking the same prices, that make some sense for voice, for data transmitted over the GPRS networks which makes no sense at all. The value of data, per unit of information, is significantly less than the value of voice traffic.
They seem to have no recollection of the speed with which proprietary network providers like CompuServe and Prodigy lost market power on initial web uptake. With WiFI on the horizon and fixed networks at flat rate prices widely deployed traffic prices like the current GPRS pricing seem positively archaic.

Ironically the phone-oligarchies (i.e. the almost monopolies that used to be monopolies) could have the platform advantage to beat out everybody in the WiFi space as well. A combined WiFi/ADSL plan with a rebate (e.g. more bandwidth at the same price) for letting your ADSL line serve as a WiFi hotspot could be a plausible way to cover metropolitan areas with WiFi.

Posted by Claus at September 30, 2002 10:19 PM
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