Once viewed as little more than a toy for tech hobbyists, Wi-Fi — short for wireless fidelity — is starting to emerge as a serious force in the Internet business. Chip maker Intel Corp. is integrating it into new microprocessors it’s building for laptop computers. Philips Electronics NV is planning to build it into remote controls and stereo systems. And Dell Computer Corp. is similarly seeding its PCs with Wi-Fi. Airports, hotels and Starbucks Corp. outlets are increasingly awash in Wi-Fi radio signals.
While Wi-Fi poses problems for cable companies and conventional phone carriers selling high-speed Internet access, it has the potential to be a major headache for the cellphone business. Cellular carriers have spent billions of dollars over the past two years upgrading their networks to accommodate higher data speeds, and they are betting that consumers will send e-mail, browse the web and make use of other applications from their new phones, laptops and hand-held devices.
But now an insurgent technology has come along to threaten that strategy — just as Napster and the Internet itself sprang up from grass-roots followings to challenge the economic models of giant media and technology companies. Wi-Fi equipment works like a cordless telephone. It invisibly extends a fast Internet connection as much as 1,500 feet to any computer equipped with a wireless receiver. That means that, for a small investment in equipment, many users in the same home or neighborhood can theoretically share the same stationary Internet connection, while only paying for a single hook-up. More importantly, the speeds offered in such Wi-Fi “hotspots” are so much greater that many users say they’re reluctant to make use of the cellular carriers’ offerings.
“What [Wi-Fi] hotspots do is they really kill about 80% of the good near-term applications that the cellular providers were expecting to make money off of,” says Danny Briere, chief executive of TeleChoice Inc., a telecommunications consulting firm. One example of a place where Wi-Fi is already supplanting cellular networks: browsing the Internet wirelessly in an airport lounge.