Interviews with Digital Media Thought Leaders
Should Apple Become a Wireless ISP?
Podcast Audio | Posted by Phil Leigh on May 5, 2011
There are four reasons that Apple may eventually launch a Wireless ISP subsidiary.
First, the market for Apple’s portable hardware cannot achieve full potential without significant improvement in Wireless Internet access. The exceptional iPhone and iPad successes are forever changing user expectations about network connectivity.
Download audio narration to iPhone, iPod, and iPad — eight minutes.
Twenty-five years ago when Sun Microsystems developed the slogan “The Network is the Computer” office workers without LANs were puzzled. But once everybody got LANs, the connotation became obvious. Instead of being independent tools, our personal computers became workstations that shared office-wide data processing assets ranging from printers to centralized storage. The network itself became our computing resource.
During the past five years we similarly came to rely upon assets distributed within the Internet. As bandwidth improved, the Internet began to resemble a massive LAN. In point of fact, our CPUs really cannot “tell” the difference between a LAN and the Internet, except the latter retrieves information more slowly. Although the experience is nothing other than a more highly evolved form of Sun’s “network is the computer” concept, to earn their fees consultants applied a new moniker, to wit, Cloud Computing.
More recently, it’s become obvious that constant wireless connectivity will be the future expected standard. As Chetan Sharma put it, “…mobile will become the platform of everything. Anything that can be connected, will be connected…” In short, consumers will come to presume the existence of an ever-present electromagnetic field tuned to their mobile device transceivers thereby enabling them to get wireless Internet access as routinely as those of us with gray hair check the time-of-day with our wristwatches.
IDC estimates that over one hundred million smartphones were shipped worldwide in the last year’s fourth quarter thereby exceeding for first time the number of computers delivered. Similarly, Yankee Group projects over sixty million tablet computers will be in use by 2015. Cisco Systems forecasts worldwide mobile Internet traffic will grow almost forty-fold from 2009 to 2014. Their research further discovered that smartphones generate about twenty-five times the data traffic of standard mobile phones. Tablet computers compound the problem since each one generates almost five times the network traffic of a smartphone.
Unfortunately, cellular systems are unlikely to meet the bandwidth needs of the iPhone, iPad, and competing devices. Although Verizon reports its 3G-to-4G upgrade will increase capacity four-fold, that still leaves a considerable unsatisfied demand gap. Consequently, Deloitte predicts that Wi-Fi will steadily increase its share of the mobile data load and become the default connection for Internet video.
Ultimately, massive Wi-Fi mesh networks like the one illustrated under construction by Towerstream in Manhattan must be deployed. Such networks will use a combination of WiMax, TV Band White Spaces, and landline facilities for connecting clusters. The latest dot-11n version of Wi-Fi is a key enabling factor. Dot-11n raw data speed is 600 mb/s which is over ten times faster than the theoretical maximum for the previous dot-11g version at 54 mb/s. It will easily handle video as most any homeowner using it can verify. The pictured network will have one thousand access points and is designed to offer twenty times the capacity of fourth-generation LTE cellular service.
While it would be sensible for cellular operators and CATV systems to regard Wi-Fi as a complimentary broadband technology, the evidence is at best mixed. Confessedly, an AT&T subsidiary offers Wi-Fi hotspots, T-Mobile supports automated Wi-Fi log-in, and Cablevision deployed thousands of hot spots in its service territories surrounding Manhattan. However, there’s little doubt that many traditional cellular and CATV executives regard Wi-Fi meshes as a competitive threat. Thus, they may choose to pursue it tepidly at best, to the detriment of Apple hardware owners.
Second, regulatory roadblocks commonly employed by FCC-licensed incumbents cannot prevent Apple from entering the market because Wireless ISPs typically utilize unlicensed frequencies. Wi-Fi is commonly used in 2.4 GHz and 5 GHz bands where no licenses are required. Presumably most readers can verify the point since they didn’t consult the FCC before setting-up a home Wi-Fi network. But more importantly, FCC licenses are not required for Wi-Fi mesh networks of any size. Finally, the Commission appears to be further endorsing open competition by its five-to-zero vote permitting TV Band White Spaces for unlicensed use as well.
Third, Apple can adequately finance mesh Wi-Fi networks capable of transforming wireless Internet connectivity — within population centers — into a semblance of an ever-present universal access field. Such networks can provide users high speed wireless Internet as routinely as turning on a car or portable radio.
The one thousand access point mesh in Manhattan illustrated above is owned by a company with annual revenues of under $30 million. In contrast, Apple has $66 billion of cash and marketable securities. That’s enough to buy whatever technical and business talent might be needed to transcend Wi-Fi availability as presently experienced. To underscore the point with hyperbole, we note that Apple could even buy Motorola Solutions for about $16 billion at the present stock price. That’s less than one-fourth of Apple’s idle cash reserves.
Fourth, historical examples suggest technological leaders might naturally evolve in such a manner.
For example, originally RCA was a leading radio set manufacturer, but it formed the NBC Broadcasting subsidiary to provide programming in order to create demand for radios. In a virtuous cycle, the growth of NBC led to expanding radio set demand.
Similarly, in 1927 Boeing Aircraft established an airline subsidiary – Boeing Air Transport — to bid for a Post Office contract. Upon winning the contract the airline subsidiary immediately placed an order for 25 Boeing aircraft. Later Boeing Air Transport acquired other carriers and evolved into United Airlines.
In a like manner as a maker of aircraft engines, General Motors formerly owned major stakes in North American Aviation and once prominent airlines such as TWA and Eastern.
Consequently, if Apple can facilitate growth in wireless connectivity, it can feed demand for its mobile devices. In point of fact, Apple may not even be able to reach its full potential if the wireless Internet remains hostage to the increasingly concentrated cellular telephone industry.
Categories: Podcast Audio
Tags: Apple, Cellular-Congestion, Cellular-Offload, Mobile-Bandwidth, Towerstream, wireless-internet, Wireless-ISP, WISP
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I really don’t want to see Apple enter into this circus. I have Applecare and Apple has a hard enough time keeping my “Airport Utility” running inside my new IMac. I’m not alone here!
[...] The reasons are precisely those discussed in our blog post six months ago entitled, “Should Apple Become a Wireless ISP?” [...]
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