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Thursday, March 16, 2006

Wireless Piggybacking
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My old Cato colleague Tim Lee has an interesting editorial on wireless "piggybacking" in the New York Timestoday. Wireless piggybacking occurs when someone opens their home wireless network to others or someone finds an open network and logs onto it. Tim argues that news reports describing the practice as "stealing," "hacking" or an "intrusion" are off the mark. Indeed, he calls this "alarmist talk" and says that intead of being a problem, "the increasing ubiquity of free wireless Internet access is something to celebrate."

Well, yes and no. There remains a legitimate question about how we are getting access the underlying bandwidth to begin with. Before we can share a high-speed connection with others, we have to gain access to one. How that pipe is provided--indeed whether it is provided to us at all--is of a primary importance here.

Let me just jump ahead and point out the the solution here is proper pricing of the pipe. If a particular user's wi-fi node witnesses a huge spike in traffic, just let the broadband service provider (BSP) price that user in some sort of a metered fashion.

A lot of users will cry foul, but that's the best way to get people to "conserve" bandwidth while also allowing them to open up their connection on a selective basis to neighbors. And, if things got bad enough in terms of network over-usage and the BSP didn't want to price the pipe on a metered basis, they could always just send the user a dirty letter and tell them to cut back or get cut off. (Some BSPs do this today, but they rarely cut people off entirely).

But I can see some problems developing as wi-fi grows more sophisticated. I'm currently using an awesome Belkin Pre-N network in my house and it beams out a HUGE signal that I can pick up almost two blocks away. I lock it down, of course. But what about the guy in the future who has an even more powerful wi-fi system and opens it up to his entire high-rise apartment complex? Will it continue to be economical for the BSP to serve that complex if one guy shares his $20 connection with everyone else in the building?

Again, I agree legislation is not needed to solve this problem, but it could be a problem and discourage further broadband investment / deployment if there were enough free-riders out there. The problem with your cup of sugar example is that the underlying service in question here has extrodinarily high sunk / fixed costs. The providers need to have some certainly that they will be able to recoup those investments if they are going to go in an provide a high-speed pipe to every community. You can share a little bit of sugar without it having serious implications for the provision of sugar in your community. But you don't really just share "a little bit" of broadband when you open your high-speed wi-fi node to the world. You share the entire capability of that pipe and allow others to extract value without paying for it.

Again, just let the BSPs price the pipe according to true demand and I think this problem solves itself in the long run. Lawmakers don't need to get involved here.

posted by Adam Thierer @ 2:16 PM | Broadband , Communications , Innovation , Wireless

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