While wireless providers currently treat Wi-Fi as a friendly way to offload wireless data traffic from their 3G and 4G networks, the wireless industry is starting to ponder whether they can also earn additional profits from regulating your use of it.

Dean Bubley has written a white paper for the wireless industry exploring Wi-Fi use by smartphone owners, and ways the industry can potentially cash in on it.

“It is becoming increasingly clear that Wi-Fi access will be a strategic part of mobile operators’ future network plans,” Bubley writes. “There are multiple use cases, ranging from offloading congested cells, through to reducing overseas roaming costs and innovative in-venue services.”

Bubley’s paper explores the recent history of some cell phone providers aggressively trying to offload traffic from their congested 3G networks to more-grounded Wi-Fi networks.

Among the most intent:

• AT&T, which acquired Wayport, a major Wireless ISP, and is placing Wi-Fi hotspots at various venues and in high traffic tourist areas in major cities and wants to seamlessly switch Apple iPhone users to Wi-Fi, where available, whenever possible;
• PCCW in Hong Kong;
• KT in the Republic of Korea, which has moved as much as 67 percent of its data traffic to Wi-Fi;
• KDDI in Japan, which is planning to deploy as many as 100,000 Wi-Fi Hotspots across the country.

America's most aggressive data offloader is pushing more and more customers to using their Wi-Fi Hotspots.

Bubley says the congestion some carriers experience isn’t necessarily from users downloading too much or watching too many online shows.  Instead, it comes from “signalling congestion,” caused when a smartphone’s applications demand repeated attention from the carrier’s network.  An application that requires regular, but short IP traffic connections, can pose a bigger problem than a user simply downloading a file.  Moving this traffic to Wi-Fi can be a real resource-saver for wireless carriers.

Bubley notes many wireless companies would like to charge third-party developers fees to allow them access to each provider’s “app store.”  Applications that consume a lot of resources could be charged more by providers (or banned altogether), while those that “behave well” could theoretically be charged a lower fee.  The only thing preventing this type of a “two-sided business model,” charging both developers and consumers for the applications that work on smartphones, are Net Neutrality policies (or the threat of them) in many countries.

Instead, Bubley suggests, carriers should be more open and helpful with third party developers to assist them in developing more efficient applications on a voluntary basis.

Bubley also ponders future business strategies for Wi-Fi.  He explores the next generation of Wi-Fi networks that allow users to establish automatic connections to the best possible signal without ponderous log-in screens, and new clients that can intelligently search out and connect to approved networks without user intervention.  That means data traffic could theoretically be shifted to any authenticated or preferred Wi-Fi network without users having to mess with the phone’s settings.  At the same time, that same technology could be used to keep customers off of free, third party Wi-Fi networks, in favor of networks operators run themselves.

Policy controls are a major focus of Bubley’s paper.  While he advocates for customer-friendly use of such controls, sophisticated network management tools can also be used to make a fortune for wireless providers who want to nickle and dime customers to death with usage fees, or open up new markets pitching Wi-Fi networks to new customers.

Bubley

For example, a wireless carrier could sell a retail store ready-to-run Wi-Fi that pushes customers to a well-controlled, store-run network while customers shop — a network that forbids access to competitors or online merchants, in an effort to curtail browsing for items while comparing prices (or worse ordering) online from a competitor.

Customers could also face smartphones programmed to connect automatically to a Wi-Fi network, while excluding access to others while a “preferred” network is in range.  Wireless carriers could develop the same Internet Overcharging schemes for Wi-Fi use that they have rolled out for 3G and 4G wireless network access.  Also available: speed throttles for “non-preferred” applications, speed controls for less-valued ‘heavy users,’ and establishment of extra-fee “roaming charges” for using a non-preferred Wi-Fi network.

Bubley warns carriers not to go too far.

“[We] believe that operators need to internalize the concept of ‘WiFiNeutrality’ – actively blocking or impeding the user’s choice of hotspot or private Wi-Fi is likely to be as divisive and controversial as blocking particular Internet services,” Bubley writes.

In a blog entry, Bubley expands on this concept:

I’m increasingly convinced that mobile device / computing users will need sophisticated WiFi connection management tools in the near future. Specifically, ones that allow them to choose between multiple possible accesses in any given location, based on a variety of parameters. I’m also doubtful that anyone will want to allow a specific service provider’s software to take control and choose for them – at least not always.

We may see the emergence of “WiFi Neutrality” as an issue, if particular WiFi accesses start to be either blocked or “policy-managed” aggressively.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/The Future of Wi-Fi.flv[/flv]

Edgar Figueroa, chief executive officer of The Wi-Fi Alliance, speaks about the future of Wi-Fi. Wi-Fi technology has matured dramatically since its introduction more than a decade ago and today we find Wi-Fi in a wide variety of applications, devices and environments.  (3 minutes)

New Zealand is one of a handful of countries stuck with pervasive Internet Overcharging schemes that limit usage or throttle broadband speeds because of international connectivity limitations.  But as international underseas fiber cables ease traffic congestion, Internet Service Providers are increasingly relaxing usage caps and reducing the level of speed throttling during prime time usage hours.

Now one ISP, Slingshot, has gone all-out, reintroducing an unlimited, flat rate broadband option for New Zealanders who don’t want to worry about how much usage they’ve racked up over the past month.

For roughly $32.50US for the first six months, $65 after that, customers don’t have to watch a usage meter or “gas gauge” or face a wholesale heavy speed throttle when deemed to be using “too much” Internet service.

It’s Cell Company Customer Crackdown-month for AT&T and Verizon Wireless as the two carriers increasingly engage in aggressive “management” of their wireless data networks.  Days after AT&T announced it would throw customers off legacy unlimited data plans if caught using “unofficial” tethering applications, Verizon has reportedly locked out customers from accessing web pages over jailbreak apps like MyWi, redirecting requests to a Verizon Wireless $20 Mobile Hotspot offer instead.

Mobiledia reports Verizon now requires users have a hotspot-capable data plan if they want to tether data from their smartphones to other devices.  At regular prices, those plans start at $20 for 2GB of usage, with a $10/GB overlimit fee.  Certain LTE/4G customers have fared better, being offered unlimited tethering for $30 a month — an option not available to 3G phone owners.

The Federal Communications Commission’s Net Neutrality policy exempted wireless providers from observing its core principles, giving carriers carte blanche to block websites and third party applications from their networks, and Verizon has put the green light to good use.

AT&T has favored direct punitive measures against customers who don’t respond to their demands to upgrade by auto-enrolling customers in $45 tethering plans or threatening legacy customers with the loss of their unlimited data plan.

Some media reports — including those from Mobiledia — have declared third party tethering applications “illegal,” which is inaccurate.  While carriers may not like these applications and declare use of them contrary to their respective acceptable use policies, they do not violate any laws.

In the wake of a scandal that forced the resignation of the president and a board member of one of America’s largest gay civil rights organizations, The Gay and Lesbian Alliance Against Defamation (GLAAD) has withdrawn its prior support for the merger of AT&T and T-Mobile and reaffirmed its support of strong Net Neutrality policies.

In a letter filed with the Federal Communications Commission earlier today, GLAAD did an about-face on its earlier support for the merger, telling the federal agency it now has a “neutral position” with respect to the deal.

Mike Thompson, GLAAD acting president, used the communication to also express the group’s strong support of Net Neutrality, which guarantees a free and open Internet.

“A rigorous review process considered GLAAD’s unique mission and concluded that while AT&T has a strong record of support for the LGBT community, the explanation used to support this particular merger was not sufficiently consistent with GLAAD’s work to advocate for positive and culture-changing LGBT stories and images in the media,” Thompson said in a statement.

Thompson’s belief that AT&T has a strong record of support for gay and lesbian issues remains controversial in many segments of the gay community. John Aravosis of Americablog would take issue with Thompson, accusing AT&T of “screwing” the gay community in the state of Tennessee:

AT&T was one of the companies whose local representatives sits on the board of directors of the Tennessee chamber of commerce.  You remember them, the group that endorsed and actively lobbied for the measure repealing gay and trans rights ordinances in the state, mandating it so that no trans person can ever change their birth certificate gender in the future, and banning any future civil rights ordinances for anyone in the future.  That AT&T.  The AT&T that weighed in early with a statement, when we asked the 13 companies to disavow the legislation and call on the governor to veto, but then whose statement pretty much didn’t say anything.  The AT&T then that emailed me multiple additional statements AFTER the governor signed the hateful bill into law.

Aravosis

GLAAD has taken its first steps to move as far away from dollar-a-holler advocacy as possible as a result of the hostile reception GLAAD’s original position got from rank and file members of the civil rights group.  After AT&T’s financial contributions to the group were exposed, along with the interests of one of their board members with direct ties to the telecommunications company, GLAAD accepted the resignation of group president Jarrett Barrios and board member Troup Coronado.

Remaining board members want the controversy to be over and done with.

“I am confident that Mike made the right decision both in withdrawing GLAAD’s endorsement of the AT&T merger application and in affirming our support of general net neutrality principles,” said GLAAD board member Tony Varona.

Politico obtained a statement in response to these events from AT&T:

“As we’ve previously said, we recognize, and fully respect that these organizations, which do important work, will make up their own minds about whether to support the merger or remain neutral. And, though it should go without saying, the decisions made by these organizations will not in any way impact our desire to work with, partner with or support those organizations in the future.”

Phillip Dampier: "Where is the actual innovation in The Spectrum Innovation Act?"

Republican members of the Subcommittee on Communications and Technology on spectrum issues have circulated a draft bill — The Spectrum Innovation Act — which is breathtaking when you finish reading it.  For the first time I can recall, the United States Congress is proposing a way for business to bypass telecommunications laws by buying their way out.  The proposed bill would allow big spectrum holders like wireless phone companies, broadcasters, and others warehousing unused spectrum to win a “get out of regulation free”-card just by buying and selling the public airwaves.

A hearing on spectrum issues is scheduled for this Friday, and it promises to be fascinating if only to hear the reasoning behind Congress proposing to throw their own authority to the wind.

The bill’s contents are appalling for a variety of reasons:

• Public airwaves remain a private commodity that companies can buy, sell, or trade, with the not-so-fringe benefit of winning deregulation or being granted a legal free pass to ignore laws still in effect for others;
• The purchase of spectrum under this bill could allow wireless carriers to avoid even the pretense of today’s watered-down Net Neutrality policies;
• Unlicensed white space/spectrum which could be used for innovative new wireless applications could instead become warehoused by private companies for their own use (or more likely to keep others from using it.)

Harold Feld, legal director of Public Knowledge, says the impact of the House measure should not be underestimated.

Feld

“Until now, communications law has never been publicly put up for sale,” Feld said.  “This draft bill would do that by allowing broadcasters to choose which rules they will follow and which rules they won’t if they sell their broadcast spectrum at auction.”

That is distressing enough, but the implications for wireless innovation are in peril if this bill ever becomes law, according to Feld.

“The innovation and experimentation we have seen through the use of unlicensed spectrum would screech to a grinding halt,” Feld believes. “Rather than have the FCC decide how much spectrum would be used for unlicensed uses, the draft bill would require a collective bid for unlicensed spectrum higher than bids for licensed uses.  Given that unlicensed uses like Wi-Fi come from small and new companies, the future of new uses would be very bleak.”

Feld points to several provisions in the bill to prove his points:

• Pages 18-19, line 19 (regulatory relief). If you are broadcast licensee, instead of taking money from an incentive auction for repacking or moving to a different spectrum band, you can ask FCC for a waiver of any commission rule or any provision of law.

• Pages 28-29, line 8 (administration of auctions).  If someone buys a license at auction, the spectrum is exempt from even the weak Net Neutrality rules that have been approved to guard against basic anticompetitive activity in wireless service such as barring competitive services.

• Page 29, line 3.  Prohibits spectrum cap, and also eliminates the ability of  the Commission to favor small business and minority, women-owned businesses in auctions.

• Page 26, line 10. Unlicensed spectrum is subject to auction.  A block of spectrum would be put up for auction, with bidders specifying whether use would be for licensed or unlicensed use.  Unlicensed has to be higher for bid to be accepted.

• Page 30 (section begins).  Gives public safety spectrum to the states, without an auction, with a nebulous plan and some unspecified grant money to coordinate the public safety network.

He’s more than proved the point.

While such legislation would no doubt be celebrated by incumbent providers to reinforce the status quo — their status quo — it is a nightmare for everyone else — another piece of irony from some Republican lawmakers who name their bills the diametric opposite of their end effect.  We can’t think of a better way to crush innovation and destroy the potential of competition by granting today’s players deregulation and easy access to unlicensed spectrum.  It’s as oxymoronic as a level playing field in the Rocky Mountains.  That’s why we need some actual innovation in The Spectrum Innovation Act.