July 2003

Wi-Fi, Li-Fi, and Mi-Fi

Wi-Fi's future depends on whether big tech companies consider it friend or foe.

By Michael Schrage

In any analysis of innovation, 802.11 is truly a prime number. This evolving standard, better known as Wi-Fi, is the "it" protocol that's won the same spectacular hype as (whisper it softly) the Internet itself. Oh, the good old days. I miss them.

But while Wi-Fi undeniably inspires that intoxicating blend of expectation and excitement that leads to entrepreneurial excess, it's also the kind of technological platform that invites the best ideas. Wi-Fi's combination of well-crafted technical standard and regulation-free deployment offers a robust model for digital development. Alas, whether this model is ultimately sustainable for marketplace development remains an open question. After all, the ongoing explosion of network innovations has hardly improved the financial health of the telecom industry.

Which is why Wi-Fi makes such an interesting case study in the economics of innovation adoption. For example: does the rise of Wi-Fi make telephone companies' underutilized fiber backbones more valuable or less valuable?

That's a multibillion-dollar question in the United States alone. Who knows? I don't. But it's not a bad bet that by increasing the number of settings where people can use their computers, ubiquitous Wi-Fi will dramatically increase bandwidth demand rather than radically reduce it.

That would surely give the telecom industry powerful economic incentives to treat Wi-Fi as a potential "force multiplier" for its networks rather than a threat. Perhaps that's why Bell Canada, Verizon, and other phone companies say they intend to turn their cell-obsoleted pay phones into Wi-Fi access points.

Then again, to the extent that Wi-Fi capabilities supersede-rather than complement-cellular, fiber, and copper nets, the technology subverts existing telecom business models. So should these companies embrace Wi-Fi or strangle it? An old political adage comes to mind: "Keep your friends close and your enemies closer."

But let's consider a bold rival approach to promoting Wi-Fi. This idea builds upon the open-source ideology of shared development and distribution, as well as "viral marketing," which turns customers into resellers. The concept is to create a Wi-Fi cooperative that turns individual laptops into potential nodes, routers, and hubs of a global network analogous to the wireless-mesh networks being pursued by Intel, among others.

So treat every laptop as a voluntary Wi-Fi hot spot. People could go online to retrieve software that effectively turns their machines into Wi-Fi access points. Instead of paying for broadband Internet subscriptions, individuals-and organizations-would agree to make their machines accessible to other machines, creating relays that eventually reach the Net. In the same way that individuals and institutions license their "free" access to open-source Linux, they would have "free" access to their open-source Wi-Fi.

In acknowledgement of Linux, let's call this approach Li-Fi. The more people who participate, the greater the number of access points and the denser and richer the networks. In the same way that Linux threatens Microsoft, Li-Fi could threaten traditional networking and telecom.