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Wi-fi and the future of wireless

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But much else about the future of wi-fi remains less clear, including who's going to pay for public hotspots installed outside the home. Right now, most of these require users to pay for access, either through a subscription (perhaps $30 to $40 per month) or on a one-time basis ($7 for 24 hours, for example). That model doesn't satisfy those who travel and don't want to run up a lot of charges to different providers. So companies setting up hotspots are now beginning to sign "roaming" agreements that let customers use hotspots owned by other providers.

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Looking ahead, analysts say prices will drop because of brutal competition. Until then, it's the business traveler who's most likely to pay for public wireless access. That's one reason hotels look like the next big growth area for wi-fi service.

Hotels are an "interesting bellwether" of where wi-fi is headed, says John Yunker, a wireless-industry analyst at Pyramid Research in Cambridge, Mass. "They're cash-strapped, but they're going ahead with deployments because they have to. The guests are demanding it.... We expect all major hotel chains to have announced some degree of wi-fi deployment by the end of next year. And many already have."

Wi-fi for free?

Pyramid also predicts that wi-fi will soon become a free amenity at many hotels (it already is at some restaurants).

Because wi-fi travels over public airwaves, security and privacy are concerns. "When I'm in Manhattan, I can stick my wi-fi-enabled PDA out the window, and I can tap into four or five access points that aren't secure to check my e-mail," says Ed Rerisi, ABI's research director. "People don't realize how vulnerable they are."

But issues like security, along with the problems of cost and identifying hotspot locations, aren't going to hold wi-fi back, analysts say. "I think all these problems have solutions and gradually over the next couple of years all of them will get solved," says Craig Mathias, a principal at Farpoint Group in Ashland, Mass. "The sky's the limit" for wi-fi.

Cellphone companies have their own plan for covering the world with high-speed Internet access through a technology called 3G. But the jury is out whether it's arriving too late to push aside wi-fi. Cellphone companies "could find themselves obsolete in a while," unless they find new ways to add value for customers, says Dr. Reed of the Media Lab. One cellular company, T-Mobile, is hedging by making a major investment in wi-fi hotspots.

As an alternative to wireless companies that build infrastructure and charge for access, the Media Lab is studying "viral communications," in which every laptop or other wi-fi-enabled device would cooperate to relay data. In this "infrastructure-free" network, the system could have great resiliency, Reed says. If one route of information was blocked, other radios would form another trail to send along the data.

Though the data might pass through many radios, security would actually be enhanced, he adds, because the route of the message would be unpredictable to hackers and because it would force the data to be encrypted. The intermediate radios wouldn't know the encryption key.

Even the question of powering up unplugged devices is solvable. Reed sees a time when they could operate "parasitically by living off the radio waves of things that happen to be plugged into the wall."

Others envision wi-fi transmitters embedded in every power strip in an office, making a whole company one big hotspot. "Who knows?" analyst Yunker says. Wi-fi is a disruptively inexpensive way to communicate "and it's hard for anything else to compete with that."