VZ Verizon Communications Inc

By Thomas Gryta And Ryan Knutson 

A battle is brewing among tech giants over the future of Wi-Fi, the ubiquitous and unregulated wireless connections at the core of the mobile Internet.

Verizon Communications Inc. and T-Mobile US Inc. are preparing to broadcast cellular signals over some of the same free airwaves currently used by Wi-Fi networks. The wireless carriers plan to begin rolling out the technology next year.

That worries startups like Republic Wireless as well as companies like Google Inc. and Cablevision Systems Corp. that have built services that rely on Wi-Fi networks. They argue Verizon's and T-Mobile's signals could take up space Wi-Fi services normally use and crowd them out. Wi-Fi networks--in homes, offices, airports and coffee shops--already carry more than half of mobile data usage globally.

Google officials wrote a letter in June to the Federal Communications Commission urging caution. Google said the new technology is "particularly worrisome" because wireless carriers "may view some Wi-Fi providers, such as cable companies offering Wi-Fi hot spots to their customers, as competitors."

Verizon and T-Mobile say the expansion is needed to manage the surging consumer demand to stream videos and surf the Web on smartphones and tablet computers. The carriers say using the unlicensed airwaves is an inexpensive way to quickly increase capacity and speed on their congested networks. They say the new technology, called LTE-U, can coexist with Wi-Fi harmlessly.

"Wi-Fi is very important to us because it's very important to our customers," said Patrick Welsh, director of federal government affairs at Verizon. "Every test that we've done shows that LTE-U is as good of a neighbor to Wi-Fi as Wi-Fi is to itself."

The debate has turned political. Late last month, six Democratic senators wrote a letter to FCC Chairman Tom Wheeler expressing concern of possible Wi-Fi harm and asking him to intervene. The FCC has opened a proceeding to study the issue. The supporters of LTE-U insist there is no need for rules or any intervention, and point out that the airwaves Wi-Fi uses aren't limited to a single technology. A senior FCC official said the agency is monitoring the situation and doesn't expect to take any action at this time, but is considering the submitted comments.

The existing rules for using unlicensed spectrum are light. They only limit transmission power and ensure that signals don't bleed into other channels.

The new LTE-U technology is a modified version of the fourth-generation cellular standard that carriers use to route phone calls and data on their networks. Wi-Fi operates over unlicensed airwaves, checking for an open channel before broadcasting. LTE-U checks, but will broadcast on the least congested channel rather than wait for an open one. That means that Wi-Fi signals could get shoved around, critics say, and reduce the speed and quality of their connection.

Earlier this month, Julius Knapp, the head of the FCC's Office of Engineering and Technology, wrote a letter to Verizon and other backers of LTE-U asking technical questions about the technology, including why it would be able to transmit on an already occupied channel.

Verizon created a group called the LTE-U Forum in April 2014 along with equipment vendors such as Qualcomm Inc. and Ericsson to develop the technology. That process is taking place alongside efforts at international bodies to create standards for similar technology. Unlike LTE-U, the global standards are expected to have a "listen before talk" mechanism similar to Wi-Fi.

Verizon and T-Mobile say they aren't going to wait for the international groups to finish setting those standards. Both carriers say they plan to begin adding LTE-U radios to their networks next year, potentially giving them a two-year lead over operators that wait.

"We are going way, way, way beyond what anyone could require in rules to make sure it will work well," said Dean Brenner, Qualcomm's senior vice president for government affairs.

AT&T Inc., which operates a large network of Wi-Fi hot spots, has urged the FCC to not set new regulations around the use of unlicensed airwaves but hasn't set any plans to launch LTE-U. A spokesman for the company said it is "supportive of LTE use of unlicensed bands as long as it can properly coexist with Wi-Fi."

The debate over the new technology comes as the price for licensed airwaves is rising. The FCC's last auction raised more than $40 billion, including $18.2 billion from AT&T and $10.4 billion from Verizon. An auction set for 2016 might raise more. The cost makes it hard both for new businesses to enter the market and established ones to maintain their networks. Verizon said earlier this year that airwaves had become so expensive it would look to new technologies to improve network speeds.

Meanwhile, consumer reliance on Wi-Fi has grown significantly. Wi-Fi first gained popularity in the early 2000s after it became standard on Apple Inc. computers, allowing users to access the Internet without plugging their computers into a cable. Then, wireless carriers encouraged customers to log on to Wi-Fi with their smartphones as a way to ease network congestion. Consumers got used to the typically faster Wi-Fi speeds--and importantly, their lack of data caps--helping fuel Wi-Fi's growth.

Upstarts like Republic Wireless and Scratch Wireless Inc. offer cheap cellphone service that runs primarily over Wi-Fi signals and only falls back to cellular networks when Wi-Fi is out of range. Firms like Google and Cablevision are also using Wi-Fi to offer similar services. All of the efforts are nascent, and have tiny subscriber bases compared with the more than 100 million subscribers on Verizon.

Wi-Fi is the only alternative network to wireless carriers, said David Morken, co-founder and chief executive of Republic Wireless, a division of Bandwidth.com Inc. "It is in their best interest, and importantly perhaps strategic long-term interest, to marginalize Wi-Fi as much as possible as an alternative open, creative ecosystem," Mr. Morken said of the carriers.

Verizon and other wireless carriers reject the idea they intend to harm Wi-Fi. They say their intentions are only to improve the wireless experience for existing customers. Ericsson says the addition of LTE-U could improve network speed by 150 megabits per second, a considerable bump over current cellular networks.

Harold Feld, senior vice president at Public Knowledge, a consumer-advocacy group, said Wi-Fi is too important to wait and see how LTE-U affects it. Even if the impact is minimal, allowing LTE-U to proliferate could give carriers the ability to slowly strangle Wi-Fi, he said. "You don't have to kill it to make a really potent weapon against the competing services," he said.

Write to Ryan Knutson at ryan.knutson@wsj.com

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(END) Dow Jones Newswires

August 25, 2015 19:16 ET (23:16 GMT)

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