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02/14/2008

Where Wi-Fi is Everywhere: Service-Provision Learnings from Estonia

Estonia is a world leader in hotspot deployment, thanks largely to one highly effective, unpaid evangelist, Veljo Haamer. Lately I've been wondering if the vision and drive of those early years has faded. So I decided to skype the founder of WiFi.ee and find out what's happening in his country:

WiFi coverage in Estonia A map on the WiFi.ee website shows that Estonia is now completely covered by Wi-Fi: 1,157 access points blanketing 45,000 square kilometers. This is an amazing achievement. And it happened with hardly any government support, isn't that so?

Veljo: Yes, it is. It was mostly from competition between different restaurants and hotels. Wifi.ee created the first hundred or so free Wi-Fi hotspots, then the number grew through competition between different sets of players. Last year we created the first Wi-Fi trains and the first Wi-Fi buses between cities, and that started a new competition between bus-lines and trains. So Internet is now available on our public transport, and next year it will be more advanced.

Isn't there also competition between commercial ISPs, free hotspots, and WiMAX?

Veljo: There is competition between different technologies. In addition to WiMAX, we have CDMA450, which enables Internet connection while moving at high speed. WiMAX is real broadband from antenna to home, if you can see the antenna, but it cannot be used during movement in traffic. So we have five different WiMAX providers as well as four cellular data providers.

How can the commercial providers survive in a market with so much free access?

Veljo: Free access is usually not completely free here. You need to pay for your coffee or your beer or your meal or something else to use the Internet. In the beginning I had to explain to the owners that the idea in this business model is to collect money for the services people are already willing to pay for. That is, they can sell more beer, or charge a higher price for the beer, if they provide Internet for free. Payment for the Internet is actually in the price of other goods and services. You can say it is free, but really it is not free. That is the first idea. The second idea is that you cannot connect to the Internet before seeing an advertisement. You don't pay a separate price for the Internet. You pay for access with something else — your attention.

Are cities in Estonia building municipal networks?

Veljo: No. I created the first Wi-Fi parks in Estonia, and now most parks in Tallinn have free Wi-Fi access from May to October. That makes the parks more attractive. But the government of Tallinn just orders wireless service from an ISP; it doesn't operate the network and the city-funded coverage is actually quite small.

Veljo Haamer Is there much interest in FON?

Veljo: FON is a way for end-users to collaborate to open Wi-Fi networks to each other. This is a wonderful idea. I agree with it. I hope there are countries where FON has much success. But it is not so successful in Estonia because we already have so many free Wi-Fi hotspots that earn their money from coffee, beer, meals or something else. During the past five years, we created a business model that is a bit different. FON came to us too late.

I would imagine that the 2.4 GHz band is pretty crowded now in Estonia. Is use of 5 GHz growing?

Veljo: Yes, you are right. The 5-GHz frequencies have definite advantages for the service provider. One reason why 5 GHz is so popular now is RouterBoard, which is made in Latvia. A complete 5-GHz RouterBoard base station costs a couple hundred euros. So anyone who has the idea to start their own wireless Internet business can do it quite easily. We have almost a hundred small ISPs in rural areas, villages and small towns. Most were started by young people who just put a 5-GHz transmitter on a cell tower to cover their neighborhood. There are a huge number of 5-GHz access points on cell towers in Estonia. That service is even more widespread than WiMAX. Because it's cheaper. You can start with your own hands and a small amount of money, cover 10 to 15 km, sign up a thousand clients and earn good money. Later a big Internet provider like T-Mobile or Elion may come and buy your network to get your clients.

Do you consider Internet access a universal right, in addition to being a good business?

Veljo: Yes. At the end of the 19th century and in the first half of the 20th century, electricity became available to the public. Some people did not trust electricity and thought they didn't need it. Today everyone knows they need electricity. The same will happen with the Internet. I am sure of that.

But every month we read about the problems of setting up city-nets in the United States — in San Francisco, Portland, Boston, Seattle. Those places are huge. In all of Estonia, there are only 1.4 million people. Some think that if universal public access can't work in a big rich country like America, it certainly can't work in Estonia.

It can't work? You already have Wi-Fi everywhere!

Veljo: It can work, but we need to change the way the market is organised. We have service providers, our people have computers. Almost every Estonian has a cellphone — or two of them — and most have laptops. It's already becoming impossible to work or to study without a laptop. But universal coverage is not the same as universal access.

I have an idea which hasn't been suggested yet. It takes advantage of the fact that we already have good coverage but our "free" Wi-Fi isn't really free. To my mind, this is mission critical. The idea is to open a certain amount of bandwidth to every citizen of Estonia. It would be limited in speed, to 128 Kbps maybe. This would be a government supported service for every Estonian who authenticates himself to an ISP with either his cellphone or his national identity card — it wouldn't matter which. So the idea is that if you authenticate yourself to any service provider, they will give you bandwidth-limited free service. Your online time will be logged and at the end of half a year, the government will reimburse each service provider according to how much free access they gave. The important thing is to preserve competition even in a market with subsidies. That means giving each user the freedom to choose any ISP, and giving each ISP an incentive to serve nonsubscribers.

Such a system would be easy to set up and run, I think. We don't need to build any new networks and everybody wins: The government increases Internet penetration, the service providers attract new customers by giving out "free samples" and the public gets a basic "life-line" service. This is a wider and more powerful idea than free hotspots. It would be open to any technology and any ISP. We just log the data and compensate the providers afterward, according to the free use of their bandwidth.

This sounds sort of like a settlements process, almost like the ITU's share-out of revenues from international phone calls according to the number of caller-minutes between each pair of countries.

Veljo: Economically, it's simpler, but politically it's more complicated because it involves social policy and collaboration between competitors. This idea can only be realised if I work with someone with political power. But the question is, with whom?

Well, let me ask that: With whom? A political party? An elected official? A ministry? Who is the best partner for a project like this?

Veljo: I don't have a suggestion. I'm not a politician. I'm not an insider. My only chance is to write articles in the newspaper and give interviews and hope someone likes the idea enough to help make it happen.

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Where Wi-Fi is Everywhere: Service-Provision Learnings from Estonia

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