FaceTime is an app built for the Wi-Fi network. It’s hard to imagine the phone bill if all this data was streaming over the 3G networks. And the same goes for Netflix, Hulu, Spotify and Pandora, which are key parts of our new connected digital life. These services have blossomed, thanks in part to the increasing ubiquity of the Wi-Fi network.

Applications such as these, not to mention our desire to check out tweets, Facebook friends, watch YouTube videos and occasionally even do work, has doubled the network traffic on the wireless networks since last year. These networks use gear from companies such as San Francisco-based wireless gear maker, Meraki. That traffic is expected to double every year, according to Sanjit Biswas, CEO and co-founder of Meraki.

Multiple Device Wi-Fi World

“We used to have one device on Wi-Fi: our laptop,” says Biswas. “Then we had two devices — laptop and our phones using the Wi-Fi.” Soon, we will have multiple devices that are piggybacking off the Wi-Fi based network connections.

Biswas predicts that by 2012, we will have between four and five devices around us with Wi-Fi built into them. (I actually have more than that even now: a phone, a tablet, a computer; an Internet-connected set-top box (Apple TV) and a digital camera with Eye-Fi.) Tomorrow, it wouldn’t be preposterous to imagine your microwave communing with a server over a wireless connection.

It’s quite a remarkable change. I remember buying Lucent-made Orinoco PCMCIA cards for an early variant of Wi-Fi and networking hubs with limited coverage. I used to wonder when it would really be possible for me to sit on my couch and get a decent Internet connection. That of course was in the last century; today, Wi-Fi is ubiquitous, and we want continuous coverage of at least 10 Mbps from our Wi-Fi routers. Tomorrow, we’ll want 50 Mbps and soon 100 Mbps wireless connections.

iPhone Lifts All Boats

The demand for Wi-Fi networks is lifting the fortunes of many, including some with suspect business models. Take Martin Varsavsky’s FON for example. The company has been through some ups-and-downs, but now it has started to grow and is profitable: about €4.9 million ($6.83 million USD) in 2010.

Where is all the money coming from? Offloading of data from 3G to the Wi-Fi networks. For FON, the growth has come in the U.K. and in Japan. Nearly two million FON access routers with auto connectors to the Wi-Fi network are handed out to buyers of Android-based smartphones and the iPhones. In-Stat, a market research firm, recently predicted that by 2012, nearly half of the Wi-Fi connections from hot spots are going to come from handheld devices.

Martin said in an email that while the company is still making money selling Wi-Fi routers and Wi-Fi passes to travelers, the future growth for the company is going to come from other gadget makers who are going to auto-connect to the FON network for a year via Wi-Fi, then sell subscriptions. “For example certain multiplayer games will come with prepaid Wi-Fi access so people can play them everywhere,” says Varsavsky.

Five years ago, FON had no idea that this future would unfold, just as Biswas and Meraki had no idea the iPhone would one day be its savior. It started out as a company based on MIT’s Roofnet project, and its ambition was to sell its wireless mesh networking hardware to hotels and other establishments, particularly in non-western markets. It proved to be a tough proposition, to say the least.

In 2009, the company, which has raised over $40 million from the likes of Sequoia Capital and Google, went through a metamorphosis and shifted focus to the enterprise market. Being at the right place at the right time, the company has seen the total number of deployed networks hit 17,000 at the end of 2010. Its growth has followed the trajectory of the wireless LAN market; in 2010, WLAN sales were up 23 percent to $2.7 billion, according to Infonetics Research.

The Smartphone Boom and Network Effects

At my request to find out what devices were connecting to the networks, Meraki took a random selection of over 7 million devices (roughly a fifth of the total devices connecting to Meraki-based networks) and found the iPhone accounted for nearly a fourth of the total Wi-Fi connections.

In aggregate, Android, iPhone and iPad accounted for about 16.53 percent of the total connections in middle of March 2010. As of March 14, 2011, these three devices now account for about 33 percent of the total connections to network.

Why the growth? While laptops were used for wireless access, it’s difficult to walk around and use them as easily one can use a smartphone or an iPad. The smart devices encourage anywhere computing, which, in turn, puts a different load on the networks. Dominic Orr, CEO of Aruba Networks, put it best when he said, “The network model has shifted from hotspots to ubiquitous and uniform networks access.”

One of Meraki’s clients has data to show that. Westmont College, a liberal arts college campus in Santa Barbara, Calif., showed in a study that nearly 3137 distinct clients connected to the Meraki wireless network in February 2011, and about 10.12 terabytes of data wer transferred.

A year ago, the data transferred was about 5.06 TB and a total of 2458 distinct clients used the network in the month. Why? Because there was a sharp increase in the number of iPhones, iPod touches and yes, there were a few iPads too.

Where Do We Go From Here?

Biswas, who has been involved with Wi-Fi for a long time, believes a future version of Wi-Fi (IEEE 802.11 ac) is going to become an apt replacement for the gigabit Ethernet wired connections in a couple of years. Currently under development, we’re likely to see the earliest devices show up in late 2012.

But one thing he knows for sure: Wi-Fi is going to be the default network connection in our homes. Today, we might sit on the couch and be amazed at the novelty of FaceTime on an iPad, but in a few years, it will be as normal as life with Facebook.

With more devices connecting to this network, it’s only a matter of time before we see even faster wireless connections inside our homes.

This is good news for developers and innovators, who don’t have to wait for the carrier’s wireless infrastructure to catch up to their ingenuity. What are you waiting for? Time to get going!

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WiFi takeoff will encourage additional investment in this technology, which is cheap to roll out, and will tilt the competitive balance back toward fixed. Looking at the broader picture, if a good urban Wi-Fi network is thrown in for free with a fixed network rental, it’s hard at this stage to tell whether this will represent substitutional or additional telecoms spend.

Last week, I asked our readers what they most wanted as a perk from their ISP, and the most popular answer by far was Wi-Fi access while on the go. Wi-Fi access has become popular with users and with certain Internet Services Providers both as a way to reduce the data deluge on wireless networks but also to reduce churn among subscribers, as smartphones with Wi-Fi become more commonplace (see chart). But signing onto Wi-Fi is kind of  a pain for a consumer who may be obliviously surfing along on a 3G network.

So will ISPs take the consumer love of ubiquitous broadband and carriers’ need for offload to the next level and create the equivalent of roaming agreements for Wi-Fi? Greg Williams, the new SVP of corporate development at Bel Air Networks, thinks they might. Williams, a founder of Wayport, the hotspot aggregator purchased in 2008 by AT&T, recently joined BelAir, a company that builds carrier-grade Wi-Fi equipment for customers including Cablevision, Comcast  and AT&T.

He wonders if carriers will negotiate with each other and fixed-line ISPs to get access for their wireless subscribers, especially in congested cities such as New York or San Francisco. I’m kind of skeptical, simply because I think most carriers are not experiencing enough pain to want to cut into their data revenue inside big cities, but it’s an intriguing idea. Regardless, BelAir, Meraki, Tropos and Cisco will all likely continue to benefit from the buildout of carrier-quality Wi-Fi networks.

Another beneficiary of the iPad/Wi-Fi buildout could be the MiFi personal hotspot from Novatel, which offers users a Wi-Fi signal while using the cellular network for backhaul. I have gotten excited about  personal hot spots before, and Sharma namechecks the MiFi in his article as well. Either way, fixed broadband isn’t in danger of being subjugated by fixed-line broadband anytime soon. Few people will dump their wired networks for wireless given the high cost of mobile data. Rather we’ll demand more seamless coverage without caring what technology we’re using or who provides it.

Image courtesy Flickr user Adventures in Librarianship.

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Devicescape is a popular application among iPhone and iPod Touch users because it eliminates the need to constantly log onto AT&T or other Wi-Fi networks using a password. As a result, the numbers in this survey might be slightly skewed, so take them with a grain of salt. And anyway, what can you expect from a survey that’s tied to three unabashed champions of Wi-Fi? But it is a good sign-post of the reality of Wi-Fi and its ubiquitous nature.

I can remember paying $350 for a Lucent Wi-Fi device many years ago, wondering when it would be possible to have a connected life without wires. Today, my entire apartment is wired with an Airport Extreme and a series of Airport Express devices for a seamless experience. Most of my other gadgets are wireless and, as I have shared previously, on-the-go Wi-Fi is part of my daily life. Looks like that dream is now a reality.

As shown through my earlier posts about Wi-Fi’s smartphone-driven renaissance, we are now assuming the wireless technology is part of our daily work flow. Nearly 98 percent of Wi-Fi consumers log onto Wi-Fi networks once daily, while nearly 57 percent log in every day, according to the Decipher’s survey of 8,000 users of the technology.

The availability of Wi-Fi on mobile phones is driving use of WiFi networks across the country. For instance, the Google network in Mountain View, Calif., has seen a big spike in Wi-Fi use, with smartphones contributing nearly 25 percent of the total usage, according to a press release from Tropos Networks, a municipal Wi-Fi networking gear maker.

And if that is not enough, nearly 90 percent of the survey respondents make hotel and travel decisions based on Wi-Fi availability, and nearly 96 percent expect it to be free. What’s more, many folks are musing about buying devices that have built-in Wi-Fi.

One of the more interesting findings of the survey was that a growing number of people are willing to share their wireless networks if there are appropriate systems in place. A good way to do so: Build a ratings system much like the one on eBay.

Does anyone else see the sweet irony in this? I mean, when municipal wireless debates were raging, phone companies couldn’t wait to get the Wi-Fi networks shut down. Today, the same technology is coming to the rescue of those  companies.

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Now comes word that by 2013, the San Francisco Municipal Transportation Agency will install 360 new bus stops powered by solar panels that will, in turn, power Wi-Fi routers and digital information panels, with any unused energy being pumped into the city’s grid. Popular Mechanics reports:

• San Francisco’s high-tech bus stops will channel an estimated 43,000 kilowatt-hours per year into the city’s grid. Built-in Wi-Fi routers will help the city create a comprehensive wireless Internet network.
• Each bus stop costs about $30,000. City officials say Clear Channel Outdoor has an installation and maintenance contract with the SFMTA. The company foots the bill and gets saleable ad space.
• The new shelters’ LED lights use 74.4 watts—four and a half times more efficient than the 336 watts used by the old shelters’ fluorescent lighting.

I checked with my colleagues over at Earth2Tech and they tell me the whole thing looks quite plausible and that the 43,000 kilowatt-hours being pushed back into the city grid isn’t too over the top. I wonder how much the fog and cloud cover will impact the actual performance of this system. (Hat tip, Kimo)

Photo courtesy of Popular Mechanics. Click on the image to be taken to the Popular Mechanics web site.

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But I quickly ran through my 5GB data transfer limit — thanks to watching Hulu and listening to Spotify, two services that have replaced television and radio in my life. My next best option was Free the Net SF, an open Wi-Fi network maintained in my neighborhood by San Francisco-based startup Meraki. It wasn’t the fastest, but it provided enough bandwidth for me to watch “The Daily Show with Jon Stewart.” The mesh wireless networking hardware maker has been a favorite of ours for years now — and it was the first time I really benefited from its Net SF experiment.

Since then, whenever I walk over for a coffee or want to sit in the park and catch up on my reading on my  iPhone, I hop on that network. I don’t use AT&T’s 3G network — I use my iPhone as an iPod. And so do others. Meraki recently conducted a wireless access census and found some amazing statistics.

This blog and I were here during the Wi-Fi boom, when the wireless networking technology was seen as a solution for world hunger. (OK, that was a joke.) It quickly went from being an in-home (and on-campus) technology to the cornerstone of municipal wireless efforts. By 2006, the hype cycle ended, and reality set in about the potential and economics of Wi-Fi. Many municipal Wi-Fi efforts started to stall, and companies such as EarthLink backed away from it.

And then smartphones happened. The current smartphone boom, led by Apple’s iPhone, has given Wi-Fi a much-needed boost, as Meraki data shows. First, some stats from the census that compared the devices that accessed Meraki access points in 2008 and 2009:

• The number of Apple devices observed, including laptops, iPhones and iPods grew by an impressive 221 percent.
• Apple now represents 32 percent vs. 14 percent in 2008 of all the devices seen by Meraki networks in North America.
• The number of smartphones (handheld devices) has quadrupled over the past year, with RIM showing a gain of 419 percent.
• The number of people using Intel-based devices declined 11 percent, which tells me that more people are using smartphones vs. laptops.

Now to be clear, Meraki has a big presence in the San Francisco Bay Area, which skews the usage patterns a little. But, as we have written in the past, Wi-Fi use has been going up across the U.S., as the data collected by AdMob shows. AdMob is a mobile advertising company. We also checked with enterprise Wi-Fi network provider iPass on the network usage, and a company spokesperson told us it had seen a 200 percent increase in enterprise smartphone use over its global Wi-Fi network from the first quarter to the second quarter of 2009. The U.S., UK and the Netherlands were the countries with the highest Wi-Fi growth, regardless of device, during that same period, according to iPass data.

The usage has grown as major 3G networks have choked under heavy mobile Internet use. There is no stopping smartphone sales, according to data collected by Infonetics Research, a market research company. (See chart.) With the growing availability of Google Android-based handsets, 2009 will prove to be a banner year for smartphones. (See a related research report from GigaOM Pro, “Google’s Mobile Strategy” (subscription required). We will also be discussing this topic as part of a free Research Roundtable Webinar on Aug. 27, 2009. Register here.)

In my opinion, the presence of PC-quality browsers, such as Safari, on smartphones and webkit-based browsers, as well as the growing popularity of social-networking services such as Twitter and Facebook as communication tools, have boosted the demand for wireless data. These tools demand data connectivity, and people want to check them while on the go. This spurt in usage has left the carriers that long saw themselves as Wi-Fi’s enemy coming around and embracing the insurgent technology.

AT&T’s $275 million acquisition of Wayport and the recent agreement between Verizon and Santa Monica, Calif., Wi-Fi aggregator Boingo Wireless are signs that despite the availability of faster 3G networks, the low-cost economics of the Wi-Fi ecosystem are alive and kicking.

Wi-Fi, which is based on a sliver of open wireless spectrum, is finally proving its disruptive qualities. The concurrent boom in demand for Wi-Fi-based connectivity shows that most networking technologies have to find a way to coexist in our increasingly bandwidth-hungry lives. As for me, I am enjoying the seamless Wi-Fi — in my apartment, my work and my home.

No wonder I don’t miss my 3G connection.

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However, this is Meraki’s second or possibly even third attempt at finding a market for its mesh networking technology. The company has pushed municipal Wi-Fi and is also trying to make a business selling access points to hotels, business districts and apartments interested in Wi-Fi.  It has some cool technology and ideas, but can it transition from selling to municipalities and folks trying to set up local networks, to the enterprise? If it does so, it would make its transition from an open-source, cheap hardware provider to money-making-business complete.

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But while the location was aesthetically pleasing, as it was somewhat off the beaten path, the venue had its challenges — the biggest being network connectivity. With that in mind, we bought four business-class DSL connections from AT&T that were bonded together at a distant central office; we then received a connection to the venue over fiber. The total bandwidth was over 20 Mbps.

But that was only half the problem. We needed to get the bandwidth distributed over a large building with thick walls. On top of that we needed three wireless networks: one dedicated to sponsors, one to the media and most importantly, one dedicated to the attendees. So we turned to Meraki, a Mountain View, Calif.-based wireless network equipment maker.

Thanks to their 802.11n mesh network, the Wi-Fi worked like a charm, even in the basement, where our team had set up camp for the day.

In the main room Meraki installed two of their new “MR58″ devices, each of which have three so-called “N” radios and supply roughly 5X the capacity of a typical wireless access device. In the side rooms, they had their small plug-and-play access devices.

Outside in the yard, Meraki installed one of their solar-powered devices, which allowed folks to surf and chat while basking in the sun. All of this was managed through a web-cloud based controller, allowing one of the onsite Meraki engineers, Greg Williams, to walk around and test and tweak the network using just his iPhone.

Here are the final stats of the network for the entire day:

* Almost 400 users connected to the network
* About 13 GB of data was transferred on the network
* The majority of users accessed the MR58 devices in the main conference room
* Parklands B in the basement, the Cypress room on the first floor, and the Solar unit in the front of the venue also received a high degree of usage

Thanks to Meraki, in particular Ivan and Greg. You have no idea how great it was to have a wireless network that worked.

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Today the company announced a Wi-Fi access point that plugs into a wall, and on Dec. 4 will release a lighter solar-powered access point to go places where power doesn’t. In a briefing about the products, it’s clear that Meraki still holds onto its altruistic views, with CEO Sanjit Biswas trumpeting the growth of Wi-Fi networks in Africa and small Chilean fishing villages. However, he’s quick to point out that hotels and apartment buildings can use the new Meraki products to rapidly install Wi-Fi networks that will cover a complex all the way from the pool to inside bedrooms.

In the last year, the startup has changed its business model several times, from trumpeting cheap hardware and charging a fee to access a dashboard, to tripling the price of its hardware and pushing ads. Such shifting hasn’t sat well with some citywide Wi-Fi network proponents, but the bottom line for many cities and customers is that Meraki’s Wi-Fi networks are still cheaper than those from vendors such as Cisco or Juniper. As Wi-Fi becomes more important, Meraki’s capitalizing on its cheaper gear with new packages that offer to unwire a city street for $10,000, or today’s launch of a residential package designed for apartments and hotels that costs less than $5,000.

Wi-Fi is of growing interest for both consumers and ISPs. Earlier this year, Quentanna, a Wi-Fi chipmaker hoping to build a plug-in home access point to boost wireless signals, launched with a few ISP customers on board. A few weeks ago AT&T purchased hot-spot provider, Wayport for $275 million. If Meraki can figure out a way to spread Wi-Fi and make money, it could be in a good position as ubiquitous access to the Internet becomes more important for gadget-toting consumers. Wi-Fi is one of the most common gateways to the web, and even in a down economy Meraki thinks it can make money on the tools to build those gateways rather than by managing them. Meraki has realized that instead of saving the world, it needed to save its business.

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We’re not sure the extent of Newsom’s announcement, but supporting Meraki is the least the mayor can do after the previously botched San Francisco Wi-Fi network. And in any case, Meraki is actually footing the bill for the entire ad-hoc free Wi-Fi network, including the affordable housing section. Biswas says the cost of the entire network is in the low several millions.

Biswas says Meraki will set up its system of Wi-Fi repeaters and Internet broadband access in “all” of the low-income housing communities in San Francisco, including the Altamont Hotel, where Newsom and Biswas will make the announcement. This is the latest part of the company’s “Free the Net” project and Biswas tells us that the company will have access points in every neighborhood in the entire city by the end of the year.

In the past, EarthLink and Google were both linked to a Wi-Fi effort in San Francisco that really didn’t go anywhere due to political roadblocks. Both companies have backed away from their MuniFi efforts.

Google, however, was one of those who invested in the seed round Meraki raised in November 2006. The mesh gear maker raised $20 million in a Series B round from Sequoia Capital, DAG Ventures and Northgate Capital back in January. Meraki could also be taking a page from Google when it comes to testing out ad-serving to support a free network. Biswas tells us that the company has tested out some contextual ads over the network.

City-wide Wi-Fi networks have been proving to not be viable in many cities and communities, but Meraki’s type of very low-cost, ad-hoc networks seems to be best suited for the technology. For just a few million, a company like Meraki can slowly add localized Wi-Fi hotspots in communities that actively want and will use the technology. Newsom certainly wants to work with the company to close San Francisco’s digital divide. We’ll check out the press conference later today and snap some pics of the mayor’s do — and the unwiring festivities.

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Meraki had boosted prices of their hardware and had incorporated some other ad-related initiatives that didn’t sit well with some of their customers who fell in the “Pro” category. In a comment following our previous post, Meraki CEO and co-founder Sanjit Biswas outlined his reasons for a newer Pro tier and price increases. This evening he wrote to us and let us know that Meraki made some changes.

(more customization/control, support for local community sponsorships, optional ads on Pro) which seem to have satisfied most of the upset customers.

He also added that the company expects “resellers to mark down the devices (same way traditional networking gear is discounted) and so we’re expecting the street price to be much lower than $150 for Pro.” I think the big issue for Meraki has been that they didn’t do a good job of communicating with their community. Nevertheless, if the price of the gear can be brought to acceptable levels (to their community), Meraki can continue to expand its ComMuniFi business model.

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