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Saturation point?

"Build it and they will come" was the whisper from the corn fields in the movie Field of Dreams but as this article in the NY Times (happily, no subscription required) poses the inverse problem - what if you built it and nobody came?

The article is about the experience of the city of Taipei and its city wide WiFi network that has managed to attract only 40,000 users since the network switched from free to a subscription based service.  The article is an interesting read following on the heels of my article last week about ad-supported WiFi networks and raises a question; at what point do you have enough Internet connectivity that you reach a saturation point and "free" becomes the only model that attracts users?

A recent article I read showed the size of the Internet user population and broke it down by country.  At the end of 2005 the Internet had over a billion users and is projected to rise to 1.8 billion by 2010.  The article also lists the population and number of Internet users by country.  Many of the developed countries have Internet usage by more than half their population.

Between broadband, mobile phones and WiFi hotspots (many freely available) I suspect we're getting close in many countries to that saturation point.  The saturation point is where simple connectivity for a fee isn't compelling enough to attract users; as a prior example, think about the declining use of dial-up that gave way to users paying more for broadband where the experience was more compelling.

As metro-areas are built out with WiFi or some other technology there will have to be a bigger hook to get people to use it - that means some combination of "free" or other attractions such as content or service bundles will be needed to get users onboard. 

This also has implications for new technologies that look to provide metro-area coverage such as WiMax or  plans such as M2Z Networks to offer a "free" service at 500 Kbps.  They will have to deal with the same issue facing metro-area WiFi networks but with much lower equipment volumes to drive down the cost of providing coverage - which in turn, makes it harder to compete against the other offerings and attract enough users to foot the bill!

My first thought when reading this article was a fear that the saturation phenomena would result in the postponement or even cancellation of metro-area WiFi plans but instead I think it places the imperative on the user hook.  The availability of a "free" high-speed metro-area network is likely to create a whole new class of applications that are built on pervasive communications.  I think there will be some very interesting investment opportunities as a result.

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STU PHILLIPS
MENLO PARK, CALIFORNIA

Intense Brit, lived in Silicon Valley since 1984. Avid pilot, like digital photography, ham radio and a bunch of other stuff. Official Geek.

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