Wi-Fi Looks to Keep the Mobile Internet Dream Alive

Is Wi-Fi the Future of Mobile Internet? Jeff Thompson, the CEO of Towerstream (s twer) has been asking this question lately. And after seeing the results of a test Wi-Fi project in mid-town Manhattan, Thompson keeps coming back to the same answer: yes.

Thompson’s company has been testing the Wi-Fi network since early summer and has recorded days of more than 1 terabyte in usage and 21 million connections in one quarter. This is in one area of Manhattan while AT&T racked up 68.1 million Wi-Fi connections in the second quarter from its more than 20,000 hotspots nationwide.

What it suggests is that even with 4G on the way, carriers cannot keep up with the looming demand for mobile broadband. And as even more people adopt smartphones, which generate an estimated 50 times more data usage than feature phones, the crunch will only continue. Current projections are that half of U.S. mobile subscribers will have a smartphone by the end of next year.

“What we’re learning is there is a huge amount of demand for Wi-Fi devices and what we’re seeing in the first three months of using the Wi-Fi network is the dramatic increase of handsets jumping on the network,” Thompson said. “All of these devices are not getting enough of what they need from 3G networks. Wi-Fi has critical mass.”

And that’s where Towerstream comes in. The company is testing the Wi-Fi network using 802.11 N technology with powerful hardware from Ruckus Wireless that extend a wireless radio’s reach to 1,200 feet. Combined with Towerstream’s own broadband network, which can pump out 200 megabits per second, the company has a system that is faster and more capacious than cellular networks.

While Towerstream hasn’t decided what it will do next after the Wi-Fi test, the company is considering building more networks and selling wholesale access to carriers who need to offload data usage. Some carriers such as AT&T are relying on their own Wi-Fi hotspots while others like Verizon have struck deals with Boingo to offer more wireless access. And all the carriers are turning to femtocells and UMA technology to extend coverage in home. But they’re aware that it won’t be enough, something that was very apparent at the Mobile World Congress in February.

Offering a wholesale option for Wi-Fi offload for carriers, especially in dense areas of big cities like New York, San Francisco, Chicago or Los Angeles, holds special promise for improving network connectivity. Overworked 3G networks are already a headache in places like New York and San Francisco but it could be a more common problem elsewhere as usage goes up. Even with a network of hotspots, having an option to light up a general problem area could go a long way in bringing down complaints and keeping pace with demand.

Thompson said he’s talking to carriers and he said cable operators might also be potential customers. Comcast (s cmcsk) recently rolled out 2,000 free Wi-Fi hotspots for its Xfinity customers in New Jersey, Philadelphia and Delaware while Cablevision (s cvc) has launched Wi-Fi hotspots around the greater New York area. The growing reliance on Wi-Fi has implications for not just Towerstream but Wi-Fi networking vendors such as Ruckus, which provided the gear for Towerstream, and  for BelAir Networks, which is building wireless base stations for wireless operators and cable companies such as Cablevision. Though much of the talk is turning to 4G these days, Wi-Fi is increasingly looking like a critical way to keep the mobile broadband boom alive.

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Post and thumbnail photos courtesy of Flickr user Steve Rhodes.