Free nationwide Wi-Fi is one step closer to reality, now that FCC tests show that a chunk of available spectrum can support a countrywide network without interfering with rival spectrumholders.
Don't ditch your access provider just yet. This is, again, just one step in what will likely be a very long and winding road toward skinflint broadband.
The auction itself is still at least several months away. The eventual winning bidder will also have plenty of time to roll out the free product. The government is requiring that at least 50% of the nation be covered within four years, and 95% of the country within 10 years.
And lest you get all excited by thoughts of all-you-can-surf wireless, know that this isn't a charitable initiative. At least one likely bidder -- startup M2Z -- is looking at an ad-supported model, with paying subscribers receiving faster access. In other words, the free product is unlikely to satisfy cyberspace speedsters. The FCC will also make sure that free access is filtered; file-swappers and fans of X-rated sites will likely have to look elsewhere.
Still, canvassing the country with free connectivity will be a game-changer, full of opportunities and challenges alike. Let's look at both sides of the story.
The telcos and cable companies providing Web access may get hurt the most, especially among their entry-level pricing plans. If cheap, slow connectivity is what those consumers want, a free ad-supported model will hit the hot spot.
Most access providers are gargantuan companies with diversified product lines, but some are pure ISPs like Earthlink
Wireless carriers should also feel the sting. Pitching subsidized handsets with expensive data plans won't be an easy sell if the public turns to Web chat alternatives.
Premium entertainment providers may get pinched, too. Sirius XM Radio
In short, if you provide a premium service that has a reasonable Web-delivered alternative, free Wi-Fi is not your friend.
Another unlikely loser is Microsoft
Free Wi-Fi's aim is to provide deeper market penetration. That will naturally benefit e-commerce and online advertising companies, but investors need to be realistic. Folks who flock to free connectivity won't be voracious shoppers at Amazon.com
Still, free Wi-Fi should be a "net" positive for both companies. If you're shopping at the mall and you can hit Amazon for a little comparison-shopping -- many people do so already, but more will follow in a free Wi-Fi future -- Amazon will be treated to incremental sales.
Google will also be a winner, especially if the top bidder turns to this online ad king to monetize its landing page.
Another wave of profit may come from display advertising, an area where Yahoo!
Dump the losers? Back up the truck on the winners? Not so fast. We may still be several years away from a reality of free countrywide Wi-Fi. That's a lot of time for the companies that now look like losers to arm themselves with the right tools to stay relevant.
Sirius XM Radio already has a Web-streaming product; an ad-supported freebie could help it compete with free Internet radio and serve as a gateway drug for the premium product. Phone and broadcasting titans have too much at stake to go down quietly, so expect them to map out ways to thrive in a changing environment.
The road is long, but it's never too early to study the map.
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Longtime Fool contributor Rick Munarriz sees strange shapes in the clouds, but not in cloud computing. He does not own shares in any of the stocks in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.