Wireless internet competition: Municipal wireless vs. 3G mobile service

Abstract

With an emphasis on creating ubiquitous Internet access to bridge the digital gap between location and access speed, the refinement of wireless technologies has it so that cities can reap the socio-economic benefits of the Internet. The 3r generation (3G) and wireless fidelity (WiFi) are the two main wireless technologies which access Internet using wireless devices. Some major cities in the U.S. have either deployed or have future plans to roll-out city-wide broadband wireless network using WiFi technology. Even if 3G and WiFi have different origins and features, they will become competing wireless Internet access services in the near future. In this paper, using a game theory, the authors build a competition model of 3G and WiFi and demonstrate which technology will have a better market position and what an optimal pricing strategy is through equilibrium analysis. The authors found that in the equilibrium analysis, WiFi could have a better market position in the future. On the other hand, by using a higher pricing strategy, the profit of 3G providers would be higher than that of WiFi providers. Finally, the municipal WiFi could be useful as a public Internet access method and prove to be competitive in this market with its attractive low pricing.