Will Apple's iPhone drive citywide wi-fi?

Apple's iPhone and other wi-fi enabled handsets coming into the market could boost demand for citywide wi-fi networks, said experts at the MuniWireless conference.

As mobile phone operators push their 3G data services, new mobiles outfitted with wi-fi capability are also being introduced. Apple's iPhone was one of the first to reach the US market. And so far the phone has gained rave reviews for web surfing when it's on a wi-fi network. Conversely, critics have complained about the painfully slow surfing on AT&T's 2.5G cellular network. (The iPhone does not operate on a 3G wireless network, which is considerably faster than a 2.5G network.)

Bill Gurley, a general partner at the venture capital firm Benchmark Capital, told conference attendees that the wi-fi enabled iPhone, along with RIM's newly announced Blackberry 8820 and other wi-fi enabled handsets will help drive the need for citywide wi-fi networks.

He said: "The devices are coming. Most chip companies will soon be embedding wi-fi and 3G cellular capability into their chips, which will make just about every phone out there wi-fi capable."

Up until recently, most people using a citywide wi-fi network have done so using a wi-fi enabled laptop or PC. EarthLink built a whole business model on selling wi-fi broadband service as a replacement for DSL or cable modem service. The company also targeted some nomadic users, who would also typically connect to the networks using laptops. But this strategy has proved to be difficult, and EarthLink has greatly scaled back its citywide wi-fi plans.

But with wi-fi enabled mobile phones users could benefit from true broadband mobile web surfing, which would likely drive demand for the service.

Ken Biba, managing director at Novarum, a consulting company that independently tests wireless broadband networks, said in some cities the wi-fi networks are outperforming the carriers' 3G networks. For example, he noted the iPhone can connect at faster speeds over the wi-fi network in cities such Toronto much faster than other handsets can connect using a major carrier's 3G cellular network.

He said: "In a city where wi-fi is deployed right, it can create a real paradigm shift."

And with 1.39 million iPhones already in the market, according to Apple, demand is likely to continue to grow.

Karl Garcia, a technical staff member at Google who is helping run the citywide wi-fi network deployed by Google in Mountain View, California, said there are roughly 850 iPhones connecting to the city's free wi-fi network every day.

T-Mobile USA, the smallest of the four major operators, is already leveraging wi-fi, and could also be tied to citywide efforts. This summer it launched a service that allows people to switch between wi-fi and cellular.

Marguerite Reardon writes for CNET News.com