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Time Warner Whacks Wi-Fiers

Time Warner Cable, based in New York City, has filed a lawsuit in federal court against iNYC Wireless Inc., an ISP it alleges has tapped into its cable network, stolen its signal, and resold it for profit (see Time Warner Sues WiFi Provider).

The suit also names the cooperative board, managing agent, and superintendent of the London Terrace Towers, one of Manhattan’s largest residential apartment buildings, located in Chelsea, where iNYC Wireless is said to have been reselling the service.

The lawsuit alleges that from May of this year iNYC Wireless illegally intercepted Time Warner Cable’s Road Runner cable lines and, using the exposed lines running through the hallways and common spaces of this building, fed the intercepted signal into a network of wireless LAN, or "Wi-Fi," transmitters, amplifiers, and repeaters installed in London Terrace’s stairwells. Once the Road Runner signal reached this Wi-Fi network, iNYC wirelessly transmitted and resold it -- as its own proprietary service in return for a monthly fee -- to building residents who were apparently unaware they were paying for a service that originates with Time Warner.

”iNYC does not have an agreement to retransmit or resell our Road Runner service, nor has it ever requested permission to use the service or informed Time Warner Cable of its use of the service,” says Keith Cocozza, spokesman for Time Warner Cable.

The lawsuit seeks an order barring further interception and redistribution in any building by iNYC, as well as monetary damages from the accused. Time Warner did not disclose the financial details.

Wireless LAN services -- or “hotspots” -- are created by hanging wireless access devices off DSL or cable networks. The access device bridges one medium to the other by converting the fixed line signal to a radio signal. These hotspots are thought to be in at least 15 million homes and offices throughout the U.S.

The problem is that one paying subscriber can set up a wireless network that allows several other people, within a radius of 100 to 300 meters, to access the Internet for free, or for profit.

”It’s a problem for the cable companies when people resell the service, but it becomes an interesting question when they are sharing their connection for free,” says Richard Stiennon, analyst, Gartner Inc.. “If a customer has paid for bandwidth, they should within reason be allowed to do whatever they want with it.”

Analysts say the crackdown by cable companies is reminiscent of the industry's attempts to target cable thieves in the 1980s who would open up cable modems and “chip them” or use unauthorized decoders to get extra channels for free. Satellite providers have been through the same thing with people climbing onto roofs and tampering with dishes to increase their coverage.

Time Warner isn’t the only cable company defending its turf against wily Wi-Fi users. AT&T Broadband (NYSE: T) has sent angry letters to customers threatening to cut them off if they continue to extend their service to neighbors. And Comcast Corp. (Nasdaq: CMCSA, CMCSK) makes a point on its Website of noting that it neither endorses nor supports home networking. Under its terms and conditions of use it states that customers are prohibited from:
    (ix) Reselling the service or otherwise make available to anyone outside the premises the ability to use the service (i.e. wi-fi, or other methods of networking), in whole or in part, directly or indirectly, or on a bundled or unbundled basis. The service is for personal and non-commercial use only and you agree not to use the service for operation as an Internet service provider or for any business enterprise or purpose, or as an end-point on a non-Comcast local area network or wide area network.
Not everyone is taking such a prohibitive stance. Verizon Communications Inc. (NYSE: VZ) for example, offers a Wi-Fi extension package with its Internet service; and Speakeasy, an ISP based in Seattle sells a Wi-Fi product called NetShare that enables its customers to share their connections with neighbors. If those customers charge their neighbors for the service, Speakeasy takes its cut of the profit in exchange for taking care of the billing and authentication of those users. Speakeasy does not charge its customers if they are sharing the connection for free.

”Prohibiting users from sharing a service with neighbors is eroding a market opportunity… It’s too early to say 'no you can’t do this,' and then turn around and complain that broadband isn’t growing fast enough,” says Mike Apgar, Speakeasy's founder and chairman.

Anthony Townsend, a spokesman for wireless hotspot advocacy group NYCWireless (not to be confused with iNYCwireless) says it’s shortsighted of the cable companies to be adopting such a hostile attitude to their customers. “They need to find a way to harness this demand, not cut it off,” he says.

— Jo Maitland, Senior Editor, Boardwatch

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