Google has been toying with the idea of implementing free municipal Wi-Fi.

I've always believed that it began as a whim, but became a subtle threat aimed at the major carriers who are saber-rattling over tiered service, threatening to charge Google (GOOG) more for its supposed free ride on their networks.

This, of course, is ludicrous, since there is no free ride for anyone.

Anyway, somewhere along the line, the concept of Net neutrality emerged. This new concept got Congressional attention soon after Google suggested that it could use a Wi-Fi mesh to light up the city of Mountain View, Calif., and then San Francisco for free.

Now to prove that it can do this, Google actually has lit up Mountain View. Anyone driving through the town can pull off the road and do e-mail for free.

It cost Google a million dollars to pull this stunt off, but that's chicken feed for Google — a fact we cannot overlook.

HIDDEN CONSEQUENCES

Although the news bureaus and reporters have covered this story extensively, nobody has looked at the hidden consequences of the event.

These are consequences that should scare the crap out of the telcos and the cable companies. Let's discuss them.

First, Google, the king of doing good work inexpensively, now has a cookie-cutter model on how to light up a city.

Google's software engineers have the architecture. They know the problems. They know the costs. In fact, this initial model will inevitably be tweaked to be cheaper and more efficient in future rollouts.

Combine this new knowledge with information developed in towns where other companies have done municipal Wi-Fi and you'll have a lot of people looking at this idea. If the spreadsheets show that they can beat the cable and telco companies at their own game, then expect a deluge of activity.

NEW PROFIT CENTER

But here is the killer. What if suddenly — from this experiment — Google discovers that localized service combined with localized search and local advertising (specific to the target community, aka Mountain View) can not only pay for the system but provide a new profit center? What happens if that turns out to be an unintended consequence?

If the numbers work out, we're talking about a new gold rush. And Google wouldn't be the only player. Microsoft (MSFT) would have to do this, and so would Ask and Yahoo! (YHOO).

Yahoo!, which is tied in with SBC (SBC), would have a lot of explaining to do, and it might be the laggard in this mad rush to light up cities with Wi-Fi.

Though the public generally would perceive free local Wi-Fi as just a free pipe to the Internet, nobody would be likely to see it as a basic societal change. This model is somewhat akin to some of the early schemes of cable-modem pioneer @Home.

There was more to the @Home scheme in its early days than being a middleman for cable-modem initiatives. There was going to be an informational infrastructure tied to it.

This never caught on for a lot of reasons, not the least of which was that the idea turned out to be both old-fashioned and ahead of its time, as odd as that sounds. And @Home's scheme was hatched long before the Google advertising model appeared on the scene

LOCATION-SPECIFIC USERS

With the Google search-centric form of information dispersal and advertising leverage, knowing that users are actually in Mountain View gives the company the opportunity to target its customers further and sell them to advertisers in new ways.

Though it's always been possible to estimate a user's location by his or her IP address, it was never easy to turn such technological mumbo-jumbo into a sales pitch to get a local dry cleaner to sign on the dotted line.

Now you can say, "This person is indeed in Mountain View, do you want to know what street?"

And since Google, MSN, Yahoo!, and a lot of other players have already toyed with VoIP, what would it take to give people free phone service along with free Internet access?

After that — and this is very possible with 802.11n — there is no reason Google couldn't offer an IPTV package and cut out the cable companies, too.

You need only 30 Mbps to do it, and that includes HDTV service. 802.11n, when fully finalized, will deliver 300 to 600 Mbps.

This expansion of services is entirely possible and doable. And it all stems from the phone companies and cable companies arrogantly shooting off their collective mouths about tiered services, along with their cavalier failure to give the American public what it needs — universal and cheap high-speed access.

Now they have to contend with being beaten at their own game. Good luck.

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