Reference no: EM131805705

Wireless router is just a box with antennas that allows you to surf the Internet on your laptop anywhere within about a 200-foot radius (about two-thirds of a football field). In a populated spot, like an apartment complex, quite a few neighbors fall within that 200 foot range; and if you're like a lot of people, you never bothered to password protect access to your router and the valuable Internet service it broadcasts.

So, what do you get when you mix an unsecured wireless router with a densely populated neighborhood of Internet users--an ample supply of digital "piggybackers" ready to access the Internet through your router free of charge.Is piggybacking theft?

Not necessarily. Indeed, some people leave their routers unprotected intentionally--"sticking it to the man" by unleashing free Internet service for the masses. Problems arise, however, when too many neighbors piggyback at once, clogging up bandwidth and reducing your Internet connection speed to a trickle. An article in the New York Times shows that a bit of benign wireless free-loading can quickly turn into a miniature tragedy of the digital commons.

As you read the article, think about how you would classify Internet service through a wireless router. Is the service a private good, a natural monopoly, a public good, or a common resource? What's the difference between a password-protected router and an unsecured one?

Read the original article, then click Continue to answer the problems.

1. According to Jonathan Bettino of Belkin, a corporation that manufactures wireless routers, how many American households had wireless access to the Internet in 2003?
A. 3.9 million
B. 16.2 million
C. 200 million
D. 48 million

2. In 2004, the owners of tomshardware.com surveyed the Los Angeles area for wireless networks. Of the networks logged by the survey, how many were encrypted?
A. 5%
B. 15%
C. 30%
D. 45%

3. Aside from free-loading neighbors, what other problems does an unprotected wireless network invite?
A. Theft of personal information
B. All these choices
C. Outside use of your computer for illegal activities
D. Release of viruses

You can classify goods by asking a couple of questions:

Is the good rival?

Is the good excludable?

Asking the questions allows you to classify a good or service as a private good, a natural monopoly, a common resource, or a public good.

Rival Non-rival

Excludable Private good Natural monopoly

Non-excludable Common resource Public good

A good is excludable when people who don't pay can be prevented from using it. A good is rival when one person's consumption of the good reduces the amount available for others. Here are some examples:

An apple is a private good--sellers can exclude those who don't pay, and fewer apples remain after a paying costumer eats one.

Cable television is a natural monopoly--cable providers can exclude non-paying customers (although cable theft is not unusual), but when one person watches a show there isn't any less of the show available for others.

A congested road is a common resource--anyone can drive on the road without paying, but adding one more driver to the road increases congestion and slows the trip for other drivers.

National defense is a public good--even tax evaders get protection if America is threatened.

The services provided by wireless networks are more difficult to classify than apples and national defense. The type of good that characterizes a wireless network depends on the circumstances in which the network is used. Are there a lot of piggyback users? Is the network secure?

Use the table to help you classify the wireless networks in each of the different scenarios below.

Rival Non-rival
Excludable Private good Natural monopoly
Non-excludable Common resource Public good

4.1. Srihari lives in a densely populated apartment complex. He purchases a wireless router but fails to secure his network with a password. As a result, anyone within 200 feet of Srihari's router can access the Internet free of charge.

Initially, only a couple of Srihari's neighbors piggyback on his network. The light use of Srihari's network has no noticeable effect on the speed of his Internet connection, leaving him with plenty of bandwidth. In this case, Srihari's wireless network most closely resembles a:
A. Private good
B. Common resource
C. Natural monopoly
D. Public good

4.2. After a few months, lots of Srihari's neighbors get hip to his unsecured network. As more and more of them piggyback on his network, they begin crowding bandwidth and Srihari's Internet connection speed slows to a crawl.

True or False: With lots of piggybacking neighbors, Srihari's wireless network becomes rival in consumption.
True
False

4.3. Again, Sriahri's Internet connection speed slows to a crawl as more and more of his neighbors piggyback on his wireless network, crowding bandwidth. In the case where the network is unsecured and congested with lots of piggybackers, it most closely resembles a:

A. Private good
B. Common resource
C. Natural monopoly
D. Public good

4. After a week of painfully slow web browsing, Srihari wises up, securing his network with password protection.

True or False: Once password protected, Srihari's network becomes excludable.
True
False

4.5. Having solved his piggybacking problems by protecting his network, Srihari comes up with an idea to get a bit of cash towards his monthly Internet service bill. He begins collecting a fee from a few of his neighbors in exchange for his network password.

Between Srihari and a handful of paying neighbors who access his network, there is plenty of bandwidth to ensure a quick Internet connection speed. Srihari's protected wireless network now most closely resembles a:

A. Public good
B. Common resource
C. Natural monopoly
D. Private good