Despite protestations from the Bush administration, the FCC succeeded last year in making a certain chunk of the nation's TV and radio spectrum—dubbed "white space"—available to unlicensed broadcasters. That meant that companies could begin developing super Wi-Fi devices that create networks at a distance of miles, instead of the 50+ feet we're used to today. The dream, nationwide wireless Internet access, was within reach.
But as Microsoft is now learning, there are obstacles. Among other requirements, the FCC has mandated that white space devices must be able to sense local TV and audio usage near their frequencies, and be able to divert to avoid interference with them. Distance presents a problem too, because various towns and states use their spectrum differently, so a network might have to use different channels in different areas; as ArsTechnica points out, a channel that is free in one county to carry a Wi-Fi signal might be used in the next county for something else.
Then there are the spontaneous interruptors: things like wireless microphones, which would kick the Wi-Fi transmission off its channel (per the FCC's requirements.) But these problems haven't stopped Microsoft from proposing something called WhiteFi, a Wi-Fi-like network that would allow computers and access points to link to each other over miles of terrain, creating ad-hoc networks that spread Internet access over huge distances.
To solve the connection issues inherent in the WhiteFi project, Microsoft is approaching each constituent problem differently. For channel assignment, they're working on algorithms that find the most reliable blocks of free spectrum, so that devices can self-assign seamlessly. For interruptions, they've made use of a special 5GHz backup channel; plug in that wireless mic, and your Internet signal gets kicked down to another frequency while inviting other devices (like your WhiteFi router) to do the same.
As Ars notes, Microsoft and its R&D teams are far from any shelf-ready products, but with several other companies like Motorola and Philips working on the technology too (and the IEEE working on 802.22 standards), it looks like nationwide WiFi is a very real possibility after all.