December 9, 2002
By Galen Gruman, editorial director, IT Wireless magazine
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From our editors

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Carriers and Wi-Fi: What to Watch For

It seems to be a natural combination: cellular carriers and Wi-Fi hot-spot service. So why aren't we seeing the major cellular carriers -- AT&T Wireless, Cingular Wireless, Nextel Communications, Sprint PCS, T-Mobile, and Verizon Wireless -- making a big push to offer hot-spot service? After all, they already have the communications background, usage-based billing systems, and roaming processes, as well as national footprints and large customer bases. And the Yankee Group predicts that by 2007, commercial hot-spot services will generate $1.6 billion in revenues in North America.

True, T-Mobile offers hot-spot service in a couple thousand locations (mainly Starbucks cafés and airline terminals), thanks to its acquisition of hot-spot provider MobileStar a year ago. But that service is a separate offering from its cellular service and is essentially a separate division that could just as easily be a separate company. More common are experimental deployments such as Verizon's in Boston or the efforts of European landline carriers such as the U.K's British Telecom and Sweden's Telia, which offer Wi-Fi service as an adjunct to DSL service -- an on-the-go high-speed adjunct to at-home or in-office DSL.

Hans van der Hoek has a good analysis of how the carriers are approaching Wi-Fi service, one that will help the enterprise figure out when and with whom they can expect to work with when they're ready to support employee hot-spot access. Van der Hoek is CEO of Gemtek Systems, a Dutch company that provides wireless LAN access systems to service providers globally, as well as wireless LAN infrastructure to the enterprise, so he's talked with most carriers and other types of companies considering hot-spot service offerings. "All carriers are at least experimenting, but it's mainly to gain experience," he says. "This is an area where carriers have an advantage, since they can create a large footprint, especially when tied with 2.5G and 3G services."

The costs of deploying a hot-spot service are not that great, van der Hoek says, and they are even lower for carriers, who can amortize the software and infrastructure pieces over a greater number of hot spots than local wireless Internet service providers can. Gemtek's analysis shows that a European carrier in a small country like Holland could pay back its infrastructure investment in 12 months for a national hot-spot system that gains 4% of the carrier's user base at €25 ($25) per month in revenue -- a mass-market pricing approach. Customer-acquisition costs would take another three months to recoup. Certainly, the outlay in the U.S. would be greater, but the user base is correspondingly higher. Van der Hoek believes the relatively low €25 cost is critical to gaining fast adoption, and he thinks the cellular carriers' traditional approach of charging high fees -- such as T-Mobile's monthly $50 national plan -- to a small set of premium users will only slow adoption.

Whatever economic model they choose, van der Hoek believes that the carriers will move into hot spots aggressively after they resolve several issues:

These are mainly political issues, not technical ones, van der Hoek points out. And it will take a serious competitive threat to motivate such political change. So far, there are no strong competitors that the carriers must respond to, so they can take their time evaluating hot-spot services. Even T-Mobile's prominent hot-spot investment is relatively small, van der Hoek says, akin to efforts by other startups (Boingo Wireless, Gric Wireless, and Wayport), who are all cash-constrained and must deploy slowly and cautiously.

So who could jumpstart the carriers' move into Wi-Fi? Van der Hoek is unsure. In the U.S., there's no monopoly or near-monopoly provider that could force the issue, as there are in early-adopter countries like South Korea and Scandinavia. A landline carrier is a possibility, I suspect -- a national cable-based Internet service provider or DSL provider that wants to offer high-speed Internet access no matter where its customers go. But those companies are not doing great right now, sapped by mergers, spinoffs, and the telecom implosion. Other possibilities include AOL Time Warner or Microsoft, who each have business reasons for expanding into high-speed wireless to support their connectivity and audience-based businesses. But like the cellular carriers, they too are cautious (and AOL Time Warner has some serious economic issues to work out). Perhaps the most sensible provider -- if it had the money -- is Nextel, since it already focuses heavily on the business market and has dabbled in cellular data services for a couple years. A Nextel hot-spot network in key business-traveler locations could gain formidable loyalty. Perhaps the startup Cometa Networks -- an IBM/AT&T/Intel partnership that is building a national network of wireless networks that it hopes broadband providers will use as the basis of their own hot-spot services -- will provide the incentive for carriers to move. Whatever the trigger is, van der Hoek expects the carriers to move quickly when it does happen -- in six months to a year. Let's hope it happens soon.

The Latest New Wireless Products and Tech

Research in Motion has announced the BlackBerry 6510, a version of its PDA designed for Nextel Communications' cellular data network. It supports voice and data connections, as well as Nextel's walkie-talkie feature and support for wireless Java applications, which Nextel offers a variety of for various vertical business needs, including real estate, field service, and construction. Nextel was the first American carrier to offer modem-like data connections via cell phones a couple years back, and the marriage of its business applications and business-oriented cellular services with RIM's business-oriented messaging service makes a lot of sense. RIM has a similar product in the works for Verizon Wireless's CDMA2000 1XRTT cellular data network. The BlackBerry 7650, due out by April, will offer voice and data services, including email, browsing, and organizer functions.

Padcom has released a new module for its Connectivity Suite that allows roaming from CDMA2000 1XRTT so-called 3G cellular data networks to other wireless networks, including CDPD cellular, 802.11b, and proprietary wireless LANs such as Motorola's RD-LAP. The system also provides a static IP address for devices, even on the dynamic-IP 1XRTT networks used by Sprint PCS and Verizon Wireless, so network administrators can ensure that only authorized users have access to their networks over 1XRTT connections. Padcom focuses on enterprise customers whose users work both within and outside the organization, such as utility workers, public-safety employees, transportation workers, and field-service employees.

Gemtek Systems is offering its P-360 "hot spot in a box" system, which combines an access point and access controller (for authentication and remote management), so service providers and enterprises can easily add hot-spot service in a small office or place of business such as a café or lobby. As more vendors offer easy-to-deploy hot-spot products, the lower the barrier will be for Wi-Fi access to become commonplace.

TDK Systems is now offering software that lets PCs equipped with TDK USB or PC Card Bluetooth adapters exchange images and audio with Bluetooth-equipped PDAs and cell-phones, as well as enable printing over Bluetooth and use of Voice over IP on a PC from a Bluetooth-equipped handset (to minimize calling expenses when in the office). The Bluetooth 1.3 software comes with the most recent TDK hardware and is available for download for users of previous TDK hardware.

IOGear is unveiling this week its Bluetooth Network Starter Kit, a pair of USB Bluetooth adapters for PCs that let them create an ad-hoc network with Bluetooth devices such as PDAs and cell phones for printing, faxing, and data transfer.

U.S. Robotics says it will offer products based on the forthcoming IEEE 802.11g standard, due in March. The 802.11g standard will provide 54Mbps connections using the same spectrum as 802.11b networks, allowing backward compatibility. Many vendors began offering 802.11a technology this year, which provides the same 54Mbps speed but in a different spectrum range, and is thus incompatible with the widely deployed 802.11b hardware. It may be safer to let the 802.11g technology take hold before going beyond 802.11b than to move to 802.11a now.

Until March, Berkeley Varitronics Systems is offering $500 off a suite of wireless LAN installation equipment and software. The Yellowjacket Pro-Pack includes a Yellowjacket calibrated 802.11b receiver, Hewlett-Packard iPaq PocketPC 3835, Bird's Eye indoor coverage mapping software, and directional antenna for IT staffers deploying access points for optimal coverage. A caveat: The company won't say how much the products cost separately, requiring customers to get a custom email quote instead, so it's impossible for us to verify the package is actually $500 less than buying the products separately, as BV Systems claims.

NetNearU has a hot-spot offering that mystifies me. It offers a wireless kiosk so locations providing hot-spot service to laptop and PDA users can also get revenues from customers who didn't bring a computer with them. Instead, they rent time on the wireless kiosk. But isn't this what any Internet café does, and couldn't any hot-spot provider simply also install some Internet-connected PCs -- wireless or not -- if it wants to get non-computer-toting customers using its data services? The wireless kiosk seems like nothing more than a shameless jump-on-the-802.11-bandwagon marketing spiel. But there was one redeeming note: The kiosk costs $600 and includes software to manage user billing and access. So if you're looking for the building blocks of an Internet café or a PC-equipped building lobby, there may be some value here.

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The Latest in the Wireless Marketplace

Gartner recently estimated that the number of public Wi-Fi hot spots in the world would jump from 1,000 at the end of 2001 to about 21,000 at the end of 2004. And in the last couple weeks, there's been lots of action recently from vendors offering to help carriers and others provide Wi-Fi services. While these vendors aren't appealing directly to the enterprise, if they do help carriers and other hot-spot providers increase hot-spot presence with enterprise-class security and authentication, that'll help companies justify adding 802.11 to their traveling salesforce and other staff's technology toolkit. Particularly noticeable, as outlined in the "Carriers and Wi-Fi: What to Watch For" story earlier in this issue, is the attempt to help wireless carriers integrate Wi-Fi hot-spot service into their cellular offerings.

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