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WiFi versus 3G
25th March 2002

Wireless phone companies pouring billions of dollars into "third generation" networks that offer high-speed Internet connections without the tether of a cable or phone line have been casting a wary eye on a cheap wireless broadband system popping up on college campuses, in hotel and airport lobbies, and even in Starbucks coffee shops around the nation.

The cheap, short-range, but super-fast "WiFi" networks have been seen in some quarters as a potential threat to carriers' huge investment in third generation, or "3G," wireless networks. Some people may decide, the thinking goes, are happy enough with a fast wireless connection they can only use when sitting down and don't need to buy one they can use anywhere.

But in forums and interviews at the Cellular Telecommunications & Internet Association convention here this week, executives of some companies involved in both 3G and WiFi said they think the two technologies may turn out not to be archrivals, but close collaborators offering unprecedented mobility and speed for people who want to stay connected to the Net.

The vision goes like this: Someday millions of Americans will outfit their laptop computers with "air cards" that connect to 3G networks at speeds in the hundreds of kilobits per second when they are on the road or in public places.

But once in range of a WiFi "hotspot" in a coffee shop, hotel or office lobby, their connection would shift over seamlessly to a dramatically faster 11Mb connection. WiFi, technically known as 802.11b, typically covers just around a 130m radius, while 3G services are intended ultimately to be as ubiquitous as cellphone service itself.

A lot of behind-the-scenes work would have to take place first, including complex systems to mesh billing and allocate revenues between wireless giants like AT&T, Verizon, and VoiceStream, and the scores of WiFi providers -- typically tiny local companies operating as few as a dozen transmitters.

But one unexpectedly harmonious panel here this week brought together VoiceStream Wireless chief executive John Stanton, whose company has launched a near-3G service called iStream offering access at over 100 kilobits per second, and Sky Dayton, chief executive of Boingo Wireless. Dayton's California start-up went live in January, offering subscribers unlimited access to over 500 WiFi hotspots for $75 a month.

Stanton acknowledged that he viewed WiFi as a threat to consumer willingness to buy 3G services, but added: "It doesn't change the need for us to get spectrum to provide true 3G services. I view WiFi to be 3G with training wheels. It whets people's appetites" for a more pervasive high-speed Net service.

VoiceStream, a Bellevue, Wash.-based carrier owned by Deutsche Telekom whose markets include Greater Boston, is unique among national cellphone companies in that it already owns a WiFi business. In January, VoiceStream bought the assets of bankrupt MobileStar Network Corp, a Texas-based company that operated WiFi service access points at 650 US locations, including scores of Starbucks coffee shops, airport terminals, and hotel lobbies.

"We're trying to have WiFi be a part of a wider network that will really meet consumer needs," Stanton said. But VoiceStream is being very cautious about predicting how soon, saying only that a converged 3G-WiFi offering could happen "as early as next year."

Need for speed

Stanton said he expects consumers would be willing to pay for a system that gave a trade-off between mobility and speed, describing a future VoiceStream network of wireless data in three concentric circles. In the center would be WiFi, available only inside certain buildings and businesses. The next ring would be services offering up to 384 kilobits per second using so-called EDGE technology, which might cover areas like downtown Boston or high-tech office parks along Route 128 and Interstate 495.

The widest circle would be the General Packet Radio Service network, running typically at 50 to 100 kilobits per second, which VoiceStream plans to build in areas covering 200 million Americans. Verizon rolled out such a system in Greater Boston this winter; AT&T and Sprint PCS plan comparable systems this year.

Already, according to hereUare Communications, a San Jose, California-based WiFi access provider, the Boston area has at least 11 public WiFi hotspots people can connect to, including parts of the Eliot, Four Seasons, and Wyndham hotels in Boston, the Royal Sonesta Hotel in Cambridge, and the Sierra Suites in Waltham. Schools such as the Massachusetts Institute of Technology have also aggressively rolled out wireless data networks on campus.

Four Seasons spokeswoman Nicole Bellows said the WiFi service there covers several common areas on the ground floor and fifth-floor meeting rooms, through a deal with a company called Wayport that also provides service to Boingo subscribers. "We've received very favorable response from our business travelers" since launching the US$10-a-day service last March, Bellows said.

In the Back Bay, Tech Superpowers, a company that sells computers and network installation services, is trying to turn all of Newbury Street into a WiFi-covered zone, offering businesses free access to its own high-speed network connection if they buy the transmitters. Already, The Wrap sandwich shop and Trident Booksellers Cafe have installed WiFi "nodes" that connect through Tech Superpowers, its president, Michael Oh, said.

Tech Superpowers is working on signing up other restaurants "so we get a high enough density, at least two or three locations per block, so that any of the public places where you'd spend any time" along Newbury Street would have a fast connection, Oh said.

Budding hotspots

Boston lags far behind many other cities, however, according to hereUare. As of late February, when it published its survey, San Francisco had 257 WiFi hotspots, Seattle 154, New York 107, and Dallas 105.

Dayton, founder and current chairman of EarthLink, the third-biggest US landline Internet service provider, said Boingo hopes to have 5,000 WiFi sites covered by its network by the end of this year.

Hotels, airports, restaurants, and other businesses would operate essentially as subcontractors or partners with Boingo, getting a cut of the revenues every time a Boingo subscriber hooked up to its WiFi transmitter.

Dayton said Boingo's business approach "favors the grass-roots, bottom-up build that's already happening." To offer WiFi access, a commercial establishment would have to get its own Internet connection, typically through a digital subscriber line, cable modem, or T-1 line. Then it would plug in a transmitter-receiver about the size of a hardcover book to let users tap into the Net connection as long as they were within about 90m of it.

Over the last 18 months, prices for both the WiFi transmitters and the air cards subscribers plug into their laptops to get access have plunged, Dayton noted. "Access points" that once cost US$2,000 apiece, and air cards that once ran US$1,000 each, have dropped in price by as much as 90 percent to 95 percent, Dayton said.

This week, Boingo announced that Hewlett-Packard has agreed to bundle Boingo service with some of its laptops. Lucent Technologies spinoff Agere Systems has also agreed to include Boingo access with its air cards.

Earlier versions of wireless Net access have raised concerns about hackers "sniffing" out Web-site passwords and sensitive information as users transmit them through the air. But Dayton insisted "we solve the security problems. [Boingo] completely encrypts your traffic" so hackers can't penetrate transmissions and steal sensitive data.

"I believe that all carriers will get into WiFi," Dayton said, either through setting up their own networks or forming partnerships with Boingo and similar companies. "We don't have to convince people why they need Internet access everywhere they go. If you're sitting in an airport waiting for a plane for an hour" and can't connect to the Net, Dayton said, "it's like someone cut off your oxygen supply."

Sanjeev Verma, chief executive of Airvana Inc., a Chelmsford start-up developing 3G wireless data systems that Verizon Wireless will test in San Diego this summer, said the idea of meshed networks of 3G and WiFi "is a very intriguing situation. These systems are all capable of a seamless handoff." But Verma said such networks would never replace the need for rolling out 3G networks nationally, because WiFi "is going to be forever spotty" in its coverage.

But Mark Feidler, CEO of Cingular Wireless, which is expanding its near-3G wireless data services to half the United States this year and to Boston next year, said while "obviously WiFi is a huge phenomenon," realizing the vision of 3G-WiFi networks blanketing the United States will involve surmounting many practical hurdles, particularly billing and customer service.

"There's a service-provider aspect of [WiFi] that no one has really stepped up to solve," Feidler said. "At this point, it's not really clear how it all shakes out."

By Taipai Times Reporter.

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