The broadband wireless Web is being built around a technology known as Wi-Fi, or 802.11b, that's easy to underestimate. Wi-Fi stands for wireless fidelity, an increasingly popular networking standard that's used to create wireless local area networks (LANs) in homes and offices at speeds up to 11 megabits per second, far faster than the peak 144-kilobit-per-second rate so-called 3G (for third-generation) mobile-phone networks that Sprint PCS, for one, plans to deliver.
For now, Wi-Fi primarily provides broadband Internet access to specially outfitted PCs and laptops within a few hundred feet of a so-called Wi-Fi base station, or transmitter. These create what in the Wi-Fi vernacular are known as "hot spots" in homes, airport lounges, or libraries. Businesses are also adding Wi-Fi networks to allow for easy Net access from conference rooms and temporary work stations -- and also to avoid the hefty costs in both time and money of wiring an office.
SPAWNING STARTUPS. Wi-Fi's most admirable attributes are that it's fast (to both set up and use) and cheap (under $200 for a small installation). It operates on unlicensed airwave spectrum, so no extra monthly costs on top of the charge for a broadband connection are incurred. It's also easy to install. Most high-end laptops now come ready for Wi-Fi, equipped with a special plug-in circuit card. Hotels and coffee shops are offering customers Wi-Fi access as a convenience. Starbucks has equipped 530 stores and plans eventually to enable more than 70% of its 3,200 company-owned North American outlets.
Some cities even are choosing Wi-Fi over cellular networks for uses such as distributing mug shots to police cruisers. Techie towns like Seattle and San Francisco already have hundreds of access points available to the public. And the technology is spawning startups. A new company, Boingo Wireless, now links 500 industrial strength Wi-Fi LANs in hotels and airports so subscribers to its $25-and-up monthly service can tap into these networks on the road.
It's low cost makes Wi-Fi particularly appealing to small businesses
The lack of marketing muscle behind Wi-Fi can make the industry seem small-time and disorganized. And some concerns include security (wireless LANs can be vulnerable to hacker attacks) and interference (baby monitors and garage-door openers, among other devices, share the same spectrum, which can slow network speeds). But those problems are surmountable, and an increasing number of companies -- large and small -- are buying wireless LANs, says Ken Dulaney, who covers mobile computing for research firm Gartner.
Wi-Fi is a no-risk financial decision especially for small businesses or companies in hard-to-wire locations, because of its low cost. Consulting firm Adventis, which spent $30,000 to wire its Boston office last year, says a similar Wi-Fi installation today would cost only $500. Gartner's Dulaney estimates that 20% of large companies currently have wireless LANs as an adjunct to their wired networks. By 2003, when the technology will provide even faster Net access -- plus tighter security and less interference -- he thinks 50% of the largest 1,000 public companies will have it.
BOTTOM-UP MOVEMENT. Indeed, research firm Cahners In-Stat expects sales of wireless network cards and Wi-Fi base stations to grow from $1.9 billion in 2001 to $5.2 billion in 2005, despite big declines in the prices of such equipment. The industry trade group, the Wireless Ethernet Compatibility Alliance (WECA), started up two years ago with six companies -- and now has close to 140. "Virtually every company that signs up for WECA has some interest in producing, selling, or deploying a product," says Sarosh Vesuna, a WECA board member.
This grassroots flavor -- similar to the bottom-up movement from which the Web itself sprang in the mid-1990s -- is what makes Wi-Fi so powerful, say tech analysts and consultants. "This came out of left field," says Andrew Cole, the global wireless practice leader at Adventis. "Now all the major carriers are sitting up and taking notice."
They had better. This is a vastly different wireless Web than the one the major network operators envisioned. The six big wireless carriers in the U.S. have spent billions on buying spectrum licenses and building 3G networks that can carry data at high speeds. Only 3G will give you a connection to the Internet that's always open from anywhere -- while driving down a lonely back road, for example.
WHO NEEDS ALWAYS-ON? Because Wi-Fi offers faster, cheaper Net connections and is here now, though, it could eat away at what already looks like a smaller-than-anticipated market for 3G data services. "It will be hard for 3G to compete on a price point that makes sense," says Tom Taulli, author of Tapping Into Wireless. Adds Eric Kintz, associate partner at Roland Berger Strategy Consultants in San Francisco: "There aren't that many people who need a truly always-on connection" -- 3G's primary selling point. "For most mobile professionals, having wireless access at airports, hotels, and the office is sufficient."
To get back in the game, many wireless players are planning to incorporate Wi-Fi into their networks so they can promise customers both coverage and speed -- even if not both at the same time. The idea is that you would use a Wi-Fi LAN when one is available and migrate to the slower wide-area networks (WANs) upon which 3G is based when that's the only network available.
"There is no question that Wi-Fi will be complementary to 3G wireless"
Furthest along is VoiceStream Wireless. It announced in mid-March that it will integrate Wi-Fi technology (acquired when it picked up the assets of the former MobileStar Network) with its existing network to provide "seamless service" -- an Internet connection that switches automatically from Wi-Fi to 3G and back -- starting early next year. Sprint PCS is working on something similar, although it hasn't unveiled an offering. "There is no question that Wi-Fi will be complementary to 3G wireless," says Sprint spokesman Dan Wilinsky. Already, Nokia and Ericcson are working on handsets that allow seamless roaming.
NETWORK HOPPING. The wired network operators that provide the broadband connection for wireless LANs also are waking up to the impact Wi-Fi may have on their businesses. For them, the concern is that customers with Wi-Fi networks often end up sharing their broadband connections with their neighbors (sometimes unintentionally, since a Wi-Fi-enabled PC can hop onto an unprotected wireless LAN that's within range). Thus, the network operators potentially lose customers for high-speed Internet access.
Sharing a Wi-Fi LAN violates service agreements, but so far phone and cable carriers can't do much about that because it's so hard to monitor. "We're already looking into ways to enhance detection of unauthorized use," says Mike Luftman, a spokesman for Time Warner Cable.
Concerns over shared access may ultimately prove short-sighted, though. Some analysts believe that Wi-Fi could make broadband to the home much more appealing -- and thus boost broadband revenues faster than most experts now anticipate. The hassle of networking more than one home computer has been a major impediment to broadband, says Blaik Kirby of tech consultancy Adventis. But in an effort to build momentum, AT&T is now bundling Wi-Fi equipment with its broadband offering.
MIRA MOBILITY. Meantime, tech goliaths Intel and Microsoft are quitely betting that wireless home networking will stimulate demand for all kinds of new mobile computing and consumer-electronics products. "The dream of having a digital hub from which you can wirelessly transmit music or videos-on-demand is made possible through Wi-Fi," says Roland Berger's Kintz.
Indeed, Microsoft's Windows XP and Windows CE operating systems for PCs and handhelds, respectively, already come configured for Wi-Fi. And for the 2002 holiday season, Microsoft will debut its Mira mobile devices including detachable Wi-Fi flat-panel monitor. Gates & Co. promises that users will be able to remove the display from a PC and carry it around a home or office while maintaining an Internet connection and the full functionality of the computer via an on-screen keyboard.
"People spend up to 10 hours a week browsing the Web and reading e-mail," says Aubrey Edwards, marketing director for Microsoft's embedded and applicance platforms group. "It doesn't need to be done in the confines of a small home office."
What Wi-Fi really needs now is a your basic killer app
Meantime, Intel has spent hundreds of millions of dollars on research and development related to Wi-Fi, says Stephen Salzman, senior director of wireless LAN marketing at the No. 1 chipmaker. He believes that Wi-Fi is the technology that will make the "extended PC" a reality and "really give people a reason to go mobile." For instance, Wi-Fi could link video cameras wirelessly to your PC so you can monitor your home from work.
As the technology improves, PCs will be able to stream movies from the Net to your living room TV, says Salzman. "The range of applications only grows," he says. "Every week we see some creative application we haven't seen before."
THE BERLE EFFECT. Of course, home-networking has been talked about for years without delivering anything much more enticing than simply sharing a printer between two computers. Peter Cohan, an author and technology strategist, says the computing industry is becoming desperate to find a new market for its chips and equipment now that corporate tech spending has fallen off. But "there's no compelling reason why most people have to have a Wi-Fi network in their home," Cohan says, "even if it's something that hobbyists love to have."
For Wi-Fi to really take off in homes, he thinks some kind of "killer ap" will have to capture the public imagination and make the initial equipment costs seem even more trivial -- much as the just-deceased Milton Berle made Americans run out and buy TV sets. "Wi-Fi is a key step for home networking, but it still doesn't solve issues of developing home entertainment," agrees Roland Berger's Kintz.
That's probably true. But coming up with a killer app doesn't seem like such a tall order with Intel and Microsoft already pouring boatloads of dollars into Wi-Fi technologies and major carriers such as VoiceStream and AT&T figuring out how to make the technology work for them.
And don't forget the legions of Wi-Fi enthusiasts who just might beat them to the punch. By Amey Stone in New York