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APRIL 23, 2003

NEWS ANALYSIS

Wi-Fi Stretches Its Wings
[Page 2 of 2]


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CAUGHT IN THE NET.  SkyPilot will offer speeds of up to 4 megabits per second, but at a much lower cost than DSL, says Johnson. The total system will cost a service provider 50% less to install than a DSL line, he says. SkyPilot just finished an internal trial in the San Francisco Bay Area and is preparing for its first commercial tests later this year.


Soma Networks, based in San Francisco, allows speeds of up to 12 megabits per second at a radius of 10 miles from the signal source. Its equipment costs as little as one-third the price of an average DSL deployment, says Jack Fuchs, vice-president for business development and sales at Soma. The technology is now used in Japan and in several spots in the U.S., including Chiloquin, Ore., a rural community of 1,000 people.

Why Chiloquin? The area is a fly-fishing mecca that's a favorite retirement spot for tech-savvy teachers and engineers, and many of the locals have long lamented the lack of high-speed connections. AlwaysOn Network, the service provider in Chiloquin, has signed up 70 of the town's residents. It projects a 15% market penetration in a few months, says AlwaysOn Chief Operating Officer Dan Stanton.

WEB WING.  Beyond these technologies are more monumental wireless broadband projects. SkyTower, a wholly owned subsidiary of AeroVironment, a Monrovia (Calif.) maker of unmanned aerial vehicles (UAVs) for the military, has developed a 247-foot, solar-powered, propeller-driven wing that provides broadband-wireless access from 12 miles high. It offers access of 50 megabits per second in areas ranging from 30 square miles to 600 square miles, depending on the terrain and usage, says Stuart Hindle, SkyTower's vice-president for strategy and business development. A wing has more than 1,000 times the capacity of a satellite and costs about a fifth to deploy, Hindle says.

SkyTower has conducted trials for two years, and it's planning another this summer. It hopes to launch the service in three years. Potential customers include the Japanese government, which is interested in using the technology to monitor automobile traffic and communicate with cars, Hindle says.

Still, competing with cable companies and telecoms won't be easy. The entrenched players could lower their prices to squeeze out new rivals. Some might even deploy the new technologies themselves. "I don't think any single one [of the last-mile technologies] will have a huge opportunity in the developed markets," says Andrei Jezierski, partner at telecom consultancy i2 Partners in New York.

INFRASTRUCTURE BYPASS.  Also, most of the new wireless technologies are yet to be standardized -- a must for mass deployment. And some analysts worry that as more users get onto the new networks, the connection speeds will suffer -- a common complaint among users of current broadband, especially cable. Most companies making wireless-broadband technologies say their network designs address this problem.

Some of these new technologies will probably find a home in many niche markets. They could even become the dominant form of broadband in rural areas and developing regions in India, China, and Latin America, where no telecom infrastructure exists, says Jim Penhune, director of global broadband practice at tech consultancy Strategy Analytics. Most WiMAX vendors already sell a third to half of their gear outside the U.S., says Margaret LaBrecque, president of WiMAX at PC-processor king Intel (INTC ), which is investing heavily in wireless-broadband research.

In the U.S., the new technologies could also give the tech recovery a boost. "Our greatest challenge as a company is the lack of broadband deployment," says LaBrecque. "Broadband access is one of the biggest factors driving demand for computing platforms," which has been slack for several years.

Souped-up Wi-Fi could also help hardware and software vendors -- and make dial-up as outmoded as, well, the rotary-dial phone. After all, hooking up wireless broadband in Manhattan in one day is no small feat.

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By Olga Kharif in Portland, Ore.
 Edited by Douglas Harbrecht
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