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APRIL 30, 2003
Dueling CEOs Talk Wi-Fi Is the technology "a major opportunity," as Boingo Wireless' Sky Dayton says, or "unbridled hype," as Qualcomm's Irwin Jacobs warns?
In December, 2001, Earthlink founder Sky Dayton launched Boingo Wireless, an Internet service provider designed for users of what was then the largely untapped Wi-Fi (wireless fidelity) spectrum. His goal is to tie thousands of hot spots together into a seamless data network that his customers can tap into via a single software package. When he started Boingo, Dayton was considered to be ahead of the curve -- perhaps too much so. But now, with large technology and telecom players such as Intel (INTC ) and Verizon Communications (VZ ) jumping on the Wi-Fi bandwagon, Dayton says his vision is coming to fruition. He recently shared his views with BusinessWeek reporter Arlene Weintraub. Edited excerpts of their conversation follow: Q: What do you make of the big guns getting into Wi-Fi? A: It's a big endorsement of what's going on. They recognize that Wi-Fi is a major opportunity as well as a threat. It's a threat to those who don't figure out how to participate and exploit it. It's like the Internet was in its early days. Once companies figured out how to integrate it into their businesses, they did well with it. Q: What's your impression of Wi-Fi vs. other wireless technologies, such as general packet radio service (GPRS), which gives users continuous wireless connection to data networks? A: Each has its strengths and weaknesses. Wi-Fi in hot spots provides speeds at prices that no other technology can touch. The spectrum is free -- and it's a lot of spectrum. But once you get into your car, you need access to a wide-area network (WAN). The problem with WANs is that you're using the equivalent of 25 calls to deliver data service to a single customer. It's expensive, and incredibly slow compared to Wi-Fi. Q: On Mar. 18, Boingo announced a partnership with T-Mobile. What will the result be? A: T-Mobile recognized the need to offer seamless connectivity between GPRS and Wi-Fi. We'll provide customers with software that allows them to move from Wi-Fi hot spots to WAN seamlessly. So when they get into their cars, they'll automatically switch to the higher-cost/lower-performance network, but they'll still get data. With one account, they'll be able to connect everywhere. Q: Boingo's network contains 1,300 hot spots. Why didn't you meet your goal of 5,000 hotspots by the end of last year? A: Overall market conditions are a lot worse than we thought. The venture-capital community has yet to really wake up. In Wi-Fi, it's still 1994. We haven't gotten that flood of capital. But we're moving toward the tipping point. Q: What would it take to Wi-Fi the nation? A: In the U.S. there are about 1.8 million potential hot spots -- cafes, restaurants, gas stations, airports. There's a lot of untapped real estate out there. Q: What's your overall feeling about Wi-Fi's acceptance so far? A: I'm happy with the progress. That said, it's still very early. We're still in the first inning of this game. I'm not even sure the game has begun yet -- we're all just now getting onto the field. The Bear: Irwin Jacobs Qualcomm (QCOM ) CEO Irwin Jacobs is a big believer in the future of wireless data. But he's not so sure the average Web surfer will pay Boingo -- or any other company -- a fee to access Wi-Fi in hot spots. He believes consumers will flock toward wireless technologies that are based on the same spectrum that runs cell phones, which would allow them to log on virtually anywhere. One such example is EV-DO, which is based on the CDMA technology that Qualcomm developed. Verizon (VZ ), which uses CDMA for its cell-phone service, has tested EV-DO, and is planning a commercial rollout for later this year. Jacobs -- along with Qualcomm's senior vice-president for marketing, Jeff Belk -- stressed the importance of separating Wi-Fi hype from reality in a recent conversation with BusinessWeek's Weintraub. Edited excerpts from their talk follow: Q: Does Wi-Fi have a future? Jacobs: We believe Wi-Fi will explode in homes, large businesses, and college campuses. The fact that Wi-Fi is getting everyone focused on the use of wireless for data is a very positive trend. The real question is: Is there a business [behind] providing Wi-Fi in hot spots? Q: You sound skeptical. Jacobs: The problem I have is seeing a long-term financial model in hot spots. Wide-area coverage, such as EV-DO, will provide high data rates over larger areas than Wi-Fi can. If you're paying a monthly rate to your cellular provider for the capability to get data anywhere, would you pay more to get Wi-Fi in hot spots? No. Plus, EV-DO is secure and requires less power than Wi-Fi does. Q: What are some of the misunderstandings about Wi-Fi? Belk: One thing that's never discussed is the speed that's lost. In a hot-spot environment, data goes to the access point at either 11 or 54 megabits per second. But the access point is connected to the Web via a DSL or T1 line, which offers speeds of only about 1.5 megabits per second. Q: What matters more to consumers, speed or ubiquity of wireless Web service? Belk: [Wi-Fi fans] say people will be willing to walk to a hot spot. We think that's wrong. Why do people love their BlackBerries when they're only getting e-mail at a couple of kilobits per second? Ubiquity. Q: Does Qualcomm use Wi-Fi? Belk: Yes. But we had to build out 200 access points to get halfway decent coverage on our campus, at a cost of $300,000. It's complicated, and it isn't cheap. We don't believe the unbridled hype. It's a hype cycle like we had around dot-coms. It's not focused on technical or economic reality. Q: Will it be one or the other, Wi-FI or WAN? Jacobs: They can be quite complementary in some settings. And I think they will cohabitate. Will the hot-spot model survive though? Let's wait and see.  Edited by Patricia O'Connell Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
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