BW Online | July 30, 2002 | The High Hurdles Facing Wi-Fi

BW MAGAZINE Get Four Free Issues Register Subscribe Customer Service

ONLINE FEATURES Book Reviews BW Video Columnists Interactive Gallery Newsletters Past Covers Philanthropy Podcasts Special Reports BLOGS Auto Beat Bangalore Tigers Blogspotting Brand New Day Byte of the Apple Economics Unbound Eye on Asia Fine On Media Green Biz Hot Property Investing Insights Management IQ NEXT: Innovation NussbaumOnDesign Tech Beat Working Parents TECHNOLOGY J.D. Power Ratings Product Reviews Tech Stats Wildstrom: Tech Maven AUTOS Home Page Auto Reviews Classic Cars Car Care & Safety Hybrids INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads

BW EXTRAS BW Digital BW Mobile BW Online Alerts Dashboard Widgets Podcasts RSS

RSS Feeds

Reprints/ Permissions Conferences Research Services

JULY 30, 2002

NEWS ANALYSIS

The High Hurdles Facing Wi-Fi
If overcrowded spectrum isn't destined to crimp its growth, it'll need better technology and regulatory help from the FCC

STORY TOOLS

Search for business contacts:

PREMIUM SEARCH
Search by job title, geography and build a list of executive contacts

Tech White Papers

A recent Doonesbury cartoon said it all: Zeke Brenner parks his car by the house of a guy with a wireless Internet connection, called Wi-Fi. The owner comes out of the house and accuses Zeke, who is surfing using the owner's network, of freeloading. "So what?" says Zeke from under the brim of his cowboy hat. "I am on the street. It's a free country. Why would anyone pay for this stuff?" Then Zeke adds, "Listen, you might want to check out your daughter's email."

Talk about taking the air out of the Wi-Fi balloon. Widespread risks of stealing wireless broadband aren't the only thing that could make it an iffy business proposition (see BW Online, 7/3/02, "A Wireless Run Around ISPs"). Experts warn that Zeke's theft of wireless high-speed access may be nothing compared to the other problems that lie ahead.

Sure, Wi-Fi has huge potential. But the spectrum could quickly become overcrowded and unreliable if it grows too quickly. Success will take two things: technological improvements and a helping hand from Washington. The Federal Communications Commission will either have to allocate more spectrum for wireless use or overhaul the way spectrum is divvied up -- an unlikely scenario given that the commission is overwhelmed by scandals in the telecom biz.

WIRELESS EVERYWHERE? Indeed, while it has been a brutal year for everyone in the technology sector, Wi-Fi has been growing furiously at college campuses, corporate office parks, and, thanks to a dedicated group of volunteers, in major U.S. cities. In Manhattan, Wi-Fi enthusiasts can surf the Web free at 50 locations around the island. The volunteer group, NYC Wireless, plans to make Wi-Fi broadband available throughout the borough within 18 months, all for a fraction of the cost of traditional wireline or wireless services.

Craig Mathias, founder of wireless consultancy Farpoint Group, estimates that covering the whole country with unlinked hotspots will cost just 10% of what it would cost incumbent service providers to build their version of next-generation, high-speed wireless networks.

Large corporations also are investing heavily in Wi-Fi. Early next year, chipmaker Intel (INTC ) will come out with a new platform for laptops and notebooks with a hook-on for Wi-Fi. This year, its venture capital arm, Intel Capital, expects to invest actively in wireless networking, particularly Wi-Fi.

A THICKER PLOT. Service provider Boingo has already assembled a 650-strong network of Wi-Fi hot spots, or areas of coverage, ranging from 100 to 300 feet in radius. Austin (Tex.)-based Wayport has installed Wi-Fi into 460 hotels, including Hilton and Four Seasons, as well as four airports. Wi-Fi "is the most exciting technology that has come out in the past few years," says Mark Christensen, director of Intel Capital Communications Sector.

So what about the next 5 or 10 years? Here the plot thickens. Dewayne Hendricks, CEO of Dandin Group, a wireless consulting firm and long-time member of the FCC's technological advisory committee, makes this dire prediction: "Wi-Fi won't scale [with the technology] under the current regulatory framework. It will have a life and then disappear." For Wi-Fi to fulfill its potential, it will need more spectrum space from the FCC, Hendricks says.

Right now, the publicly available spectrum used for Wi-Fi is also shared by amateur radio broadcasters, microwaves, garage openers, and baby monitors. So, for wireless to expand under the existing configuration, it'll have to take spectrum away from someone else such as TV broadcasters and law enforcement.

SPREADING THE SPECRUM. Of course, these groups have powerful lobbies in Washington, and they aren't likely to give up prime spectrum property without a fight, especially to a bunch of grassroots activists who say they're changing the world. "The FCC can't chose one user over another," warns Rudy Baca, an analyst at Precursor Group, who served as senior adviser at the FCC for 12 years.

There's another solution: abandoning the current method of spectrum allocation in favor of a technology called "spread spectrum." Instead of giving a band of spectrum to, say, a TV station that may not be using it all at all times, regulators would allow electronic spectrum-parceling devices to allocate spectrum on a moment-to-moment basis.

The device, called a cognitive radio, would field requests for spectrum and scan the airwaves to determine the most appropriate band for that request. Once the data was transferred, the spectrum would once again become up for grabs. In short, the tools become the rules.

"HISTORY TELLS US..." This technology isn't pie-in-the-sky. The military has used spread-spectrum tools for more than 20 years but has resisted efforts to commercialize them. Nevertheless, high-tech companies are starting to build cognitive radios. Motorola (MOT ) and a host of startups have projects under way. Motorola estimates it will take five years to bring a cognitive radio to market.

Even spread spectrum's biggest advocates admit that making this system work would be difficult. "It's a paradigm shift," says Hendricks. Adds Ramesh Rao, director of the California Institute for Telecommunications & Information Technology: "History tells us that we cannot rely on the FCC's ability to anticipate the future and write rules to allow progress."

In the absence of a regulatory rescue, wireless advocates, including Rao, are trying to solve Wi-Fi's problems through technological innovation. Right now, anyone can head down to Radio Shack and, for a few hundred dollars, wirelessly network their laptop to their cable or DSL broadband connection.

NO HIERARCHY. Moving around is more difficult. For one, individual hotspots aren't linked together so if you pass out of one, you need to locate and log on to another (unless you are a subscriber to a network like Boingo). And because no one is managing the network, no one gets preferential access, which could be a problem for a business user downloading large files. "This is a road system with no freeways or traffic lights," says Rao. "In all successful distribution systems -- water, electricity, whatever -- some hierarchy is necessary."

To that end, Rao and his team of researchers are working on a project called ABC -- Always Best Connected. The idea is to discover what pathways any given user has to the wired Internet and connect them to the fastest, most efficient pathway. Inside, that might be high-speed Wi-Fi. Outside, it might be a cellular service. The key is making it seamless so that the user never knows he's left one connection for another.

Projects like these give grassroots enthusiasts hope that the power of technology will get Wi-Fi out of its infancy and into the big leagues. "Look at the little sliver of spectrum we have and the huge amount of innovation we've seen in just two years. Imagine if we took away the limitations," says Joe Plotkin, marketing director of local Internet service provider Bway.net. But dreaming is easy. It's the reality that often bites.

By Jane Black in New York and Olga Kharif in Portland, Ore.
Edited by Douglas Harbrecht

Get BusinessWeek directly on your desktop with our RSS feeds. XML

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