High-Speed Wireless Internet Network Is Planned
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HIGH-SPEED WIRELESS INTERNET NETWORK IS PLANNED
By John Markoff
New York Times
December 6, 2002
SAN FRANCISCO, Dec. 5 The wireless technology known as WiFi, which allows
users of personal and hand-held computers to connect to the Internet at high
speed without cables, got a significant stamp of approval today when AT&T,
I.B.M. and Intel announced a new company to create a nationwide network.
The unruly technology, which has largely been a playground for hackers,
hobbyists and high-technology start-ups, is already sprouting mushroomlike
in coffee shops, bookstores, airports, hotels, homes, businesses and even a
The new company, Cometa Networks, has set ambitious goals for itself: to
deploy more than 20,000 wireless access points by the end of 2004, placing
an cable-less high-speed Internet connection within either a five-minute
walk in urban areas or a five-minute drive in suburban communities.
Executives from the technology companies and the two investment firms, Apax
Partners and 3i, that joined to create the network said they would begin
offering their service through cellular and wired telephone companies,
D.S.L. and cable Internet service providers and other Internet retailers
some time in 2003.
The service is intended to let subscribers pop open their laptops and have a
seamless high-speed wireless extension of their personal or corporate
Internet services -- initially in the 50 largest metropolitan areas --
without having to give credit card numbers or enter additional information,
as is generally the case now. Connections would generally be at least the
speed of a typical home broadband connection.
Cometa executives said that they expected the national availability of the
wireless network would combine with Intel's planned inclusion of wireless
Internet capability in all its mobile microprocessors next year to spur a
fundamental shift in the way Americans will use the Internet.
"This is that big," said Dr. Lawrence B. Brilliant, chief executive of
Cometa Networks. "It's that exciting; it's that much of a distortion in the
computing field. It's a change in the way people use technology."
Until now WiFi has been viewed by many technology analysts as an upstart
from-the-bottom technology that has the potential of upsetting other
capital-intensive technology deployments, like the expensive next-generation
data-oriented cellular networks known as 2.5G and 3G that are being
established by companies like AT&T Wireless, Cingular, Nextel, T-Mobile,
Sprint and Verizon.
But Cometa executives said that because they had chosen a wholesale business
strategy, in which they will not sell Internet service directly to consumers
or business, it is more likely that the two technologies would complement
each other. In addition, users of the wireless access points would generally
be stationary while connecting to the Internet.
"WiFi has very high bandwidth and short range, while 2.5 and 3G cellular are
lower bandwidth services designed to support data services on the fly," said
Theodore Schell, chairman of Cometa Networks and a general partner of Apax
Partners. "They will have different cost equations, and there is a place for
both of these technologies."
Industry analysts have said they believe that growing WiFi use could steal
valuable subscribers from cellular companies that are hoping consumers will
begin using their cellphones for data services like movie times, restaurant
reviews and shopping deals wherever they are traveling.
The Cometa executives said they were not certain how the new network would
be used but were convinced that the nation's 100 million Internet users
would begin to use their portable computers in new ways once connections are
widely and easily available as they travel.
The executives and industry analysts acknowledged that creating a new
nationwide wireless network was something of an act of faith given the
general economic and technological gloom in the telecommunications industry.
It is widely believed that the industry had overbuilt and had overinvested
in the Internet boom of the last decade.
The new company would not disclose its planned prices or the equity stakes
of the five partners. Wireless industry analysts, however, have said WiFi
hot spots can cost as much as $4,000 apiece to install in public places. If
the average cost is half that, the installation of 20,000 access points
would cost $40 million.
"One of the problems is that giant companies creating wireless ventures
often have not had tremendous success," said Alan Reiter, publisher of
Wireless Internet and Mobile Computing, an industry newsletter based in
Chevy Chase, Md. He pointed to ambitious and expensive undertakings like a
cellular data initiative known as C.P.D.P. in the 1980's and early 1990's
and the wireless data service known as Metricom, which went bankrupt last
year with $800 million of debts.
Other analysts questioned whether Cometa Networks would be able to make
headway in an already crowded WiFi marketplace that has had both early
failures and a host of smaller, aggressive start-ups.
"It's obvious that what is happening right now is a wireless land grab,"
said Andrew Seybold, editor of Outlook 4Mobility, a publishing and
consulting firm based in Los Gatos, Calif. "The question is, How many places
can they lock up and how quickly?"
Cometa executives insisted, however, that they were in a different position
from their predecessors. The companies have a technological advantage in
that they will not have to create customer equipment, relying on Intel's
equipping the nation's portable computers with wireless abilities.
They said Cometa was also in a particularly strong position with respect to
its competitors because it could use AT&T's existing data network, to
connect the planned 20,000 wireless access points.
Leaving the relationship with individual customers to Internet service
providers "is smart from a business point of view," said Richard Miller, a
wireless data industry consultant at Breo Ventures in Palo Alto, Calif. At
the same time, he noted, the venture will not succeed unless big corporate
customers demand the service from Internet service providers.
"The demand will have to come from the enterprise to the carriers," he said.
To gain the confidence of corporate customers the new network will have to
meet stringent data security standards, and Dr. Brilliant said that Cometa
planned to take advantage of industry standards like virtual private
networks to add security to the WiFi standard.
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