Subject: [NEXTEL-1] Will You Buy WiFi?

From: Marcel <[email-masked]>
Date: Wed, 16 Apr 2003 00:05:41 -0400

Sunday, Apr. 13, 2003
Will You Buy WiFi?
Tech giants from Intel to Cisco bet that road warriors will pay for wireless Web
access
By CHRIS TAYLOR/SAN FRANCISCO

If there is one lesson Larry Brilliant likes to distill from his life, it is
this: Never
settle for one career when nine will do. Starting out in the 1960s as a hippy
kid
from Detroit with a medical degree and a vague desire to change the world,
Brilliant drifted into a surreal series of roles: physician to the Grateful
Dead,
co-star of a movie called Medicine Ball Caravan, seeker of enlightenment in
India. The turning point came when, on his guru's advice, Brilliant joined the
World Health Organization's effort to stamp out smallpox. "For a doctor,
eradicating a disease is like climbing Mount Everest," he says. "It makes you
want to find other mountains."

Brilliant has been scaling peaks ever since, not in medicine but in technology.
Understanding the body, he discovered, helped him understand computers —
the science of physiology translated into that of networks. In 1985 he founded
one of the world's first commercial Internet ventures, an online community
called
the Well. Membership cost all of $2 a month, and the Well was a huge hit, a
precursor of every online business from Amazon.com to eBay. Brilliant had
established a reputation for seeing the future before anyone else and being able
to
make money out of it.

Now 58, Brilliant is engaged in his most audacious climb yet. The business plan
he wrote for Cometa Networks — a joint venture of AT&T, IBM, Intel and
others — is every bit as obstacle filled as trying to cure smallpox or getting
people to pay to talk to others via computer. Cometa's goal is to take a
technology that is exploding in every major city in the U.S., Europe and the
Pacific Rim — grass-roots wireless Internet service that is as accessible as any

radio signal, and often as free — and figure out a way to make you pay for it.
In
the long run, Cometa aims to be nothing less than the Windows of business
Wi-Fi.

Wi-Fi stands for wireless fidelity, and the name is apt. Most who try it love it

faithfully. No wonder: they are browsing the Internet on laptops untethered by
cables, and at the high speed of 11 megabits a second — fast enough to let you
watch a movie while you're downloading it. "I wasn't much of a surfer before,"
says Donna Gallagher, 37, an office manager and Wi-Fi fan in Wilmington, N.C.
"Now I'm totally addicted."

She's not alone. In 2002, 20% of business laptops were Wi-Fi enabled. By
2005, analysts believe, that number will be more like 95%. Apple started things
rolling in 1999 with its Wi-Fi system, known as AirPort, and in January unveiled

a speedier upgrade called AirPort Extreme. Last month, in a bid to boost
demand for laptops (and Intel processor chips), Intel released Centrino, a
mobile
technology that features a new microchip and a built-in Wi-Fi receiver.

Whether anyone will make serious money off the technology is an open question.
Wi-Fi is shaping up to be one of those destructive technologies — like the
Internet — that deliver huge benefits to users while slashing profit margins for

existing businesses (think of what the Net did to travel agencies). It's easy to
see
how a blazing-fast connection on a big-screen laptop — anytime, anywhere —
might pose a threat to firms like Sprint and Verizon, which are investing
billions of
dollars to deliver fancy 3G data services over your cell phone or laptop at
slower
rates and steeper fees. Yet there's no proof consumers will pay. "No wireless
data-only network in the world has ever made money," warns Andrew Seybold,
a wireless analyst based in Los Gatos, Calif. That so many have rushed to invest

in Wi-Fi is, he predicts, "the next dotcom disaster."

One hurdle is the technology's simplicity, and the ease with which anyone can
provide it. Ignore the geeks who use Wi-Fi's painful official designation,
802.11.
Here's a more familiar name for the technology: radio. The Wi-Fi card in your
laptop is a receiver, and the Wi-Fi router — which plugs into a cable or DSL
modem at your home or office or coffee shop — is nothing more than a
short-range transmitter-receiver. (Here's a piece of trivia for your next
cocktail
party: the patent on which Wi-Fi technology is based was filed back in 1942 by
actress Hedy Lamarr and composer George Antheil.) Wi-Fi uses a frequency
long set aside by the FCC for quirky radio devices — the downside being that
microwave ovens and some brands of cordless phone can play havoc with the
signal.

The range of transmission is usually 150 ft. to 300 ft., which makes Wi-Fi ideal

for home use. It also works in most workplace settings. Shipping companies
were the first to see the value of Wi-Fi in warehouses; FedEx estimates its
Wi-Fi-enabled workers are 30% more productive since they've been unleashed.
Hospitals and college campuses came next. Today 57% of all U.S. corporations,
including all of the FORTUNE 1,000, have at least a small-scale Wi-Fi network,
although only a few tech-savvy firms like Qualcomm and Novell have so far
dared to roll out wireless service company-wide.

Elsewhere, Braveheart-style battles rage between the IT department's obsession
with security and the workers' demand for freedom. Slowly, freedom is winning
— good news for equipment manufacturers like Cisco Systems, which recently
announced it would acquire top wireless-router maker Linksys for $500 million
in stock. "Once people have wireless inside their offices," says Frank Keeney,
co-founder of the Southern California Wireless Users Group, "they never want to
go back. It's a tremendous productivity tool."

That goes double for road warriors, the real source of potential wealth in the
wider Wi-Fi world. These are the field sales reps, insurance adjusters, real
estate
agents and delivery managers. There are more than 11 million road warriors in
the U.S. alone who regularly dial in remotely to corporate networks, and 90% of
them are using slow-as-mud 56K modems via standard phone lines. The
advantage of untethering office workers is relatively unproved (Won't they just
instant message one another during meetings?), but even the most technophobic
CEO can imagine the benefit of her top salesman's being able to tap into the
database minutes before he sits down with a client — and place his order
immediately afterward. "Intuitively, I felt there was going to be a market for
this in
the business community," says Ted Schell, a venture capitalist with Apax
Partners
in New York City, one of the backers of Cometa.

Fourteen months ago, after mulling a list of defunct Wi-Fi start-ups, Schell
brought AT&T, IBM and Intel together to discuss a jointly funded $30 million
Wi-Fi network blanketing 50 U.S. metropolitan areas. He dubbed the venture
Project Rainbow. Each side could see the benefit: IBM sold approximately $1
billion in Wi-Fi services in 2002, Intel was looking for a way to get into the
wireless chip game, and AT&T provided the communications backbone for 8
million road warriors. But as IBM's representative John Boutross remembers, the
talks were initially very static: "These large players were being very polite
and
careful not to infringe on anybody else's territory." To get these wallflowers
to
dance, a matchmaker was called for.

Enter Larry Brilliant, who had been doing a little consulting for Intel.
Brilliant
knew the benefits and pitfalls of Wi-Fi, and he was accustomed to working with
start-ups. (In the years since the Well, Brilliant had created 14 networks
including his own failed Wi-Fi company, AirZone.) The pace of the discussion
frustrated him. "It was harder to negotiate a treaty between these three
elephants
than between India and Pakistan," he says. Brilliant should know. He once
brokered a subcontinental smallpox treaty in six weeks. Talks among Project
Rainbow's founders over the nondisclosure agreement alone dragged on for three
months.

The new company, today called Cometa after the Italian word for comet, was
unlikely to get funding without a CEO. So Brilliant agreed to fill the role for
as
long as it took him to draft a business plan and find a suitable replacement.
His
chosen successor was Gary Weis, 55, an engineer and M.B.A. who had worked
at AT&T and IBM. Weis wanted the job, but it took more elephant wrangling
— six months of negotiation — to secure his services.

Meanwhile, Brilliant threw himself at the question of how exactly Cometa was
going to make money. It wasn't 1999 anymore. The company had to be able to
show skeptics a return on investment. Signs from abroad weren't good: in 2001,
KT Telecom spent more than $14 million setting up 8,900 access points across
South Korea. Two years on, only 123,000 out of a country of 45 million —
most of them tech sophisticates — have signed up. (One reason is that South
Korea's cell-phone data technology and service offerings are vastly superior to
those in the U.S.)

And what about those 11 million U.S. road warriors: How can they be sold on
Wi-Fi? Starbucks, in partnership with T-Mobile, had already launched its
in-house Wi-Fi network, which you could pay for by the minute or subscribe to
by the month. The San Francisco-based Surf and Sip network offered a similar
service in independent coffee houses. If the typical road warrior turned out to
be
a fan of Grande Double Lattes, Cometa could be sunk before it started.

Another big question: What kind of threat is the free-Wi-Fi movement? In major
cities, many home users are leaving their networks open — either as a public
service or, in more cases, accidentally — meaning anyone can use those
networks to surf freely without a password. The practice of looking for those
networks — known as wardriving, in homage to Matthew Broderick's wardialing
in the movie War Games — got a boost when the descendants of ham-radio
enthusiasts figured out that you could pick up a much stronger signal by welding

an empty Pringles can to your Wi-Fi card.

Then came the habit of warchalking — which began in London and spread
around the globe — in which wardrivers would mark the presence of free
networks with a strange hieroglyph — parentheses in reverse order — in chalk
on the sidewalk for all to see. "The beauty of Wi-Fi is that it is so
decentralized,"
says Anthony Townsend, an N.Y.U. professor who runs a network of 141 free
access points called NYCwireless. Even Brilliant keeps his home Wi-Fi network
open, and is happy for his Mill Valley, Calif., neighbors to use it.

If Cometa was going to work, Brilliant knew, it had to think big. Despite the
expense, it had to build 20,000 access points across America. These access
points have to be as secure as Fort Knox and support Virtual Private Networks,
or VPNs (think of a VPN as a solid, encrypted tunnel of data in the middle of
any signal). Free Wi-Fi rapidly loses its appeal when you realize those home
users could potentially take a peek at the data on your laptop as part of the
bargain.

Brilliant also insisted that Cometa had to make deals with corporations, not
individual road warriors. "We need to sign them up 50,000 at a time," he says.
If
consumers use the service, it will be through potential partners like AOL Time
Warner (parent of TIME) or EarthLink. Cometa would still be in charge of the
infrastructure, but the Cometa brand would be invisible to Joe Public. Software
developers would work directly with the providers to produce different flavors
of
Cometa.

Cometa recently inked a cunningly symbiotic deal to test Wi-Fi in 10
McDonald's outlets in Manhattan. If the test works out, Mickey D's 30,000 U.S.
locations will provide the kind of footprint in the heartland that Cometa needs.

McDonald's is interested not only in better serving road-warrior diners but also
in
the savings to be had from a network where everything down to the milkshake
machine's maintenance schedule can be accessed at a moment's notice. The
company has Wi-Fi in Australian, Japanese, Swedish and Taiwanese restaurants.

Brilliant's big thinking isn't enough to convince some skeptics. Seybold says it

would take 72 people connecting to an access point every day for three years to
recoup the cost of constructing it. And if each access point covers only a
300-ft.
radius, that's going to leave a lot of urban America outside the Cometa canopy.

But time and technology are on Brilliant's side. The Institute of Electrical and

Electronics Engineers — those geeks who came up with the name
802.11--tentatively announced the creation of a new Wi-Fi standard earlier this
year. It's called 802.16a, or more memorably, Wi-Max. It can comfortably
cover a square mile, meaning it would take only 49 transmitters to blanket San
Francisco. As Brilliant says with a grin, "Now it gets interesting." If you can
cover
entire cities with wireless Internet access, you suddenly have a very cheap
alternative to cellular networks. But even Wi-Max won't kill 3G, which works
much better when you're driving at high speed.

Brilliant will stick around to see the outcome, even now that Weis has taken
over
the CEO role. "I'm on the board of directors," Brilliant says. "They can't get
rid
of me." After all, there's still one more mountain to climb.

http://www.time.com/time/globalbusiness/article/0,9171,1101030421-443172,00.html

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