Subject: [NEXTEL-1] Executives Recognize Great Potential of Wi-Fi

From: [email-masked]
Date: Wed, 21 May 2003 20:31:40 -0400

Executives Recognize Great Potential of Wi-Fi
Wi-Fi is growing and has the potential to be an excellent source of
revenue for wireless carriers. The problem seems to be that industry
executives are not quite sure how to make those revenues or what
customers will be willing to pay. Service could be priced by flat fees,
the volume of data transmitted or in a variety of other ways. Some
companies, such as Verizon Communications, recognize the inevitable
growth of Wi-Fi and have said they will offer Wi-Fi even if it doesn’t
provide immediate revenue.

=====================================================

WiFi Seen As A Money-Maker, But
Nobody's Quite Sure How

By STEVEN VAMES

OF DOW JONES NEWSWIRES

LOS ANGELES (Dow Jones) Wireless Internet access, known as
Wireless Fidelity or WiFi, presents a promising opportunity for
telecommunications firms, but industry executives say they still don't
exactly know how they will make money from it.

"We're not quite sure what the business model is yet," said Lawrence
Babbio, Vice Chairman at Verizon Communications (VZ), at the
Vortex 2003 networking conference in Laguna Niguel, Calif., Monday.

Other executives at the conference agreed that a big expansion of
WiFi, led by telecommunications firms and supported by network firms
and computer and device makers, will be the next big step in
broadband Internet and network access for consumers and businesses.
But key elements of such a system - such as roaming, switching, price
structure, and compatibility, are still uncertain.

Currently, the market is fragmented, with various companies offering
local 'hot spots' in places like train stations, airports, coffee shops,
and
in some cases, entire towns. But there has been little, so far, to match

the kind of roaming and continuous access similar to mobile phone
networks.

Telecom firms, with experience building large, seamless wireless
networks, envision themselves at the center of an imminent WiFi boom.
Though reception is currently limited to a roughly 300-foot radius
surrounding any one transmitter, companies are planning on building the
networks to provide continuous service to large geographical areas.

But whether revenue will come from flat fees, volume of data
transmitted or some other model is still largely up in the air.

"There is a lot of opportunity, but still some question over how it will
be
delivered and billed," Scott Kriens, Chief Executive at Juniper
Networks Inc. (JNPR), said at the conference.

For the time being, Verizon is willing to move ahead with a WiFi
system even if it doesn't provide immediate revenue. The company
announced plans earlier this month to activate 1,000 WiFi hot spots in
New York City and offer the service as a bonus to subscribers of its
Direct Subscriber Line service, a wired broadband service based on
existing telephone lines. Verizon also cut the price of its DSL service
to
$35 per month from $50, as it tries to boost the number of subscribers.

"For now, we're offering (WiFi) as an enhanced value to our DSL or
normal wireless service," said Babbio, adding that he's not sure yet
what customers would be willing to pay for the network on its own.

If such a strategy ultimately leads to revenue and profits it might
vindicate phone carriers from their
previous failures to move quickly enough in the networking world. First,
dialup carriers, such as AOL
and Mindspring, dominated home Internet access before telecom firms such
as AT&T and Verizon
joined the fray. Later, cable companies trumped phone carriers, winning
over home customers with
high-speed cable connections that are faster and more widely available
than the phone companies' DSL
hookups.

Industry analysts say WiFi is one of the few bright spots in an
otherwise poor outlook for
telecommunications firms. The sector is reeling from intense
competition, heavy government regulation
and flat-rate pricing practices that dilute the value of new technology.

Those factors amount to "growth stealers and profit killers in this
industry," said Scott Cleland, CEO at
Precursor Group, an independent technology equity research firm. Cleland
said that only a few areas,
including WiFi, are promising growth for telecom firms.

That growth may still be ill-defined for service providers. But
hardware, software and network
companies are preparing for what they see as inevitable growth in WiFi.

Intel Corp. (INTC) is among a large number of hardware firms that are
already building products that
will support WiFi. The company recently introduced its Centrino chip,
which has features specifically
made for notebook computers that use wireless networks. Intel Capital,
the firm's venture capital unit, is
also investing $150 million in companies that focus on WiFi technology,
such as Cometa Networks.

But despite such strategic planning on the hardware and software side,
executives say they are still
unsure how the service side of the WiFi business will eventually be
structured.

"The least clear element is the service providers," said Craig Barrett,
chief executive at Intel. "For now,
this is the only thing that is exciting in the high-tech sector."

-By Steven Vames, Dow Jones Newswires; 323-658-3874;
[email-masked]

Updated May 20, 2003 8:39 a.m.
http://online.wsj.com/article_email/0,,BT_CO_20030520_003025,00.html?
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