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The December 17, 2002 Issue Provided by System Dynamics Inc.
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"'Tis the Season to Go Wireless"

Wireless has been in the news the past few months and a full-page ad with this headline in the Sunday New York Times (12/15/2002) shows how mainsteam it has become. The ad, by Intersil and Linksys, promised "rebates on seven of our most popular networking products" -- all 802.11b wireless devices: routers, Ethernet bridges, PC cards and more. Wireless PC cards sell for less than $60 after rebate. A wireless router - including a cable/DSL router, wireless access point and 4-port Ethernet switch - costs $100 after rebate. Not long ago, the access point alone cost more than $500.

Now that wireless has reached the mass market, we thought it would be worth an update on some of the changes taking place.

IEEE 802.11g Products Coming to Market

IEEE 802.11g is the latest version of the 802.11 family of standards. It operates at speeds up to 54 Mbps in the 2.4 GHz band. Thus it combines the speed of 802.11a with the frequency band of 802.11b.

While the .11g standard won't be ratified until 2003, products based on it are starting to appear in the market. At the BroadbandPlus show, Broadcom showed us their "54g" chip (so-called because 802.11g isn't yet "official") and both Netgear and Linksys talked about products about to appear on the market. (The Linksys website shows a "Wireless-G" router that will be available at the end of this month.)

With three different versions of 802.11 technology, it's going to be difficult for consumers to decide what to buy:

  • We are already seeing single-mode 802.11a and 11b, and dual-mode 11a/11b products. We will soon see dual-mode 11g/11b and tri-mode 11a/11b/11g products.
  • The Wi-Fi Alliance has decided to use "Wi-Fi" for all 802.11 products and differentiate between them in the fine print on the box.
  • 802.11a and .11g promise much higher speeds: the 54 Mbps claimed by both will probably provide about 30 Mbps -- still six times the realistic 5 Mbps speed of 11b.
  • 802.11a runs in the 5 GHz band, which promises both more usable channels and less interference from other uses.
  • 11a is expected to have less range than 11g with more trouble transmitting through the walls of a house.
  • A dual mode 11a/11b product requires two radios (one each for 2.4 GHz and 5 GHz) while a dual-mode 11b/11g unit requires only one radio for 2.4 GHz.
  • Many vendors have told us that 11g products will be priced only slightly above 11b, while 11a products sell now at two to three times the price of 11b.

We think 11a may prove to be the winner in the enterprise market, where the additional channels are an important consideration.

But we think 11g will win in the home, especially if the pricepoint of dual-mode 11g/11b products quickly reaches the current pricepoints of 11b. That would provide an easy migration path for the rapdily growing installed base of 11b products, in much the same way as 10/100 Ethernet equipment eased that migration.

We plan to test and report on 11g products early in 2003.

Built-in Wi-Fi

We just bought an IBM X30 portable with built-in Wi-Fi. The antenna is built into the cover. The 802.11b functionality is on a tiny "Mini-PCI card" that plugs in under the keyboard, leaving the PC Card (PCMCIA) and Compact Flash (CF) slots available for other devices.

We've already used Wi-Fi when we're on the road and expect to use it more now we have it built into our main road computer.

We're glad that Wi-Fi is packaged on an interchangeable Mini-PCI card. As we reported above, 802.11g products are already appearing on the market, and we anticipate that IBM will offer a card with 802.11b/11g some time in 2003. At that time, we'll remove the 802.11b card and swap it for a new one.

Hot Spots - Boingo and Cometa Networks

We expect that most people have heard of "hot spots" - places with a Wi-Fi connection to the Internet. They are increasingly mentioned in the popular press. Some are free (such as Bryant Park in New York City), others have a fee. Several companies are now trying to simplify finding, connecting to, and paying for the use of hot spots.


Boingo was one of the first companies trying to aggregate hotspots. David Hagan, the President of Boingo, spoke in our session at BroadbandPlus. In his speech, he estimated that there were over a million potential locations for hot spots, including gas stations, restaurants and retailers. Boingo has so far signed up 900 locations -- including hotels, coffee shops and free networks -- and is negotiating with many more. (A quick search on the Web showed that Boingo was available in three nearby hotels and a deli.) They have a variety of payment plans, ranging from an "As-You-Go" plan at $7.95 per 24-hour "connect day" to an unlimited plan at $49.95 a month.

Cometa Networks

Early this month, AT&T, Intel and IBM announced that they were forming Cometa Networks, a new venture to offer Wi-Fi services to telecommunications companies and ISPs for resale to their customers. One of the IBM executives says the plan is "to offer a single sign-on, single authentication, seamless-roaming nationwide network." Customers would not sign up for a new accounts, but rather would use an existing account with a telecommunications provider, cable operator or ISP.

The firm says it will have "ubiquitous coverage in the US" by the end of 2004 and expects to deploy 20,000 hotspot sites. AT&T will provide network infrastructure and management, while IBM will provide wireless site installations and back-office systems.

We think this announcement will encourage broadband service providers to decide how to leverage the growing popularity of Wi-Fi. For smaller operators, it seems an easy decision to join Boingo, Cometa or one of the other aggregators. Larger operators face a more difficult decision: whether to join one of the aggregators and have a widely available service to which they can affix their brand, or whether to develop and market a differentiated service.

We are a little concerned, however. The recent outburst of enthusiasm for Wi-Fi sure seems a lot like the enthusiasm for "dot coms" a short time ago. We wonder whether the willingness to pay for hot spots isn't limited. In the long run the question is whether this is really a stand-alone business or an incremental service to be provided by mobile telephone and broadband service providers. Are hot-spots today's version of payphones, and if so, how long will they be around?

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