Major Telcos Expose Themselves to WiFi

Among the new things in the works are new WiFi roaming capabilities; new devices that bring WiFi capabilities to CPE used for public network service access; and, ultimately, integrated WiFi and public network service offerings.

"There's obviously a lot of activity in the WiFi space, it's been going on for a while," notes Mark Whitton, vice president and business leader for technology and business strategy at Nortel Networks. "It's still a space where the operators trying to offer it as an exclusive business are trying to figure out what to do to make it successful." However, larger network operators like the telcos, which have existing services, are better positioned to capitalize on WiFi, he says, because these companies have more assets to figure out a business plan for WiFi.

Freedom of Movement

One of the more prevalent recent WiFi announcements including a major telco is the creation of Cometa Networks, a joint venture of AT&T, IBM, Intel and financial firms Apax Partners Inc. and 3i. Cometa, which late last year announced plans to build WiFi networks nationwide, expects to bring to market its wholesale services, which will run over AT&T's IP backbone, in the top 50 U.S. urban areas this year. Specific details of the launch were not available in late December when this piece was written.

"The plan is to organize the industry around this," says Rose Klimovich, vice president of AT&T managed Internet access services, referring to Cometa.

The joint venture will work with major national and regional retail chains, hotels, universities and real estate firms to deploy the WiFi "hotspots." Cometa will also partner with various ISPs, DSL providers and cable companies, which will act as the retail channels for the services. Cometa's service will make it possible for users to keep existing sign-on procedures, e-mail addresses, IDs, passwords and payment methods -- regardless of whether they are accessing the Internet via an ISP, corporate VPN, telecommunications provider or cable operator.

"The advent of Cometa is really a significant sign that the market is maturing and coming into its own," says Christian Gunning, director of product management at Boingo Wireless, the pioneer in WiFi hotspot aggregation.

A lesser-known company called FootLoose Networks Inc., a subsidiary of Wireless Retail Inc., has a similar model to Cometa's. "The goal for us is to be as agnostic as we can and to create a unified presence for every customer no matter whether they're using Cingular or Sprint" as an example, says Joe Truscelli, president of FootLoose Networks. "Our goal is if the carrier wants the WiFi service on their current cellular service, we do that."

Neither Cometa nor FootLoose had any announced service provider partners in mid December when xchange interviewed them, but both promised more news on this front shortly.

Telcos that want to toe the waters of WiFi, but aren't ready to take the plunge might also consider the services of Airpath Wireless Inc. The ASP offers companies that want to be their own branded WiFi entities with subscriber management services including a portal, branding, billing, user ID and passwords. "Telcos could roam on the existing aggregated network that Airpath powers and provides settlement and roaming for, or the telco could buy its own access gateways and own its own hotspot," explains Timothy Barrett, Airpath's president and co-founder.

He says it makes sense for telcos to move into WiFi now, before WiFi erodes their existing service revenue. "Most telcos are in the business of owning end users and creating high ARPU," he says. "WiFi serves as a destructive technology that could definitely cut into some of their ISP revenue."

Truscelli of FootLoose says he expects to see much more telco involvement in WiFi in the next 12 months, whether telcos are involved in building their own hotspots and/or reselling services from WiFi hotspot operators. "802.11 only complements what they're doing in 2.5 and 3G," he says.

Ken Haase, director of product marketing for the WAN division of Proxim Corp., which sells WiFi and other wireless equipment, agrees. "From a carrier perspective, whatever the carrier, it's become crystal clear that the wireless data game doesn't stop with 3G," Haase says. "If you're serious about this game, you need a wireless LAN strategy."

The Cellular/WiFi Connection

Indeed. T-Mobile already has made its mark in the WiFi world. The wireless carrier through its HotSpot service provides WiFi Internet access in more than 2,000 public locations such as Starbucks coffeehouses, airports, and airline clubs, which T-Mobile claims makes it the largest carrier-owned WiFi network operator in the world.

T-Mobile's future plans include developing an integrated WiFi/GPRS data card and other handheld devices, giving customers seamless service between the two networks. Press contacts at the company declined to returned xchange's calls requesting more information of the company's WiFi strategy.

GRIC Communications, which offers roaming among various operators' WiFi hotspots in 20 countries, early this year expects to announce a solution for WiFi to GSM roaming, John Rasmus, vice president of corporate and business development for GRIC Communications, tells xchange.

Meanwhile, Boingo Wireless this year plans to enable its WiFi software to talk to a 2.5 or 3G card, says Gunning. "That means," he says, "we would have a deal in place [with a wireless network operator] to drive those services." However, offering seamless handoff between WiFi and wide area networks is a slightly longer-term proposition, says Gunning. "We're in talks with wireless service providers so Boingo can resell their [services] and customers, when they open their PC [applications], have a choice between WiFi hotspot or wireless" connectivity, Gunning says. "We think nirvana moving forward is the combination," he adds.

Boingo and Voicestream, which in June was acquired by Deutsche Telekom, making it part of DT's mobile telephone subsidiary T-Mobile International AG, were among the first to publicly discuss the idea of connecting WiFi and wireless wide area networks (see xchange's "The Proposed Marriage of WiFi and the Wireless WAN", May 2002, page 6). Speaking at the CTIA trade show last spring, Boingo CEO Sky Dayton and then-VoiceStream CEO John Stanton envisioned how sweet it would be when people could move across the country, or around the world, and get Internet access seamlessly -- indoors or out -- from a combination of WiFi LAN and wide area wireless networks.

"At some point your chocolate will fall in my peanut butter, and we'll have the wireless network that's good for everyone," Dayton said at the time, referring to a potential pairing of the Boingo service with a wide area network service.

At the same cellular industry trade show, several vendors, including Ericsson, Lucent and Flarion Technologies, each demonstrated how their products could do seamless handoffs between WiFi and wide area networks. Kenneth J. Rehbehn, principal analyst of wireless infrastructure with research and consulting firm Current Analysis Inc., says there are now several such products on the market. For example, he says, Nokia has a SIM card that goes into a WLAN card, which then fits into the user's PC. Several operators, especially those in Scandavia, are now testing it, he says.

Meanwhile, Bridgewater Systems is selling products that enable the linking of CDMA and 802.11 wireless LAN environments while providing subscribers with a single sign-on and single bill. Bridgewater does the authentication, authorization and accounting (AAA) for users across multiple access technologies, including CDMA 2000 1X, dial, DSL and 802.11; collects and aggregates usage detail records into session records. The solution then filters, formats and streams the session records to the appropriate billing and settlement systems. The company in December announced it was working with Nortel on interoperability between its systems and Nortel's CDMA, GSM and UMTS wireless network access equipment.

The Wireline Connection

Clearly, wireless operators aren't the only ones moving to capitalize on the popularity of WiFi.

Reselling, installing and managing WiFi equipment also has moved into the bailiwick of wireline telephone companies in recent months, with Verizon and BellSouth as key examples.

In addition, new WiFi capabilities being built into cable modems and other CPE-based gear can make this broadband service even more attractive to the customer, says Nortel's Whitton. "WiFi is a nice extension of the value proposition for the DSL or cable provider," he says. "You don't need to have cable all over and do drilling in the walls."

WiFi Hotspot Stats/Forecasts

• In most regions, hotspot deployment growth will continue to be steady in the coming year.

• Much of the growth in 2003 will result from carriers and other large players entering the hotspot market.

• Several European providers are expected to become more active in the hotspot market in 2003, and the providers in the Asia Pacific region will continue to demonstrate a high level of interest.

• Hotspot usage is currently very low, with some providers supporting a user-to-location ratio as low as 7 to 1.

• While deployment levels in 2002 were higher than anticipated at the onset of 2002, they are significantly lower than what providers were predicting as of mid-year 2002.

• In the U.S., Boingo initially expected between 2,000 and 5,000 locations by end of 2002, but as of November 2002 they had less than 1,000 locations in their portfolio.

• Even in Korea, which comprised the vast majority of the 2002 growth, target deployment levels were not met.

Source: In-Stat/MDR

WiFi Equipment Stats/Forecasts

• Shipments of WLAN products increased more than 100 percent in 2002, and will continue growing as the stellar wireless market performer for the next several years.

• Even though average equipment prices overall dropped by almost 28 percent, revenues increased by more than 50 percent in 2002 to the $2.6 billion level, worldwide.

• The WLAN equipment market will continue growing at a 43 percent compound annual growth rate (CAGR) to the $10.3 billion level in 2006.

• The WLAN chip market grew more than 43 percent in 2002 to the $364 million level, in spite of a 31 percent decline in overall average selling prices.

• The overall WLAN chip revenues will continue to grow at a 49 percent CAGR, in spite of continual average selling price declines.

Source: Forward Concepts

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