No Wires, No Rules
High-speed Internet access has been as rare as sunshine in winter in Campsie, a tiny village on the northern coast of Northern Ireland. The town is located in a sparsely populated rural area, which makes it too expensive to install traditional broadband technology. And the town is too far from larger cities like Londonderry to use their Internet facilities.
The people of Campsie shouldn't give up hope, though. Earlier this year, British telephone giant BT Group PLC (BT ) invited about 100 Web surfers in the village and three other rural areas to sign up for a promising new wireless Internet service. BT has installed a series of radio towers that beam signals across the countryside to small antennas on the sides of customers' homes. The system is about as fast as traditional broadband but much cheaper to set up. Why? BT is using less-expensive equipment and a free, unlicensed part of the radio spectrum, avoiding billions of dollars in fees. If the test in Campsie goes well, BT may roll out the service to consumers across Britain by next year. "This will revolutionize society, just as mobile telephony revolutionized society in the 1980s," says Mike Galvin, director of Internet operations at BT.
It's just one example of how the unlicensed portion of the radio spectrum is turning into a hothouse of technological innovation. For years, these radio frequencies were neglected, the lonely domain of cordless phones and microwave ovens. In the past few years, however, engineers at institutions from Massachusetts Institute of Technology to Dutch giant Royal Philips Electronics (PHG ) have been hard at work on a grander vision for the unlicensed radio frontier. That tinkering is what sparked the creation of Wi-Fi, the wildly popular wireless Net technology that took off last year with the support of chip giant Intel Corp. (INTC ).
Wi-Fi is just the first step, though. Hard on its heels are four equally innovative technologies -- WiMax, Mobile-Fi, ZigBee, and Ultrawideband -- that will push wireless networking into every facet of life, from cars and homes to office buildings and factories. These technologies have attracted $4.5 billion in venture investments over the past five years, according to estimates from San Francisco-based investment bank Rutberg & Co. Products based on them will start hitting the market this year and become widely available in 2005. As they do, they will expand the reach of the Internet for miles and create a mesh of Web technologies that will provide connections anywhere, anytime. "Now you have a toolbox full of wireless tools that can help with each problem, whether it's reaching a couple of inches or a couple of miles," says Ian McPherson, president of Wireless Data Research Group, a market research firm in San Mateo, Calif.
These technologies will usher in a new era for the wireless Web. They'll work with each other and with traditional telephone networks to let people and machines communicate like never before. People in what have been isolated towns, be it in Ireland or Idaho, will find themselves with blazingly fast Net connections. Zooming down the highway, you'll be able to use a laptop or PDA to check the weather or the traffic a few miles ahead. Back at home, couch potatoes will be able to dish up movies from their PC and transfer them to the flat screen in the living room -- without any wires at all. And tiny wireless sensors will control the lights in skyscrapers, monitor utility meters in suburban neighborhoods, even track toxicity levels in wastewater. This will give rise to the Internet of Things, networks of smart machines that communicate with each other.
What are the technologies behind this vision of the future? ZigBee, along with its radio standard, is the technology that coordinates communication among thousands of tiny sensors. These sensors can be scattered throughout offices, farms, or factories, picking up bits of information about temperature, chemicals, water, or even motion. They're designed to use little energy because they'll be left in place for five or 10 years and their batteries need to last. So they communicate very efficiently, passing data over radio waves from one to the other like a bucket brigade. At the end of the line, the data can be dropped into a computer for analysis or picked up by another wireless technology like WiMax. Products based on ZigBee, which has been nurtured by giants Philips and Motorola, are expected to start hitting the market later this year.
HUGE HOT SPOTS
WiMax is similar to Wi-Fi. Both create "hot spots," or areas around a central antenna in which people can wirelessly share information or tap the Net with a properly equipped laptop. While Wi-Fi can cover several hundred feet, WiMax has a range of 25 to 30 miles. That means it can be used as an alternative to traditional broadband technologies, which use telephone and cable pipes. It's an early version of WiMax that's bringing the Net to Campsie. WiMax can't be used right now if you're moving, say in a car. But backers of the technology, including Intel and Alcatel (ALA ), plan to have a mobile version out within a few years. A similar standard, known as Mobile-Fi, will be available two or three years from now. It will let people surf the Net at speeds even faster than their home broadband links today -- while they're racing along on a train or in a car.
Ultrawideband serves a very different purpose. The technology lets people move massive files quickly over short distances. In the home, that will allow users to zap, say, an hourlong Sopranos show from a PC to the TV without any messy cords. On the road, a driver who has his laptop in the trunk receiving data over Mobile-Fi could use Ultrawideband to pull that information up to the handheld computer in the front seat. Although the standard hasn't been finished yet, Motorola already is selling chips based on an early version of the technology.
One reason for this flurry of innovation now is the nature of unlicensed spectrum. Traditionally, a big company like AT&T Wireless (AWE ) paid billions of dollars to the federal government for an exclusive license to use a swath of the radio waves. That allowed the company to provide mobile-phone service to its customers without any interference, but it blocked other players from using the same radio frequencies. By contrast, most of these technologies use unlicensed spectrum. That means that anyone -- really, anyone -- can try out any idea they can imagine on those frequencies. Think of it as open-mike night at the local pub. "The licensed world tends to move in this fairly ponderous way, but with unlicensed spectrum people can try out other things and learn there is a whole market sitting out there," says Kevin Werbach, an independent technology strategy consultant.
Wi-Fi set the pattern for stardom that these emerging technologies hope to emulate. A group of companies got together to establish a standard for the technology, touching off a virtuous cycle. High volumes brought the cost of Wi-Fi gear down, low costs boosted demand, and strong demand led to even higher volumes. Now, Intel, which stoked the frenzy with a $400 million marketing push last year, sells its Wi-Fi chips to computer makers for $20 each, down from $45 a year ago. Some 54 million laptops, PDAs, and other devices with Wi-Fi are expected to be sold this year, according to researcher In-Stat/MDR, four times as many as in 2002.
For all their promise, these new technologies face steep challenges. Giants are battling over the exact standards for Mobile-Fi and Ultrawideband, and a final resolution may not come before 2006. Until that happens, equipment makers won't be able to start mass production, meaning costs won't be driven down by economies of scale. Mobile-Fi, which is planned for licensed spectrum, may be subsumed by WiMax once it adds mobile capabilities.
What's more, these innovations aren't emerging in a vacuum. Cellular companies already are rolling out technology that will let their customers get speedy Net connections on their mobile phones or laptops. This third-generation, or 3G, gear will compete directly with WiMax and Mobile-Fi. Verizon Wireless installed its 3G networks in Washington, D.C., and San Diego last year, and it plans to add 98 more markets by the end of 2005. Other cellular companies are providing similar service in the U.S., Europe, and Asia. The 3G technology may be slower than WiMax, but it has the benefit of being reliable -- and available. "WiMax, all of a sudden, has caught a lot of attention, but we have been commercial for two years," says John Hambidge, senior director of marketing at IPWireless Inc., which makes 3G equipment. "We have a huge time-to-market advantage."
Even if WiMax and its brethren can compete with 3G, another challenge looms: a spectrum shortage. As all these devices begin chattering away over the same radio frequencies, they may begin to bump into each other. To avoid such a shortage, Intel (INTC ), Microsoft (MSFT ), and other tech companies are lobbying the Federal Communications Commission for more spectrum. Their target? The major TV broadcasters, including ABC (DIS ), NBC (GE ), and CBS (VIA ), which are sitting on vast amounts of spectrum for transmitting TV programs. The FCC long has supported the development of technologies for unlicensed spectrum, but it's unclear whether the commission wants to take on the powerful broadcasters, especially in an election year. "The broadcasters hate it, but as demand just keeps going up, it gets harder and harder to defend policies that are restricting supply," says Michael Calabrese, program director at the New America Foundation, a public policy institute in Washington that advocates providing more spectrum for these new technologies. "Over the long haul, I am optimistic."
One reason for such optimism is that these technologies offer benefits that could ripple through the economy. The wireless Internet promises to spur productivity by collecting data that could never be tracked before and by making information available exactly when it's needed. It will speed automation, allowing people stuck behind, say, a cash register to do more productive work. Already, J.C. Penney salespeople use Wi-Fi to check inventory and prices. Now the technology is moving into construction, rescue services, health care, and other markets. Combined, these technologies are expected to reach $17.3 billion in sales by 2007, up from $3.3 billion in 2003. "The next wave of personal productivity at work is about mobility, people wanting to get access anywhere," says Sean M. Maloney, executive vice-president and general manager of Intel's communications group.
There are early signs of interest in the new technologies. Andover Controls Corp. (BBY ), which has 100,000 building-control systems installed worldwide, is working with Goodman Manufacturing Co. to cut energy consumption an expected 10% with ZigBee sensors. In a test that's just being rolled out, Andover has installed four matchbox-size sensors in about 25 hotel rooms in Texas. One sensor is placed on the air conditioner, while the others are placed on the walls to monitor motion and temperature in the room. The sensors track whether the air conditioner is on, if someone is in the room, and the temperature. The data moves through the bucket brigade of sensors to the front desk, which monitors the temperature and the equipment. A clerk, or even a computer, can shut off an air conditioner if one room is getting too cold. Andover expects the system to be more energy efficient than relying on customers to fiddle with the controls.
The federal government's plans for ZigBee are more ambitious. The Energy Dept. has hired Honeywell International Inc. (HON ) to use ZigBee sensors to help cut energy costs by up to 15% in steel, aluminum, and six other industries. In tests that start later this year, the sensors will be installed at companies such as Alcoa (AA ), Dow Chemical (DOW ), and ExxonMobil (XOM ) to track energy loss from piping systems and to monitor the use of gases in production processes. These processes use large amounts of heat and energy to transform gases, such as hydrocarbons, into ethylene, which is used to make plastics. Honeywell's network of sensors will be able to monitor the amount of gas constantly, compared with as little as once a day in the past. That will let companies eliminate leaks or waste almost immediately. Honeywell estimates the wireless technology could help save up to 256 trillion Btu of energy a year, more than the amount of natural gas used by Washington State last year. "Having this data in real time is a big deal," says Dan Sheflin, vice-president and chief technology officer of Honeywell's Automation & Control Solutions Div.
As research continues, the sensors will become smaller and more versatile. Eventually, they are expected to shrink to the size of dust particles. Thousands of minute sensors, or "smart dust," could be released into the atmosphere to check for everything from chemical weapons to changes in the weather. "We're going to make this happen and drive costs so that people don't think twice about using this anymore," says Venkat Bahl, vice-president of marketing at ZigBee sensor maker Ember Corp. in Boston and vice-chairman of the ZigBee Alliance, which shepherded the technology along.
As they become woven together, these technologies will create a foundation for other innovations. Over time, cell phones and laptops will be able to switch from one type of network to another, jumping from Wi-Fi to WiMax to traditional phone networks. Cell-phone makers including Nokia (NOK ), LG Electronics, and Samsung are adding Wi-Fi to their phones this year. These interconnected networks also will provide the basis for new services. For example, an electric utility could offer discounts to customers who agree to have their electricity usage monitored by ZigBee sensors and then reduced during periods of peak demand.
Already, pioneering universities and businesses are beginning to send telephone calls over Wi-Fi. Dartmouth College last fall began rolling out Internet phone service over the university's Wi-Fi network, allowing students to make free domestic calls from anywhere around campus with a laptop or handheld computer. Instead of spending $1.3 million on traditional phone gear, Brad Noblet, director of computing technical services at the school, dished out only $350,000 for networking gear and software for the students. Now, Noblet and his band of techies are testing wireless video, with the goal of offering cable-TV programming over Wi-Fi. The university plans to charge for cable television, but it would save money because it would not have to maintain three different networks, for cable, telephone, and Net service. "The technology is a lot more flexible [than traditional equipment]," he says.
After its success with Wi-Fi, Intel is trying to accomplish the same trick with WiMax. When they hit the market at the end of this year, WiMax modems likely will cost around $450 each, estimates researcher ABI Research. That's much more than the cost of a broadband modem or 3G phone card, which are $50 and $200, respectively. But WiMax is expected to hit speeds of 5 to 10 megabits per second, trumping 3G's 300 to 500 kilobits per second and the 3 megabits per second that traditional broadband delivers. Intel, Siemens (SI ), Alcatel (ALA ), and Motorola (MOT ), which all recently announced they would make WiMax gear, are betting they can spur demand and quickly drive down modem prices. Intel plans to have embedded WiMax chips in laptops by 2006.
There are early signs of demand for WiMax gear. The technology is being tested by AT&T, as well as by BT. Doug Keeney, chief executive of U.S. Wireless Online Inc. (UWRL ), which provides wireless broadband service in Atlanta, Louisville, and Columbus, Ohio, plans to spend about $250,000 on WiMax gear when he rolls it out in Louisville this year. That's about 50% less than it cost him to build metropolitan Wi-Fi networks in other cities. He's betting that, within a year or so, the price of the modems will drop to $100. That will help him lower his subscription price for consumers from $29.95 to $19.95. "This will let us increase our market coverage and connections and make us more competitive," Keeney says.
WiMax has sparked interest at the local level, too. Portland State University in Oregon and the Oregon Health & Science University two months ago began deploying a network that combines WiMax and Wi-Fi gear. Four WiMax radios are being placed on rooftops to provide broadband wireless access to laptops within reach and to other Wi-Fi relay antennas dotted around the city. The equipment, which can handle voice and video, will be tested for six months by the university and the local fire department. Then the goal is to make the network available to anybody in town who wants to use it. "This will allow the fingers of the network to spread out in an affordable way," says Nigel Ballard, who is helping deploy this new network after rolling out 120 free Wi-Fi hot spots in Portland.
Big dreams? Sure, but that's the kind of thinking that's beginning to take hold with the development of WiMax, ZigBee, and the other up-and-coming wireless technologies. These airwaves are open to all.
By Heather Green
With Roger O. Crockett in Chicago, Steve Rosenbush in New York, and Catherine Yang in Washington
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