Wireless Wonders

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 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
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.

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, 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 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.

The Wireless Frontier A Web Wireless Innovation Within five years, five innovative wireless technologies could transform how work gets done. Here’s a look at how a typical company will use these technologies as it goes about its daily business: Cutting-edge technologies are being pushed along by upstarts and tech giants alike. Here are some of the leaders in each area: ZIGBEE Temperatures are soarning in Sonoma Valley. But the vintners at Chateau de la Geek are monitoring their fields closely, because each vine is equipped with a small, wireless ZigBee sensor. These machines, about the size of a coin, can track data such as heat, moisture, and nutrients in the soil. They link to one another using a tiny radio transmitter. Industry giants Motorola, Royal Philips Electronics, and Samsung, as well as upstarts Millennial Net and Ember, are expected to reap big benefits from making ZigBee sensors Revenues (Billion) 2003 2007* $0 $3.5 WI-FI The data is zapped via a Wi-Fi antenna from the edge of the field to a PC in the office, where it’s analyzed. Wi-Fi is high-speed wireless technology that connects PCs, printers, and other devices over short distances and links them to the Internet. The plants on the southern side of the field are ripening ahead of schedule. Yikes! Intel is the big winner here, after using its marketing muscle to build demand for Wi-Fi chips in laptops and other devices last year. Wireless carrier T-Mobile has been the most aggressive in rolling out public Wi-Fi service, with 5200 locations Revenueas (Billion) 2003* 2007** $3.3 $6.4 WIMAX Bob, the foreman, wants to start the harvest in the south fields immediately but needs an O.K. from the owner, Natasha. She’s in a meeting at her software company two towns away. Bob sends her an e-mail that travels over WiMax to her PDA. WiMax is a new form of high-speed wireless networking that is similar to Wi-Fi but can reach up to about 50 km. Trying to repeat its Wi-Fi success, Intel threw its weight behind the standard last year. Telecom-equipment giants Alcatel and Siemens and upstart radio-equipment makers Alvarion and Aperto also stand to gain Revenues (Billion) 2003 2007* $0 $5.4 MOBILE-FI Natasha forwards the e-mail to Chateau manager Jeff, who’s driving on Route 101 to a meeting in San Francisco. The message travels over a network that uses Mobile-Fi, next-generation technology that extends high-speed wireless access to moving vehicles. Infighting between Japanese wireless giant NTT DoCoMo and startup equipment makers Flarion and Navini is expected to delay the standard until 2005 or 2006. Still, the upstarts are conducting trials with wireless carrier Nextel and South Korea's KT Telecom Revenues (Billion) 2003 2007* $0 $918 ULTRAWIDEBAND Jeff pulls over to the side of the road and downloads data from the almanac on his laptop in the trunk to his PDA on the front seat. The data travels over a wireless connection called Ultrawideband, an emerging technology that can move huge files over short distances and penetrate through walls. Jeff sends an e-mail to the foreman: Start the harvest! A war over competing technologies between chipmakers Texas Instruments and Intel on one side and Motorola on the other has stalled work on this standard. Both sides may simply release their products and let the market sort out which is best Revenues (Billion) 2003 2007* $0 $1.1

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, Microsoft, 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."

Automation Acceleration

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. 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 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,
Dow Chemical, and ExxonMobil 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, 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 ," 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, Alcatel, and
Motorola, 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, 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 in BusinessWeek. Copyright 2004 by The McGraw-Hill Companies, Inc