Around the world, telecommunications companies are spending billions of dollars to build new 3G data networks. But a popular and inexpensive wireless networking technology may seriously undermine the telcos' plans for the wireless Internet.
From London to Tokyo, giant telecommunications companies are dishing out billions of dollars, pounds and yen, to build third-generation mobile phone networks. For the first time, 3G networks will offer fast connections to the Net over the airwaves - up to 2 Megabits per second - for laptops, handhelds and mobile phones.
These networks will begin to roll out this summer in Europe and Asia, arriving in the U.S. a few years later. Most carriers are planning phased rollouts, starting with so-called 2.5G services at 65 Kbps and eventually climbing to 2 Mbps.
Thanks to the massive expenditure, 3G services are likely to be expensive, at least initially. But in many cities you can already get a wireless connection to the Net that's four times as fast as 3G will ever be and is relatively inexpensive - and in some cases is free. All it takes is a cheap and readily available PC-card plugged into a laptop.
The technology is called IEEE 802.11b, which was recently re-named Wi-Fi. Wi-Fi networks are springing up all over the place - at thousands of hotels, restaurants, coffee shops, libraries and airports. Some European cities are wirelessly networking public spaces, while dozens of community groups across the globe are trying to create their own free, city-wide wireless networks.
"We don't need 3G with 802.11," said Bryan Arp, director of product management with Surf and Sip, a Californian startup that's wirelessly networking cafes and restaurants across the U.S. "We have a high-speed wireless network and it's available now."
Operating in the 2.4 Gigahertz microwave frequency, Wi-Fi offers data connections of up to 11 Mbps within about 300 feet of a base station. The technology has the enthusiastic backing of the computer industry, with companies like Apple, Compaq and Dell building Wi-Fi into laptops and handhelds. And while Microsoft isn't supporting Bluetooth in its new Windows XP operating system, it is supporting 802.11b.
Consumers love it. In the last six months, Wi-Fi base stations and laptop cards have been snapped up like hotcakes. Cahners In-Stat Group, estimates by the end of this year more than 10 million Wi-Fi products will be sold.
Crucially, Wi-Fi doesn't need a government license, allowing anyone to set up a base station wherever they please.
This has led to an explosion of startup companies and community groups setting up their own networks using off-the-shelf Wi-Fi technology. They are becoming, without the need for expensive spectrum licenses or infrastructure, wireless ISPs.
Most telecommunications companies appear to be reluctant to talk about Wi-Fi. None of the telcos contacted for this story provided a spokesperson for comment. AT&T Wireless flatly refused, while British Telecom and Sprint PCS failed to find qualified spokespeople before the deadline.
"The carriers are ignoring it," said Allen Nogee, a senior analyst with Cahners In-Stat. "I've been talking to several of them and they're just ignoring it
because it does put a little kink in their plans."
In the U.S., companies like MobileStar and WayPort are building extensive networks catering to the business traveller by wiring hundreds of hotels and airports with Wi-Fi. MobileStar plans to have 4,000 locations in cafes, hotels and airports by the end of 2002. The company has teamed up with Microsoft and Starbucks to put base stations in hundreds of Starbucks coffee shops.
"You're starting to see the build out of a national network," explained Surf and Sip's Arp.
Chasing the consumer market, Surf and Sip and its rival AirWave are wirelessly wiring hundreds of cafes, health clubs, malls and laundromats. Surf and Sip has about 70 locations and plans to have as many as 550 by the end of the year.
Arp said in San Francisco it's already possible to travel down a couple of streets logging onto one Wi-Fi network after the other, courtesy of either Airwave or Sip and Surf. The coverage, Arp said, is more or less contiguous. The problem is roaming. There's no agreement between competitors for a common authorization and billing system.
Working out the kinks
Aware of this problem, Microsoft, for one, is working on systems for authentication, security, bandwidth differentiation, location services, roaming and billing. "I believe 802.11 is fast and reliable and it can easily fulfil the data connectivity needs for road warriors," said Victor Bahl, a researcher with Microsoft Research's Systems and Networking Group.
HereUare, a Silicon Valley startup, is already trying to set up roaming agreements between the different Wi-Fi networking companies, but according to Arp, it's a little too early in the game. "Most of us are saying 'let's build our networks first and we'll deal with you later,'" he said.
Curiously, Arp said there are a couple of other roaming companies that haven't yet gone public and are being backed by some of the big telcos. "As this market matures you'll see more and more of the big players," he predicted.
Meanwhile, at the other end of the scale, there are perhaps 30 or 40 community groups in Europe, U.S. and Australia trying to build large, public Wi-Fi networks that are free for anyone to log on to. "It's easy to set up, transmission is free and you don't have to wait three years for a telco to do it," explained Matt Westervelt, founder of Seattle Wireless, one of the largest and most ambitious Wi-Fi nets.
Along with Seattle Wireless, Consume the Net in London and San Francisco's Bay Area Wireless User Group are among the biggest community Wi-Fi networks, with between 150 and 400 people involved. Elektrosmog of Sweden, is an active group with more than 300 members, but concentrates more on disseminating information about building networks rather than the actual building of them.
Wi-Fi community networks are also underfoot in New York, Portland, Berlin, Perth, and a handful of other cities.
"Every other week I hear of a new one," said Ken Caruso, who runs FreeNetworks.org, an information clearing house for community Wi-Fi networks. "People like the idea of user owned and operated networks."
Large deployments are already here
The idea of a city-wide network isn't so far fetched. Large universities such as Stanford, MIT, and Carnegie Mellon already have big, campus-wide Wi-Fi networks up and running.
Launched last autumn, London's Consume the Net has grown rapidly from a handful of nodes in the East End to more than 60 locations within 10 kilometers of central London. Nationwide, there are about 100 locations linked to the project.
"It's hard to say exactly because people haven't been very diligent about registering the location of their nodes," said James Stevens, who launched Consume with Julian Priest. Stevens added that Consume's momentum is good: the group has more than 4,000 people worldwide on its mailing list. The main problem is density. Consume has patches of coverage all over the city but so far there aren't enough volunteers to fill the gaps.
To maintain coherence in the network, Stevens plans to link nodes over the terrestrial Internet via a virtual private network. The VPN would create a single network out of the separate, loosely-affiliated nodes. "It gives people the sense that they're part of a bigger network," said Stevens. "As the concentration grows, these clumps will link together."
Stevens is confident the Consume network will eventually fill out, creating a large, fast, publicly accessible alternative to the wireless networks planned by British Telecom and Vodafone. "The next two months will tell," said Stevens. "Weve got a lot of work to do."
Across the pond in the Pacific Northwest, Seattle Wireless has about 30 nodes operating in and around the center of the city. Like Consume, Seattle Wireless has the problem of populating the dead air between nodes. The group is working on directional antennae to beam connections between locations until the network fills out.
"Our goal is to make a wireless backbone," said Westervelt. "We're trying to build our own city-wide network." But what there is of the network is being used, Westervelt said. People are buying laptop cards for their base stations at home or work, and are using them to gain access to the Seattle Wireless network.
To boost usage, the group is working on big orange stickers to let people know they are within range of a base station. One member, Stephen Briggs, is using his node to wirelessly share his Internet connection with about four of his neighbors. Curiously, he's never met them face-to-face. He even e-mailed the guy in the next apartment the details. "We have weird schedules," Briggs said.
Briggs' node also covers a bar, a restaurant and a bus stop across the street. A systems administrator for Real Networks, Briggs always takes his laptop to lunch, which means he doesn't have to get up if he's called on to fix something.
Thanks to the adoption of the network among residents, Westervelt is skeptical about 3G. He thinks the initial bandwidth will be too low and the cost too high. "I see 3G as a whole lot of effort and not a whole lot of return," Westervelt said. "The whole idea is to make wireless cheap. The cheaper you make it, the more people you get. Even if 3G were here, we'd still be doing this. It's an alternative, it's free and it's here today."
Westervelt said he's not alone in recognizing Wi-Fi's potential as an alternative to cell phone networks. As well being invited to speak at conferences, he said he's been contacted by entrepreneurs from developing countries who are interested in building dirt cheap telcos from Wi-Fi technology.
"They're looking into the viability of building large infrastructures out of 802.11," he said. "People are looking into this stuff. Hopefully it's going to go crazy."
Theres always a hitch
But is Wi-Fi really a good technology for building alternative wireless data networks? Not everyone thinks so. Even the technology's boosters have their doubts.
Matt Peterson, founder of BAWUG, said there are a number of serious problems that will prevent it from becoming the foundation for large wireless networks. Perhaps the most important is overcrowding of the 2.4 Gigahertz band, which is susceptible to interference from devices as diverse as cordless phones and microwave ovens. The frequency will become even more crowded with the debut of Bluetooth devices. "It's totally unreliable," Peterson said. "There's far too much interference."
Additionally, Wi-Fi is short range and is not very good at penetrating buildings and other obstacles. Long-range links must be line of sight. Attempts to boost the power, and therefore the range, are almost universally prohibited, especially in Europe.
Wi-Fi also suffers from some serious security flaws that often leave networks wide open to snoopers.
The security concerns are mostly about configuration - products are shipped with network defaults open to make them easy to set up - but there are concerns about weak encryption. "There are thousands of networks in the Bay Area already, most of them insecure," said Peterson. "Ironically, it's the big corporations that are the most clueless about security. They spend thousands of dollars on their corporate firewalls and $100 on a base station that blows it all wide open."
Peterson thinks the security problems are solvable, but he is skeptical that Wi-Fi will overcome interference, its short range, and the inability to penetrate buildings.
In-Stat's Nogee points out that 3G may be relatively slow and expensive, but it will be everywhere.
Users won't have to be within a few meters of their local Starbucks to get a connection; 3G will be available even be at the beach. Plus, it will be mobile. Subscribers will be able to download their e-mail while hurtling down the autobahn.
3G networks will also be more reliable and should be brain-dead easy to connect to. At the moment, Wi-Fi is still somewhat for the technically inclined.
Although Nogee thinks Wi-Fi will have an impact on 3G, he thinks they will ultimately complement each other.
"Of course, the networking people are going to say you don't need 3G and the phone people say you don't need 802.11," he said. "But they actually could help each other. Users will log into [Wi-Fi] hotspots primarily and then the 2.5 or 3G networks when they are out of range."
Hardware manufacturers will undoubtedly make laptop cards that automatically seek out cellular and Wi-Fi connections, Nogee said. The key factor determining which one they actually connect to, as always, will be cost.
Originally from the U.K., Leander Kahney now lives in San Francisco and is a reporter for Wired News as well as TheFeature.