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Welcome
to Wi-Fi
A new way of wireless Net access is catching on at bars,
offices and schools
by
Robert Burke
Virginia Business
July 2003
Come
to Williamsburg’s Casa Maya with your laptop and
you can munch nachos for a couple of hours and still
get some work done. The restaurant has wireless Web
access that is free and fast. Owner Samuel Gamez added
the perk early this year hoping it would fill some tables.
“Nobody else has it, and there’s a lot of
hotels and a lot of people traveling through here,”
he says. He got the idea to install the system late
last year on his own business trip to Texas. “I
brought my laptop with me but I could never use it,”
he says. “There weren’t any connections.”
That’s
changing quickly. Wi-Fi, short for wireless fidelity,
is in the midst of a boom, thanks largely to people
like Gamez. Simple and relatively cheap to set up, Wi-Fi
is sprouting quickly as thousands of similar “hotspots”
pop up around the country. One estimate puts the total
at 15,000 and the number is growing quickly. It’s
hard to say how many are in Virginia — maybe 100
or so, often in hotels and airports frequented by business
travelers or in trendy restaurants and coffee shops.
Richmond’s O’Brienstein’s restaurant,
for example, tells diners its Wi-Fi link will let them
“browse the Internet or download corporate files
during a luncheon.”
Why
is Wi-Fi so popular? Because it works. It uses a radio
signal sent from a small transmitter to deliver high-speed
access over unlicensed spectrum, the kind used by cordless
phones. Any desktop or laptop computer can be made Wi-Fi-friendly
by adding wireless local area network (WLAN) hardware
and software. Virtually all new machines come already
equipped.
Anyone
with a hard-wired broadband connection can create Wi-Fi
access for as little as $200 or so. Lots of hotspots
offer access for free; some charge a small fee or a
per-use or monthly basis. Granted, Wi-Fi only covers
a distance of about 150 feet. But that beats waiting
for the emergence of other wireless technologies like
Bluetooth or broadband 3G networks.
All
the grassroots enthusiasm, naturally, has the big companies
moving in. Santa Clara, Calif.-based chipmaker Intel
announced last year it would invest $150 million in
startups developing Wi-Fi technology and has in March
unveiled new wireless-specific chips for notebook computers.
Last December Intel joined with AT&T and IBM to
fund a new company, Cometa Networks, which says it will
build 20,000 Wi-Fi hotspots in 50 U.S. cities by the
end of next year. And telephone giant Verizon is setting
up more than 1,000 hotspots in New York City at its
public pay phones and will offer the service to its
current business telecom customers. There’s a lot
of smaller companies, too, popping up, selling hotspot
access or looking for new ways to apply the technology.
What’s
not exactly clear, though, is who will make money in
Wi-Fi and how they’ll do it. A few Virginia companies
are taking a shot and one looks particularly strong.
Dulles-based Core Communications in February announced
a deal with Irving, Texas-based Omni Hotels to make
Wi-Fi available in guest rooms of its 30 hotels in North
America. Other hotels generally offer Wi-Fi only in
a lobby or conference room. “It’s a competitive
time for hotels, it’s a tough market,” says
Core CEO David Giannini. “They see this as a key
differentiator, and it’s working.”
Core’s
previous business was providing broadband access for
meeting spaces and it has worked with Omni for several
years. Giannini says Wi-Fi offers an alternative infrastructure
that’s a lot cheaper. “A property that would
take $500,000, we can build it at $50,000 to $100,000,”
he says. “That’s the real paradigm shift.
Now, if you’re a typical hotel or office building
it’s not going to cost you hundreds of thousands
or millions to wire a building. It’s just a tremendous
difference.”
A
Charlottesville-based network provider sees potential
in the cost-savings as well. Blue Ridge InternetWorks
installs and maintains hardwire networks but has added
Wi-Fi to its offerings. “Just about every installation
we see has [Wi-Fi] nowadays,” says co-founder Jeff
Cornejo. Though the demand is rising not every company
welcomes it. A typical client: a young company moving
into new office space and trying to get up and running
fast and cheap. Plus, young entrepreneurs are more willing
to try the new technology. “It’s the corporate
bureaucracy where Wi-Fi gets stuck a lot these days
because of security,” Cornejo says. “The IT
guys say, ‘No way.’” But using virtual
private networks (VPN) offers a reasonable measure of
security, he says.
A
tiny telecom firm in Southwestern Virginia is using
Wi-Fi technology to overcome the lack of broadband access
in mountainous areas. MTC Wireless in Wise County sells
the service to a handful of businesses and residences.
MTC has six transmitters on towers around the region,
says owner Mike Davis. “We can do eight to 10 miles
depending on the terrain,” he says. “You’ve
got to have a clear line of sight and in southwest Virginia
that is a challenge.”
Davis’
company is an example of just how uncertain Wi-Fi’s
future is. Even he doesn’t think the technology
he’s using now will last. He’s holding out
for a new Wi-Fi technology designed for outdoor applications
and offering a stronger, more reliable signal. “I
think wireless ultimately is going to be a solution,
but it’s just not there yet,” he says. “But
we want to be there when it becomes a solution.”
Waynesboro-based nTelos isn’t sure Wi-Fi ever will
be the answer for rural areas. This month it’s
rolling out a CDMA-based system from two towers in Albemarle
County that will offer broadband access over 500 square
miles. “This is our rural broadband solution,”
says Noel Munson, a product planner for nTelos’
Internet service. “We can take the service to areas
with lower population density and still have a business
model that makes sense.” Wi-Fi might work in high-density
urban areas but “it’s impractical to wire
up the country 300 feet at a time,” Munson says.
NTelos
is planning several more towers that would extend its
wireless broadband service to southern Greene County
and most of Rockingham County including Harrisonburg.
Though Munson dismisses Wi-Fi’s technology he says
the company is thinking of adding it in some areas for
current dial-up or DSL subscribers. Just like Verizon,
nTelos would use Wi-Fi to hold onto current customers.
“They’d be sticky users [and] much less likely
to churn out” and sign on with other providers.
That
might be what Wi-Fi becomes for many — something
the bigger providers will adapt to keep market share.
Munson calls Verizon’s installation of Wi-Fi hotspots
in New York “a shot across the bow, saying, ‘We
either need to control this ... and make a buck off
it or it’s going to be taken from us.’”
Peter Jarich, a Wi-Fi analyst for Sterling-based Current
Analysis research firm says the uncertainty of the marketplace
and the dominance of bigger telecoms and equipment makers
will squeeze out small companies. “There’s
an expectation that it will be difficult for these smaller
folks to survive on their own,” he says.
And
while the current gold rush surrounding Wi-Fi is good
for the technology, says Core’s Giannini, it’s
bad for companies who believe there’s enough gold
for everyone. “I think a lot of service providers
will fail” because there’s not enough revenue
to divide up, he says. “Wi-Fi is simply an infrastructure
alternative. That’s all it is. There’s no
magic.” Its biggest impact could be in efficiency
and productivity applications. United Parcel Service,
for example, has spent $120 million for wireless networks
at its distribution centers to track packages. The company
says it’s seeing a 35 percent gain in productivity.
Maybe
that’s where Wi-Fi will dazzle. “The more
interesting stuff is the small innovative players that
are going to come up with the productivity tools”
for back-office uses, Giannini says. “And that’s
why you want the gold rush, so people will take risks
they wouldn’t otherwise take.” One way or
another it sounds like Wi-Fi will make a connection.
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