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Doing More With Wireless

It was this new, faster-acting NVG that Rajiv Laroia encountered with his idea for what would become Flarion. The mathematician’s studies in communications had led him to a radical concept for handling wireless data-and in October 1997, he started the Digital Communications Research Department to pursue it. Laroia’s efforts went beyond e-mail and music applications, then coming into vogue, to include more sophisticated services such as videoconferencing and interactive gaming that he believed mobile people would soon want in wireless form. Planned improvements to conventional wireless systems-the so-called third-generation technology still under development-could conceivably accommodate such applications (see “Internet Everywhere,” TR September/October 2000). But traditional systems had originated to handle voice calls, which have different technical requirements from digital data transmissions. Voice systems can tolerate typical losses of up to 1 percent of a given conversation with no noticeable problems, largely because of the redundancy of speech. Data transmission is a lot more sensitive: The same small losses-even losses a hundred times smaller-can ruin a deal or end a game. And besides, Laroia reasoned, configuring voice-optimized systems to carry high data volumes was an expensive proposition affordable for businesses but not for the mainstream users he wanted to serve.

The way around this problem was to start from scratch with a system designed for data. (Adding voice to this would be relatively simple, since voice could be treated as just another form of data.) The key lay in improving on a well-known technology popular in wireless and digital TV and audio called “orthogonal frequency division multiplexing,” which tries to get around the “multipath” interference that happens when signals bounce off trees, buildings and the like. Lucent’s big innovation was to add the “flash,” a term that refers to the ability to hop rapidly between frequencies. Essentially, the new system deploys multiple high-speed wireless signals virtually simultaneously over several frequencies. This spread-spectrum technique both optimizes bandwidth and minimizes interference.

Initially, Laroia’s department consisted of himself and one colleague. But by mid-1998, he had hired several additional members-and things began to move. Within a year, the group was far enough along for Laroia to envision a commercial system consisting of a base station transmitter paired with a unified modem-chip set that could be integrated into cell phones, personal digital assistants and other wireless devices. He spoke with business groups about his concept, but they were squarely focused on third-generation technology and did not have the extra resources to develop such a radical alternative. Laroia felt it was far too important to let go, since if left to others it could ultimately usurp a core part of Lucent’s wireless business. Still, he believed the idea had a significantly greater chance of success if it could be pursued in a more entrepreneurial environment.

That led him to New Ventures, where his proposal fell into the hands of J.C. Huang and Lars Johnnson. Huang, with a doctorate in applied physics, an MBA and consulting experience, heads up one of three core groups inside NVG. He had helped launch WatchMark, a firm specializing in network-management software. The German-born Johnnson was an entrepreneur-in-residence who had worked as a chemical engineer before joining NVG with a master’s degree in technology management.

The pair liked the idea immediately and spent a couple months helping Laroia hone the concept into a workable business plan. Then it was time to meet the venture capitalists. Laroia had never been much of a pitch artist, but with Johnnson handling the business end and the mathematician touting the technology, together they wowed venture capitalists on both coasts. Backed by $12.5 million from Lucent and three leading VC outfits-Charles River Ventures, Bessemer Venture Partners and Pequot Capital-Flarion was launched this February. Johnnson signed on as director of business development, and Laroia became chief technology officer, taking his entire department with him. By summer, they had hired former NextWave and Bell Atlantic Mobile executive Ray Dolan as CEO and set up shop in a roomy 2,500-square-meter space in a modern office park in Bedminster, N.J. Even as workmen were converting an old mailroom into a systems laboratory, Flarion was up to 40 employees, and is heading toward 100 by year’s end.

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