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Wireless Wonders

The rise of WiMAX and Wireless Mesh – and other alarm:clock news from the land of private venture funding.

WiFi (wireless fidelity) has been a tremendous success – arguably one of the biggest technology trends in recent years. Yet it is also severely limited: its range is poor and it has developed a reputation among consumers for being laborious to set up, with signals sometimes not covering a household, as well as compromised security.

Enter two new technologies: WiMAX (“worldwide interoperability for microwave access”) and wireless mesh networking. They could augment WiFi – and make the wireless Internet pervasive. Both the WiMAX and wireless mesh equipment markets enjoyed solid inaugural years in 2004; but the best is yet to come, according to a report by Infonetics Research. It looks like both emerging technologies may be taking off, as WiMAX clients come to market in 2007-08 and more metropolitan areas launch wireless mesh projects.

WiMAX is a technical standard that’s both faster and has a longer range than WiFi. Its coverage, for instance, is measured in square miles, while WiFi is measured in square feet. Yet WiMAX does not necessarily conflict with WiFi, but is designed to interoperate with it and may also complement it. Currently, WiMAX products are aimed at network service providers and businesses, rather than consumers. However, eventually the technology could enable millions of people to access the Internet more easily and cheaply than WiFi.

So far, only about $16.4 million in WiMAX equipment has been sold, primarily to businesses for intra-office and campus uses. Interoperability testing just began in July 2005 by an official nonprofit standards organization, the WiMAX Forum, as well as by vendors. Infonetics estimates that around $124.5 million in WiMAX equipment will be sold by the end of this year.

These “convergence” technologies promise many strategic opportunities, as they bring down the cost of connectivity. WiMAX can be a last-mile solution for WiFi, for instance, and potentially used in third-generation (3G) cell-phone networks. It may also become a viable DSL/cable broadband replacement technology for consumers, and even offer nomadic or portable wireless Internet access for both consumers and enterprises. Finally, it could carry voice-over-Internet-protocol (VoIP) services.

Meanwhile, wireless mesh networking, in which each node is connected to several others in a robust, redundant LAN, is already being used by some municipalities for WiFi hot zones. According to the Infonetics report, it’s also ramping up quickly. The entire city of Philadelphia, for example, is looking to install a wireless mesh network.

Mesh equipment sales were only about $8.8 million in 2004, but are projected to rise to more than $110 million this year. Wireless mesh does face significant competition, though, in the cable and telephone companies, which see it as a threat to their revenues. As reported in recent headlines, these first- and second-generation providers have already lobbied successfully for legislation barring wireless mesh zones in some metro areas.

But investors aren’t daunted, and have recently bankrolled a number of WiMAX chip makers. PicoChip of Bath, England raised $20.5 million in June 2005; Paris-based Sequans, $9 million in February 2004; and Carlsbad, CA-based Cygnus, $20 million in July 2004. In April 2005, Intel and Fujitsu both unveiled radio chips for use in WiMAX equipment, and announced a large number of customers.

In the field of wireless mesh, La Jolla, CA-based Kiyon Inc. raised $10 million; Los Gatos, CA-based Firetide Networks, $15.6 million; and Sunnyvale, CA-based Tropos Networks, $13.5 million.

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