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Why WiMax?

A new technology standard on the way will change the economics of Internet access–and make Wi-Fi look feeble.
November 1, 2004

It’s hard to buy a laptop computer today that doesn’t come with a Wi-Fi chip: a built-in radio that lets users surf the Web wirelessly from the boardroom, the bedroom, or the coffee bar. People love Wi-Fi because a single base station – a box with a wired connection to the Internet, such as a DSL, cable, or T1 line – can broadcast to multiple users across distances as great as 100 meters indoors and 400 meters outdoors. But there’s a new technology standard on the way that will make Wi-Fi look feeble. It’s called WiMax, and it provides wireless broadband Internet connections at speeds similar to Wi-Fi’s – but over distances of up to 50 kilometers from a central tower.

“Metropolitan area” wireless networking at broadband speeds isn’t new, but the specialized equipment that receives the broadband signals has typically been too expensive for everyone but large businesses. Now that U.S. computing and communications firms are gradually reaching consensus on the details of the WiMax standard, however, those prices could come down significantly. Industry agreement on details such as how to encrypt WiMax signals, which frequencies to use, and how to provide multiple users with access to those frequencies will finally allow companies like Intel to manufacture mass quantities of WiMax-enabled chips for use in broadband wireless equipment. And that’s expected to eventually bring WiMax receivers into the $50 to $100 price range of today’s DSL and cable modems, meaning that millions of users could eventually drop their current Internet service providers – often local phone or cable companies – and simply access the Internet over rooftop antennas at the other end of town.

WiMax’s first appearance, however, will take place in more public venues. Equipment meeting the standard will allow a new wave of small and medium-sized businesses to go wireless, abandoning the expensive T1 lines they currently rent from local or regional phone companies. New Wi-Fi base stations designed to connect to the Internet via WiMax could also create mobile-computing hot spots in places without phone lines – think the Great Lawn in Central Park. And WiMax networks could extend broadband Internet access to poor regions that currently have none.

WiMax – an acronym for Worldwide Interoperability for Microwave Access – is little more than a long list of technical specifications intended to ensure that wireless equipment from different vendors can interoperate at high speeds. Also known as 802.16, the specifications have been under development since the 1990s as an alternative to technologies such as Ethernet and Wi-Fi. A single WiMax transmitter will transmit voice, video, and data signals across distances of up to 50 kilometers (assuming an unobstructed line of sight) at rates as high as 70 megabits per second – enough to support about 60 businesses at T1 speeds, or hundreds of homes at DSL speeds.

It was Intel’s announcement of a major push into WiMax technology in January 2004 that helped the standard emerge into the spotlight. The company’s Centrino initiative had already put Wi-Fi chips into millions of laptops. “After we did that, we began looking at whether you can cover full cities with Wi-Fi,” explains Scott Richardson, manager of Intel’s broadband wireless group. While it would be relatively simple to blanket an entire city with Wi-Fi hot spots, the company decided, such a patchwork would be difficult to administer and would operate over too narrow a frequency range to deliver sufficient amounts of data for future needs. “We came to the conclusion that Wi-Fi needed to evolve into more of a ‘carrier’ technology, deployed by a service provider, and needed to exploit a lot more spectrum options,” says Richardson. WiMax, which operates at greater distances and over a greater range of frequencies, turned out to be ideal.

The company began designing communications processors to exploit these frequencies – from roughly two to 11 gigahertz, a range used mainly by Wi-Fi, microwave ovens, and certain types of radar – and had delivered the first sample chips to manufacturers by September. Meanwhile, it began promoting an industry association called the WiMax Forum to certify equipment from vendors as WiMax compliant. And through Intel Capital, the company’s venture wing, it has begun to make strategic investments in a few companies that plan to demonstrate how WiMax can be put to profitable use.

Seattle-based Speakeasy is one of those companies – and a prime example of the economics driving WiMax’s rollout. Founded in 1994 as an Internet café, Speakeasy has evolved into the leading provider of extrafast DSL connections to hard-core online gamers and technical professionals who work at home. But because DSL works over phone lines, it has an inherent limitation: about 30 percent of residences in the cities Speakeasy serves are too far away from phone network central offices to get a usable signal. “That’s a lot of people to turn away,” says Speakeasy CEO Bruce Chatterley. “That’s why we started to look for alternatives, and that’s why WiMax is so strategic to our business.” Speakeasy will begin technical trials of WiMax equipment using Intel’s chips by the end of this year and hopes to offer broadband wireless connections to business and residential customers by the middle of 2005.

But while the emergence of WiMax will give consumers, businesses, and people in hard-to-reach areas a powerful new way to connect to the Internet, it won’t happen overnight. For one thing, it could take manufacturers some time to reach the economies of scale that would enable consumer-priced WiMax equipment. Then there’s the cost of building a network of transmitters. “People tend to think that you can put one WiMax tower on a hillside and beam around the entire city, and that’s certainly not the case,” says Intel’s Richardson. “When you fill up a cell, you use up the capacity” – meaning that providers will still have to add towers as demand grows, just as they do in traditional cell-phone networks.

But TowerStream, a Waltham, MA, company that plans to add WiMax to its existing broadband wireless services, thinks it has that problem licked: it’s already tied up what chief operating officer Jeff Thompson calls “beachfront property” atop many of the tallest buildings in Boston, New York City, Chicago, and other cities, and it will simply install the new WiMax-certified gear alongside its existing transmitters. “When WiMax comes out,” Thompson says, “our speed of deployment will be very quick. We’ll have a wireless backbone in the sky.” Which sounds great – as long as it really does cost less to use than our earthbound skein of wires, fibers, and cables.

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