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Perspective: An answer to Wi-Fi's discontents

On his monthly hunt to chronicle technology's next big thing, CNET News.com's Michael Kanellos examines the prospects of a Texas start-up for rewriting the Wi-Fi landscape.

By knocking down physical barriers to the acquisition of knowledge, communications technology has had as great an impact on society as any breakthrough in the past two centuries.

When it comes to business, however, the communications industry remains locked in a medieval time warp where success is dependent on the strategic mastery of key pieces of real estate acquired through conquest (WorldCom), marriages of convenience (SBC/Pacific Bell), inheritance (AT&T), or royal grant (China Unicom).

Transat Technologies
Location: Southlake, Texas
Employees: 36
Web site:
www.transat-tech.com

All this has contributed to the slow growth of wireless Internet infrastructure where no single company is in any shape to build out the network. Coverage remains spotty, prices are relatively expensive and the situation will likely get worse before it gets better. Roughly 450 carriers currently offer service, but only 100 have advanced third-generation or 3G licenses. Meanwhile, another 150 carriers--most located in Latin America--are still in the midst of trying to erect their networks.

Now a 36-person start-up in Southlake, Texas, has developed a technology that it says can help break the logjam. Transat Technologies sells a software system that essentially lets carriers mesh advanced cellular networks with independent, local Wi-Fi hot spots into a cohesive data network. The software is designed to let cellular carriers offer nationwide notebook PC roaming. That means a traveling sales representative could drive across 15 network boundaries in a day and not lose a signal.

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If it works out the way Transat says, then cash-strapped cellular carriers also wouldn't have to fire up the bulldozers and plant new equipment to get into the wireless data service business.

"They invest in a technology and go and deploy it but they never have the money to do the customer acquisition piece," said Transat's CEO John Baker. "Nobody in their right mind is going to tear all this (the cellular infrastructure) out and change it."

Other trends in wireless could work against Transat, but the approach is nonetheless winning adherents. Intel has invested in the company, which was founded by alumni from Nokia, Bell Labs and Pacific Bell Wireless. Companies such as Switzerland's Togewa Holding have begun experimenting with services based around the software, while Hewlett-Packard offers Transat's software to its customers.

The software is designed to let cellular carriers offer nationwide notebook PC roaming.

Approximately 3,000 to 4,000 hot spots exist in the United States, but Baker says 40,000 to 50,000 will be needed to provide nationwide coverage. All of these hot spots have largely been created and operate independently. Transat's software--which performs authentication, billing and services--ties them to the larger reach of the cellular carriers. The software consists of both a server element, which can be owned by any of the parties on that side of the transaction, and a downloadable client. The wireless LAN thus maps into the GSM world and it looks like a piece of the cellular network. Once properly connected, cellular carriers could tout their nationwide notebook coverage to existing or new phone customers, while local hot spots would carry most of the traffic with cellular connections filling in the gaps.

Ideally, everyone in the food chain would benefit. Carriers would finally be able to offer higher-value services without having to take out new leases or invest in hardware. Local hot spot owners and wireless ISPs would pocket a portion of the revenue for service conducted across their own hot spots.

The existence of a potential payoff might encourage the growth of hot spots, which are now open to the public mostly through neglect. Unlike when the cellular networks were first created, property owners are now more reluctant to issue leases, but would rather retain a percentage of revenue. Liken it to the old pay phone model where you take cash out of the box every month.

Clearinghouses, meanwhile, will emerge to coordinate billing and payment. It sounds easy, but the global reach and the number of nodes make this a logistical nightmare. Notebook manufacturers, meanwhile, will gain the opportunity to sell laptops equipped with both Wi-Fi and cellular chips.

Few doubt that Wi-Fi service will become immensely popular, especially after consumers have their "Starbuck's moment" when they can log on remotely without digging around for a phone cord.

Individuals would also get more dependable service. The first round of wireless network carriers, such as MobileStar, left many holding a $150 modem that is valuable now only to collectors of 1998-2000 nostalgia.

So what's the catch?
Few doubt that Wi-Fi service will become immensely popular, especially after consumers have their "Starbuck's moment" when they can log on remotely without digging around for a phone cord.

Instead, Transat could find itself faced with major competition. Both Nokia and Cisco Systems have vested interests in dominating the wireless infrastructure market. By incorporating Wi-Fi into cellular stations, these two heavyweights could blunt demand for Transat's software.

A glut of capacity could also hurt Transat. Most companies still have more wireless bandwidth than they need, and many will begin to offer it as a privilege to guests, walling them off through firewalls. "If everyone lets me use their spare capacity, that is going to eat into the hot spot for revenue model," said Richard Redelfs, CEO of chip designer Atheros Communications.

That argument does not faze Baker, who allows that Transat faces obstacles--not the least being the prospect of increased competition. But he also points out that demand for wireless Internet is surging and people will pay for the convenience--if the price and the quality are up to snuff.

Now it's just a race against the clock.