Science-fiction staple new entry in high-speed Net

Dan Hesse could have stayed on through an upcoming lucrative spinoff of AT&T's wireless business, despite being passed over for the top spot in the new organization. Instead he chose to become chief executive at TeraBeam Networks, a stealthy start-up that plans to deliver the Internet to metropolitan businesses via laser beams, an unproven technology with plenty of potential but some weather-induced limitations.

By delivering Internet access, corporate data and other services through glass windowpanes via beams of light, companies such as TeraBeam believe they can offer communications services faster and at lower costs than competitors. Unlike competitive technologies such as cable or copper broadband connections, fiber optics, or high-speed "fixed" wireless dishes, lasers do not require costly wireless spectrum licenses, access to rooftop rights-of-way, or trenches under city streets, proponents say.

"There's a tremendous amount of potential for free space lasers, especially when laying fiber is a problem," said Vincent Chan, a professor of electrical engineering, astronautics and computer science at Massachusetts Institute of Technology.

Lasers have promise when compared to competitors such as fixed wireless technologies because of the far greater speeds at which they can transmit voice and data traffic. Lasers can deliver communications at least 10 times faster than most fixed wireless systems and do not require expensive regulatory licenses. Some experts suggest there simply is not enough wireless spectrum to supply similar download speed rates.

"It was a difficult decision to leave," Hesse said. "There were tremendous financial incentives to stay. But when I saw the TeraBeam technology, I've never seen anything that had quite the potential to disrupt the whole industry because it is so much better than anything else out there."

Dozens of communications companies are racing to build urban networks in and around the nation's largest cities to connect businesses to high-capacity, long-distance pipes. Analysts believe these networks will be a fierce battleground among many companies and various technologies, potentially including lasers.

Interest in "free space lasers"--invisible beams of light within a region of the communications spectrum unregulated by the Federal Communications Commission--is mounting as service providers such as TeraBeam reveal their plans and established equipment providers including Lucent Technologies embrace the technology.

The lasers, targeted at small and medium-sized businesses in urban areas, could cut significantly into the market for fixed wireless companies such as Teligent and WinStar Communications, digital subscriber line (DSL) providers such as Covad Communications, and local phone companies and other network operators.

"The pros are very short install times. It doesn't take any time at all to establish a connection," Chris Nicoll, director of infrastructure analysis at market watcher Current Analysis, said.

Laser service providers install receiver equipment near a window in their customers' offices, while originating the signal from a nearby office building, often rented with the sole purpose of housing the service provider's gear. The equipment uses lenses, similar to those found in telescopes, to project the invisible beams of light.

But some industry experts say susceptibility to foul weather leaves lasers far from an ideal solution. Heavy rain, snow, sometimes turbulence in the air and particularly fog can attenuate laser signals and cause outages or slow connection speeds, experts say. If the human eye has difficulty seeing through the weather conditions, such as in thick fog, so will the lasers, experts say.

"I think it's an augmentation technology," MIT's Chan said. "(Lasers are) not perfect; 80 percent of the time you'll do well, and when there's bad weather you'll need to be prepared to have downtime or slow service."

The lasers can penetrate fog at limited distances, but the equipment must be put much nearer to the customer, increasing costs for both the service provider and the customer.

Others foresee only a temporary role for laser-based communications in many metropolitan area networks.

"I can see it being used to test areas for the viability of fiber in a market or as a temporary connection while fiber is being built," Nicoll said. "But I don't see it as a permanent technology.

"The gamble is: Are there enough of those niche markets?" he said.

Still others, including equipment manufacturers that have high hopes for laser gear, believe it will be only one of many technologies utilized in metropolitan area networks.

"We don't see it doing away with fiber, but there are many, many times--bigger than a niche--where fiber is not appropriate or wireless has interference issues and this will be an alternative," said Stuart Waldman, director for Lucent's OpticAir laser product line.

Some experts believe free-space laser technologies will have their greatest success in space where the light travels farther without interference, particularly as a means to connect satellites for long-distance networks.

"That's a real killer technology," Chan said. "In the future I think it will be very competitive with undersea fiber optic networks."

Formed in 1997, Seattle-based TeraBeam has been testing a laser-based network in the Washington city since the beginning of the year. The company expects to launch commercial service in Seattle by the end of the year and expects to start service in most major U.S. markets and some international cities within three years.

Separately, a handful of Lucent customers have been testing the OpticAir gear. The company expects to begin selling the products commercially in early April.

Despite the early nature of the largely untested market, some service providers are beginning to consider using lasers for their high-bandwidth capabilities.

Broadwing, the communications company formed by the merger of Cincinnati Bell and IXC Communications, is eyeing free space laser technologies as a way to break into new local markets.

"This holds the greatest potential for a major disruptive technology shift in communications as I've seen in 20 years in the industry," Broadwing chief executive Rick Ellenberger said. "We're real believers in lasers. Long term, we think the laser is much more exciting (than fixed wireless)."

Broadwing has tested free space laser technology for months and is considering an investment in TeraBeam, according to executives. TeraBeam recently closed a third round of funding but declined to reveal investor names or the amount of money.

The emerging industry already has been careful to avoid the space-age associations with comic book laser guns and eye surgery lasers.

"This you can look right into, even with binoculars, and it doesn't harm the human eye," said TeraBeam vice president of business development Stephen Gartside, noting the U.S. Food and Drug Administration doesn't require any warnings on usage of free space lasers.

The lasers used for communications networks cannot be viewed by the naked human eye because of the frequency at which they operate.

"Those infrared lasers are no different than your TV remote controller," MIT professor Chan said. "I think (radio frequency) has more potential for health issues than lasers."