Before Wi-Fi Can Go Mainstream

Early 2004 has been the season of Wi-Fi hope and hype. At January's Consumer Electronics Show in Las Vegas, the buzz was everywhere as gadget makers and technology companies trotted out TVs, stereos, cameras, speakers, and boomboxes designed to take advantage of wireless fidelity's short-range-radio functionality.
Written by Alex Salkever, Contributor

Early 2004 has been the season of Wi-Fi hope and hype. At January's Consumer Electronics Show in Las Vegas, the buzz was everywhere as gadget makers and technology companies trotted out TVs, stereos, cameras, speakers, and boomboxes designed to take advantage of wireless fidelity's short-range-radio functionality. Also known as Wi-Fi, this nascent technology promises transmission of data, including songs and movies, at sizzling speeds. Cell-phone and telecom companies have recently announced big deals to share -- and thus tie together -- Wi-Fi hotspot networks across the country. And more corporations are deciding it's time to cut the cord and turn on office Wi-Fi networks.

So why, despite all that, does Wi-Fi feel like a technology that's here but hasn't quite arrived? Could be because, except for rapid growth in the number Wi-Fi access points that individuals can tap into, the revolution has been stuck in techno-limbo, with progress coming mainly in fits and starts. While Wi-Fi is available in more and more places around the country, many customers at Starbucks or Borders may not be aware of the service, despite in-store promotions.

What's more, a hotel chain and McDonald's may have different authentication mechanisms for their hotspots. Thus, Wi-Fi aficionados might have to recreate their user names, install additional software, tweak their network-configuration settings, or adjust their firewall software as they move one hotspot to another -- hardly a recipe for attracting the average Web surfer.

PLUS-MINUS EQUATION. In short, Wi-Fi is now in that no man's land through which every important technology must pass on its way to becoming the Next Big Thing. It has escaped the confines of geekdom, but it's only starting to approach the tipping point that will transform it into a mass-market phenomenon.

The signs of this are everywhere. Corporations drawn by the speed and lower cost of Wi-Fi are finding that while the technology is getting easier to manage, security is still a huge obstacle. Without good protection, every company laptop could provide a backdoor into the corporate network.

Consumers are confronting the same plus-minus equation. It's now easier to install Wi-Fi access points that allow multiple computers in a home to use a broadband connection. But the new generation of Wi-Fi devices that are supposed to make it possible to stream video stored on a PC in the den to the plasma TV in the living room remain more bleeding edge than leading edge. Installation can be a hassle, and sifting through thousands of songs on your PC via a remote control in another room is painful.

Though Wi-Fi is headed for technological stardom, in short, it won't get there until major progress is made on a number of initiatives now under way.

BEYOND GARBAGE BANDS. That Wi-Fi is likely to become such a mass market was presaged by the banner year it had in 2003, as more users sought to further exploit the unlicensed spectrums of the airwaves. Unlike the segments of the electromagnetic spectrum that are reserved for cell-phone companies, the U.S. military, and broadcast TV, Wi-Fi's domain are the portions of the airwaves where, at least so far, the FCC lets anyone do almost anything they please.

Engineers once called these garbage bands, since interference from microwave ovens and baby monitors would snarl communications signals. But technology developed over the last 20 years has turned garbage into gold by allowing fast transmission of data via these bands with less interference. In theory, the latest generation of Wi-Fi gear can move data at up to 54 megabits per second. That's 50 times faster than typical broadband speeds, though hardly anyone ever sees that yet because the wireline Internet connections that feed into a Wi-Fi distribution node rarely approach that velocity.

Such promise pushed up sales of Wi-Fi networking equipment by 40%, to $2.5 billion, in 2003, according to tech consultancy Synergy Research in Scottsdale, Ariz. -- about two-thirds of it from sales of equipment to consumers. Sales of wireless access points for homes nearly tripled last year, to 22.7 million units, according to market research firm In-Stat/MDR.

ONE-QUARTER CONNECT. In part, that's because Wi-Fi has become nearly a subconscious purchase for buyers of laptops. Over 2003, about half the laptops sold were Wi-Fi-enabled, and by yearend 2004, virtually all will be, according to Craig Mathias, founder of wireless consultancy Farpoint Group. Helping that rapid adoption no doubt is Intel's $300 million marketing campaign for its Centrino laptop chipset, now used in notebooks from the likes of Dell, Hewlett-Packard, and Toshiba.

At the same time, competition among makers of Wi-Fi equipment dropped the price of stand-alone access points and Wi-Fi adapters for desktop computers and older laptops to less than $100 and $50, respectively. In-Stat analyst Gemma Paulo estimates that one-quarter of all homes that receive broadband Internet service already have Wi-Fi as well. "It's still mainly broadband users who might feel comfortable handling networking stuff," says Paulo.

Wi-Fi thus remains a small slice of the overall global technology market. Yet its sizzling growth provides an incentive to eliminate obstacles that otherwise might hold it in check. Perhaps chief among those is a lack of comprehensive roaming agreements that would let any customer who buys Wi-Fi service from a phone company, for instance, use the technology anyplace in the country. It was the cell-phone industry's ability to provide such coverage that eventually fostered the phenomenon of a cell phone in every pocket.

SEAMS EVERWHERE. So far, several complications have Wi-Fi providers struggling to solve the roaming issue. While only a handful of cell-phone companies divvy up the U.S. market, dozens of wireless Internet service providers now compete, ranging from big companies such as T-Mobile (wholly owned by Deutsche Telecom) to well-funded startups such as iPass to small regional players. Many hotels have struck deals with Wi-Fi specialists such as Wayport, while others use local companies. Convention centers, likewise, deliver a hodge-podge of Wi-Fi coverage.

This severely fractured market has made seamless roaming all but impossible. The proliferation of players combined with the complexity of tracking and servicing customers from one provider to the next have led to both quality-control issues and too many problems with logons and billing. Even if everything worked perfectly, the U.S. has only 20,000 to 25,000 commercial hotspots right now. Considering that each hotspot has a range of about 200 feet, tops, that number of connecting points doesn't come close to covering all the locations where consumers may want to use Wi-Fi.

Worse still, the largest Wi-Fi hotspot operator, T-Mobile, has yet to allow its competitors' customers to roam its networks. That will change later this year, when T-Mobile kicks off a deal for reciprocal roaming privileges with AT&T Wireless' hotspot network.

"HYPE LEADS EXECUTION." However, none of this will fill the biggest block of downtime for most business travelers -- the hours spent in the air. Boeing will launch its Connexion in-flight broadband service this year with flagship customer Lufthansa. But U.S. airlines have thus far passed on Connexion, leaving U.S. fliers unplugged. "The domestics got hit hardest by September 11, and the international carriers have been in a stronger position to pay for this," says Connexion spokesman Terrance Scott.

The upshot? At present, the Wi-Fi experience is hardly seamless and not terribly easy to master compared with, say, e-mail. "In the public hotspot space today, hype leads execution," says Wesley Dittmer, senior director for Wi-Fi at Sprint PCS, who oversees an ongoing buildout of 1,300 hotspots and roaming agreements with several wireless ISPs, including Airpath Wireless, Wayport, and Cometa Networks. "There's just not enough footprint in the U.S. for business travelers to start their day in New York and make their way to San Francisco, staying connected via Wi-Fi. And you can't just sign on through a browser like you do with Yahoo!"

Meantime, only 10% or so of big companies have installed Wi-Fi networks so far, according to tech consultancy MetaGroup in Stamford, Conn. Corporate Wi-Fi outlays lag behind consumer purchases because of security concerns but also because the relatively stagnant economy and slow growth in tech spending have made Wi-Fi a lower priority for most companies than replacing PCs or upgrading their internal communications equipment, for example.

STILL WARY. This could change soon, however. Better security is built into a new Wi-Fi standard called 802.1x, which offers enhanced encryption and authentication. And more and more chief information officers are making Wi-Fi a goal. A recent Goldman Sachs survey of CIOs put Wi-Fi among the top three priorities for tech purchases. "WiFi is now a budgeted item for the first time, and we think [corporate] growth rates will mirror those on the consumer side," says Alan Cohen, a vice-president at wireless switch company Airespace in San Jose, Calif.

Still, the corporate Wi-Fi market needs to overcome at least one other obstacle -- ease of management. While Wi-Fi equipment makers have made their products easier to use, CIOs are still wary of taxing already overworked IT staffs. Often, Wi-Fi means adding lots of new security responsibilities, since the lack of physical barriers to intruders requires extra scrutiny of network traffic.

At the same time, predictions that 2004 will be the year the wireless home finally gains traction seem to be overstated. The verdict of experts after the Consumer Electronics Show was that most of the Wi-Fi-enabled products displayed there aren't quite ready for prime time, in part because no single device exists for managing a household that includes Wi-Fi-enabled TVs, stereos, and DVD players.

"The consumer-electronics industry historically hasn't been real good at standards and interoperability," says Kevin C. Kahn, director of Intel's communications laboratory. "Look at the piles of remote controls people have lying around."

NEW YEAR'S EVE PLAYLIST. Companies such as Cisco subsidiary Linksys are starting to pressure long-time consumer-electronics leaders such as Sony in this area. Linksys has introduced several audio products that are designed to link up with standard PCs attached to Wi-Fi routers.

Yet the consensus seems to be that these devices need to be further refined -- and cost less. A 15-inch flat-panel display that can receive Wi-Fi signals costs more than $1,000, at least double the price of a standard LCD of the same size. "They're still costly and not easy to use," says Tim Bajarin, founder of Campbell (Calif) tech strategy firm Creative Strategies. "They're aimed at early adopters, not ready for mainstream consumers."

Device makers say their products are getting much better: "We've already seen quite a bit of improvement," says Tushar Kothari, Linksys vice-president and general manager. Last New Year's Eve, Kothari used a Wi-Fi stereo product from Linksys to connect a playlist of songs stored on his computer to speakers placed all over his house -- and didn't have to touch a stereo or CD the entire evening. "The quality-of-life improvement we all will experience is exciting," says Kothari.

No doubt that's true. But for the average consumer, all this remains a year or two -- or maybe five -- in the future. Between now and then, makers of Wi-Fi must help their technology through the transition from big idea to big-time product.

Business Weekly originally published this article on 18 February 2004.

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