more on Krugman on "Digital Robber Barons",nyt 6 Dec (a compliment, from NYT)

[Dave Farber <dave () farber net>]

------ Forwarded Message
From: Courtnay Guimarães Jr <courtnay () yavox com>
Organization: Yavox Latin America
Reply-To: courtnay () yavox com
Date: Fri, 06 Dec 2002 19:48:11 -0300
To: dave () farber net, "'ip'" <ip () v2 listbox com>
Subject: **SPAM** RES: <[IP]> more on Krugman on "Digital Robber Barons",nyt 6
Dec (a compliment, from NYT)

High-Speed Wireless Internet Network Is Planned
By JOHN MARKOFF


AN FRANCISCO, Dec. 5 — The wireless technology known as WiFi, which
allows users of personal and hand-held computers to connect to the
Internet at high speed without cables, got a significant stamp of
approval today when AT&T, I.B.M. and Intel announced a new company to
create a nationwide network.

The unruly technology, which has largely been a playground for hackers,
hobbyists and high-technology start-ups, is already sprouting
mushroomlike in coffee shops, bookstores, airports, hotels, homes,
businesses and even a few parks.

The new company, Cometa Networks, has set ambitious goals for itself: to
deploy more than 20,000 wireless access points by the end of 2004,
placing an cable-less high-speed Internet connection within either a
five-minute walk in urban areas or a five-minute drive in suburban
communities.

 
Executives from the technology companies and the two investment firms,
Apax Partners and 3i, that joined to create the network said they would
begin offering their service through cellular and wired telephone
companies, D.S.L. and cable Internet service providers and other
Internet retailers some time in 2003.

The service is intended to let subscribers pop open their laptops and
have a seamless high-speed wireless extension of their personal or
corporate Internet services — initially in the 50 largest metropolitan
areas — without having to give credit card numbers or enter additional
information, as is generally the case now. Connections would generally
be at least the speed of a typical home broadband connection.

Cometa executives said that they expected the national availability of
the wireless network would combine with Intel's planned inclusion of
wireless Internet capability in all its mobile microprocessors next year
to spur a fundamental shift in the way Americans will use the Internet.

"This is that big," said Dr. Lawrence B. Brilliant, chief executive of
Cometa Networks. "It's that exciting; it's that much of a distortion in
the computing field. It's a change in the way people use technology."

Until now WiFi has been viewed by many technology analysts as an upstart
from-the-bottom technology that has the potential of upsetting other
capital-intensive technology deployments, like the expensive
next-generation data-oriented cellular networks known as 2.5G and 3G
that are being established by companies like AT&T Wireless, Cingular,
Nextel, T-Mobile, Sprint and Verizon.

But Cometa executives said that because they had chosen a wholesale
business strategy, in which they will not sell Internet service directly
to consumers or business, it is more likely that the two technologies
would complement each other. In addition, users of the wireless access
points would generally be stationary while connecting to the Internet.

"WiFi has very high bandwidth and short range, while 2.5 and 3G cellular
are lower bandwidth services designed to support data services on the
fly," said Theodore Schell, chairman of Cometa Networks and a general
partner of Apax Partners. "They will have different cost equations, and
there is a place for both of these technologies."

Industry analysts have said they believe that growing WiFi use could
steal valuable subscribers from cellular companies that are hoping
consumers will begin using their cellphones for data services like movie
times, restaurant reviews and shopping deals wherever they are
traveling.

The Cometa executives said they were not certain how the new network
would be used but were convinced that the nation's 100 million Internet
users would begin to use their portable computers in new ways once
connections are widely and easily available as they travel.

The executives and industry analysts acknowledged that creating a new
nationwide wireless network was something of an act of faith given the
general economic and technological gloom in the telecommunications
industry. It is widely believed that the industry had overbuilt and had
overinvested in the Internet boom of the last decade.

The new company would not disclose its planned prices or the equity
stakes of the five partners. Wireless industry analysts, however, have
said WiFi hot spots can cost as much as $4,000 apiece to install in
public places. If the average cost is half that, the installation of
20,000 access points would cost $40 million.

"One of the problems is that giant companies creating wireless ventures
often have not had tremendous success," said Alan Reiter, publisher of
Wireless Internet and Mobile Computing, an industry newsletter based in
Chevy Chase, Md. He pointed to ambitious and expensive undertakings like
a cellular data initiative known as C.P.D.P. in the 1980's and early
1990's and the wireless data service known as Metricom, which went
bankrupt last year with $800 million of debts.

Other analysts questioned whether Cometa Networks would be able to make
headway in an already crowded WiFi marketplace that has had both early
failures and a host of smaller, aggressive start-ups.

"It's obvious that what is happening right now is a wireless land grab,"
said Andrew Seybold, editor of Outlook 4Mobility, a publishing and
consulting firm based in Los Gatos, Calif. "The question is, How many
places can they lock up and how quickly?"

Cometa executives insisted, however, that they were in a different
position from their predecessors. The companies have a technological
advantage in that they will not have to create customer equipment,
relying on Intel's equipping the nation's portable computers with
wireless abilities.

They said Cometa was also in a particularly strong position with respect
to its competitors because it could use AT&T's existing data network, to
connect the planned 20,000 wireless access points.

Leaving the relationship with individual customers to Internet service
providers "is smart from a business point of view," said Richard Miller,
a wireless data industry consultant at Breo Ventures in Palo Alto,
Calif. At the same time, he noted, the venture will not succeed unless
big corporate customers demand the service from Internet service
providers. 

"The demand will have to come from the enterprise to the carriers," he
said. 

To gain the confidence of corporate customers the new network will have
to meet stringent data security standards, and Dr. Brilliant said that
Cometa planned to take advantage of industry standards like virtual
private networks to add security to the WiFi standard.

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