Wireless Broadband (WIFI or 802.11 for short)

WiFi stands for Wireless Fidelity and 802.11 (sorry, this is not the new cool zip code in Beverly Hills 90210) is the set of standards that the Institute of Electrical and Electronics Engineers (IEEE) put together for wireless LANs (local area networks). In a recent Businessweek article, it was estimated that there are already two million users in the US, with a growth curve that can hit 45 million by 2004.

In simple terms, WiFi can give you anytime, anywhere (as long as there is a hot spot, where there is a WiFi Internet base station) Internet mail and Web access. Imagine in a WiFi world, you are a salesman with a configured Palm Pilot; you can go to your customer and put the order in as he speaks. Press the "go" button and the order flies to the online processing system via the WiFi broadband. However, the best you can do today is use DFNN’s Mobile Messenger that uses SMS technology to check inventory and move purchase orders in the mobile environment. (Sorry! Shameless plug!)

Why is it so cool? It is fast and cheap to execute. It has a range of about 100 meters with speeds of 11 megabits per second. That speed is for the 802.11b series; the g-series can go 54 megs a second. To get started, all you need is a $175 base station and $50 per antennae. For a household with three teenagers, you are talking about wiring five PCs in the household for less than $500 (P25,000), significantly less than punching holes in the wall, cabling a whole house with fiber cable and retouching that irreplaceable wallpaper. And there are no cables to talk about; I personally do not like to be tethered to my laptop. (Tethered to other things, hmmm…)

Think of the possibilities: a school with 1,000 PCs would probably need 20 base stations for a total of about $60,000 or a per unit of P3,000. Data ports currently cost P5,000 a port, without cables and LAN cards.

What is the downside? Speed is, of course, a function of the link between the base station and the broadband link you have to the Web. The 11 megs is limited by the 256k, 512k or 1 meg that you buy from the DSL provider or cable modem service. Since this is a fairly infant technology, the security protocols are not in place yet. Cisco and the other modem suppliers are working round the clock to address it.

Why are the US telcos worried? The telcos have already spent a lot of money to implement GSM (Global System for Mobile) technology, which is great for voice because 70 percent of the world is running on the GSM network. In the last 18 months, most, if not all, wireless divisions of telcos have talked up the data side of the wireless game as the source of revenue growth because their voice business is dropping.

The wireless telcos have to decide on their technology migration path. Do they go the way of the GPRS (General Packet Radio Service) model or what is called the 2.5 generation, or do they go straight to a CDMA model (third generation or 3G), both of which mean more expensive equipment? In the US, you need to add the cost of the licenses in the 3G spectrum which, in the latest auction, run into the hundreds of millions of dollars, if not billions. WiFi is using free spectrum.

That is just the cost of starting up, what about running it? How do you charge?

Some companies like VoiceStream Wireless and AT&T Wireless are already setting up separate WiFi divisions.

Here is a wish-list scenario: What if VOIP (Voice over Internet Protocol) develops into a mature technology and irons out its latency issues and the whole of Makati is on WIFI, what happens to the $0.40 a minute that the telcos are currently charging? Hmmm….

My Two Cents: Methinks the telcos need to keep their voice business separate and let a new data division think clearly about that business.

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Dickson Co is CFO (C is for Cheap) for both Dfnn and HatchAsia.com. For comments and suggestions, e-mail [email protected].