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News
Issue #2003 - 15 (May 2003)
(Updated May 8, 2003)

OPINIONS

Qualcomm & Boingo CEOs Have Different Visions of Wireless Networking

Source: Business Week - Arlene Weintraub. 

Hot spot Wi-Fi market was really started in 2000 by MobileStar that did not survive unfortunately and sold its assets to T-Mobile. A few additional entrants came into this market and went away soon after. Rolling hotspots did not gather any moss. Then, in December, 2001, Earthlink founder Sky Dayton launched Boingo Wireless, an Internet service provider. Boingo took a different approach. It capitalized on the emerging popularity of Wi-Fi and instead of spending energies and capital in setting up WLAN hot spots on its own, it started tieing together thousands of hot spots that were being set up by a number of organized or poorly-organized business ventures. The objective was and is to create a seamless data network that Boingo's customers can tap into via a single software package. 

When he started Boingo, Dayton was considered to be ahead of the market. But now, with large technology and telecom players such as Intel, IBM and carriers like Verizon Communications jumping on the Wi-Fi bandwagon, Dayton says his vision is coming to fruition. He recently shared his views with BusinessWeek 

We bring a few excerpts from this interview (source acknowledge with thanks) and then summarize this debate with our own advisory comments:

Q: What do you make of the big guns getting into Wi-Fi?
A: It's a big endorsement of what's going on. They recognize that Wi-Fi is a major opportunity as well as a threat. It's a threat to those who don't figure out how to participate and exploit it. It's like the Internet was in its early days. Once companies figured out how to integrate it into their businesses, they did well with it. 

Q: What's your impression of Wi-Fi vs. other wireless technologies, such as general packet radio service (GPRS), which gives users continuous wireless connection to data networks?
A: Each has its strengths and weaknesses. Wi-Fi in hot spots provides speeds at prices that no other technology can touch. The spectrum is free -- and it's a lot of spectrum. But once you get into your car, you need access to a wide-area network (WAN). The problem with WANs is that you're using the equivalent of 25 calls to deliver data service to a single customer. It's expensive, and incredibly slow compared to Wi-Fi. 

Q: On Mar. 18, Boingo announced a partnership with T-Mobile. What will the result be?
A: T-Mobile recognized the need to offer seamless connectivity between GPRS and Wi-Fi. We'll provide customers with software that allows them to move from Wi-Fi hot spots to WAN seamlessly. So when they get into their cars, they'll automatically switch to the higher-cost/lower-performance network, but they'll still get data. With one account, they'll be able to connect everywhere. 

Q: Boingo's network contains 1,300 hot spots. Why didn't you meet your goal of 5,000 hotspots by the end of last year?
A: Overall market conditions are a lot worse than we thought. The venture-capital community has yet to really wake up. In Wi-Fi, it's still 1994. We haven't gotten that flood of capital. But we're moving toward the tipping point. 

Q: What would it take to Wi-Fi the nation?
A: In the U.S. there are about 1.8 million potential hot spots -- cafes, restaurants, gas stations, airports. There's a lot of untapped real estate out there. 

Q: What's your overall feeling about Wi-Fi's acceptance so far?
A: I'm happy with the progress. That said, it's still very early. We're still in the first inning of this game. I'm not even sure the game has begun yet -- we're all just now getting onto the field. 

Now the other Side -  Irwin Jacobs of Qualcomm
Qualcomm CEO Irwin Jacobs is a big believer in the future of wireless data. But he's not so sure the average Web surfer will pay Boingo -- or any other company -- a fee to access Wi-Fi in hot spots. He believes consumers will flock toward wireless technologies that are based on the same spectrum that runs cell phones, which would allow them to log on virtually anywhere. 

One such example is EV-DO, which is based on the CDMA technology that Qualcomm developed. Verizon (VZ ), which uses CDMA for its cell-phone service, has tested EV-DO, and is planning a commercial rollout for later this year. Jacobs -- along with Qualcomm's senior vice-president for marketing, Jeff Belk -- stressed the importance of separating Wi-Fi hype from reality in a recent conversation with BusinessWeek's Weintraub. Edited excerpts from their talk follow: 

Q: Does Wi-Fi have a future?
Jacobs: We believe Wi-Fi will explode in homes, large businesses, and college campuses. The fact that Wi-Fi is getting everyone focused on the use of wireless for data is a very positive trend. The real question is: Is there a business [behind] providing Wi-Fi in hot spots? 

Q: You sound skeptical.
Jacobs: The problem I have is seeing a long-term financial model in hot spots. Wide-area coverage, such as EV-DO, will provide high data rates over larger areas than Wi-Fi can. If you're paying a monthly rate to your cellular provider for the capability to get data anywhere, would you pay more to get Wi-Fi in hot spots? No. Plus, EV-DO is secure and requires less power than Wi-Fi does. 

Q: What are some of the misunderstandings about Wi-Fi?
Belk: One thing that's never discussed is the speed that's lost. In a hot-spot environment, data goes to the access point at either 11 or 54 megabits per second. But the access point is connected to the Web via a DSL or T1 line, which offers speeds of only about 1.5 megabits per second. 

Q: What matters more to consumers, speed or ubiquity of wireless Web service?
Belk: Wi-Fi fans say people will be willing to walk to a hot spot. We think that's wrong. Why do people love their BlackBerries when they're only getting e-mail at a couple of kilobits per second? Ubiquity. 

Q: Does Qualcomm use Wi-Fi?
Belk: Yes. But we had to build out 200 access points to get halfway decent coverage on our campus, at a cost of $300,000. It's complicated, and it isn't cheap. We don't believe the unbridled hype. It's a hype cycle like we had around dot-coms. It's not focused on technical or economic reality. 

Q: Will it be one or the other, Wi-FI or WAN?
Jacobs: They can be quite complementary in some settings. And I think they will cohabitate. Will the hot-spot model survive though? Let's wait and see. 

Source: BusinessWeek 

MobileInfo Comments and Advisory: We understand the motivations of Boingo and Qualcomm CEOs to downplay other guy's beat. As always, the truth is somewhere in between the two positions, even though they are not polarised. Wi-Fi is on a roll and gathering a lot of moss this time but it will take at least a couple of years before there are enough hotspots that we can say that there is semi-ubiquitous coverage. There are billing and support issues that are now being addressed. On the other hand, 3G (whether Qualcomm's EV-DO variety or UTMS) is stalled. There are other differences in speed and cost of adapters that are significant giving Wi-Fi an advantage where it is available. If Jacobs doubts the viability of hotspot business model, it is an artificial barrier created by vested interests and not as a result of the shortcoming of technology and business economics. Carriers can easily solve the business model issue, if they wholeheartedly (not lukewarmly) supported Wi-Fi.

Instead of debating the merits of one or the other and hoping that there should be only one network technology, the industry and enterprise users should try to figure out how to utilize both technologies and let them co-exist in a complimentary fashion. Let 3G WWANs give you the roaming at moderate speed when you are truly mobile and let Wi-Fi give you the speed when you are more at ease to do some useful work.

 Note: This news release may contain forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and section 21E of Securities Exchange act of 1934 in USA. Similar provisions exist in other countries. There is no assurance that the stipulated plans of vendors will be implemented. MobileInfo does not warrant the authenticity of the information. Readers should take appropriate caution in developing plans utilizing these products, services and technology architectures.  All trademarks used in this summary are the property of their respective owners.


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