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The End of Telecom As We Know It?

The End of Telecom As We Know It?

Most rainbows are colorful shining heralds that a storm has passed. "Project Rainbow" leaves us in a fog as to what is to come. So do frequently named participants such as IBM, Intel, AT&T, and Verizon by their silence. At its vaguest, Project Rainbow is a consortium that loosely ties at least the aforementioned companies together. According to a consensus of surrounding industry hearsayers, the purpose is a serious verbal rumination about the plausibility of a nationwide 802.11 network that all participants could profit from. The fact that Project Rainbow exists with such certainty while remaining so unidentifiable is part of its attraction for investigation, reporting, and discussion.

Project Rainbow seems to be a loosely knit rallying point for certain known and unknown tech-sector giants to discuss how to take advantage of the popularity of 802.11 (WLAN) hotspots. Administering 802.11 as a nationwide service, and reaping profits is the goal. Building out additional hotspots, enlisting the cooperation of service providers, and agreeing on profitable billing models are certain to be under consideration by those at the Project Rainbow discussion table.

According to Adam Needles, principal at Alescor Group, "Project Rainbow is a loose industry attempt to address a need that's really not being filled right now." The need is for wireless broadband that truly is broadband. U.S. 3G services have failed to deliver speeds above 56K.

Why 802.11?
WLAN (802.11) offers broadband speeds (up to 11Mbps now, 54Mbps with the coming 802.11g standard), and is highly device compatible. Hardware (like the IBM Thinkpads for example) frequently comes with 802.11 cards. If you solve the roaming and billing issues (assuming a model that includes carrier participation) and put up hotspots where business customers linger, you're open for business.

IBM, Intel and the Carriers
IBM and Intel product sales would soar upon successful implementation of national WLAN service. Chips, devices, and network cards are but a few of the hardware categories that would see a sales boost paralleling service expansion. "The companies already involved see healthy sales for wireless LAN gear; enabling a broader application and infrastructure where you can use this will encourage further growth," says Bill Carney, director of business development, Wireless Networking Business Unit, Texas Instruments.

Some forecasters portend that carriers are in a position to profit from WLAN. "Carriers such as AT&T and Verizon are looking for a less costly way to service customers," says Needles. The premise here is that the free open spectrum would provide the carriers with sufficient savings.

The Dilemma
It's difficult to imagine IBM and Intel needing the carriers. It is even more difficult to see the carriers favoring a competing data communications industry that's also based on the Internet model, and that would allow clear digital voice calls. Though some surmise that IBM is searching for a way to bring the carriers on board, it really doesn't need them. IBM, Intel, et al, can sell hotspot hardware to businesses, use the free spectrum, and connect to their own backhaul.

What's to stop IBM and Intel from circumventing the carriers completely? Is a cooperative gesture easier than removing the mask and moving ahead in direct competition with the telcos? Is this a way to let the fight die quietly? According to Carl Ford, VP of community development, Pulver.com, "Intel and IBM together have a better understanding of all the carriers' troubles than any other systems integrators around today." Will this understanding be used to bring the carriers on board or to leave them behind?

Needles rightly asks these hard questions: "How do we make a viable business model out of this service? Who's paying for it? What is the critical mass and cost of infrastructure to make it happen?"

The obvious reply is that the hardware manufacturers already have a viable business model and the carriers have little hope of finding one. All IBM and Intel have to do is sell the equipment and provide the connection, retaining the option to allow the service to remain free as long as the frequency is free, or to institute an attractive, minimal charge. They would profit from hardware sales so they wouldn't have to lean hard on the service for revenue. At the same time, they'd be gaining control of the market and shutting the carriers out.

Making the Point
Needles continues, "One of the major concerns about these networks was that they just could not get enough subscribers, even in a small area, to make it profitable. I think they need to ask: Who pays for it? Who maintains it? Who are the customers? Is it an individual user? Is it an organizational user? How do you make that worthwhile? Because right now the way I see it, the only people who are going to win are the equipment manufacturers. That's exactly why they are pushing it. It's being pushed more by IBM than Verizon."

This is exactly the point. The population of mobile enterprise users will continue to grow and by the time that market is large enough to support a nationwide network, IBM and Intel will have jockeyed to adopt it. Businesses will pay for it by buying the WLAN hardware. Individual subscribers will pay for it by purchasing the devices and LAN cards, perhaps for a nominal fee.

As Alex Lightman, CEO of Charmed Technologies, logically predicts, "I've been saying for years that the computer industry and the communications industry will converge, but where everybody thinks it's sort of nice and everything will be split 50/50, the computer industry will emerge dominant.

"Ultimately there won't be a charge for per-minute communications. It will either be something that's incorporated in the hardware and the service contract or something that's done in a monthly fee. So Project Rainbow to me is the beginning of the end of telecom as we know it," he says.

It will be interesting to see if and when the telecom industry's household names will begin to show signs of taking an "if you can't beat them, join them" stance, and buy in as much as possible to survive. The telcos would need to have some control over the resulting convergent technologies to stay in the game.

The Internet Is Pulling the Telcos Away from Their Familiar Framework
IPv6 (Internet Protocol version 6, which allows for a virtually limitless source of public IP addresses) will become necessary to support the vast number of devices used for data or voice or both. This will provide the option to bill the IP address owner, which will make for a much easier, much more concrete billing model. Ford comments on IPv6 as a billing solution: "As the Internet takes over our network model, it makes a lot of sense for [our network model] to work the same way that the Internet works. It's possible to own a private address and have plain connectivity from people [for which they are billed, rather than being billed per use], and if you [additionally] buy a roaming agreement [then] you buy a roaming agreement."

John Harrison, cofounder of Ecutel, stated that in about two years, more than 80% of the U.S. workforce will be mobilized. According to Dr. John Rasmus, VP of business and corporate development, GRIC Communications, "You've got an inexorable shift toward remote-centric enterprises."

Businesses want employees in the field, face to face with customers. Teams are getting together remotely and need all the utilities of a stationary office in the mobile environment. Companies see it coming. IBM knows, Intel knows, so like hungry dogs waiting for the meat to fall off the table, perhaps they're waiting for a certain plateau along the way to that 80% workforce mobility before jumping in aggressively. While they're waiting, they have ample time to strategize.

Stodginess Loses the Day
Carriers have several issues to overcome. According to Needles, "One of the things carriers have got to get better at is the access device; they've got to be more agnostic about what that access method is." Single devices that connect to several access protocols are being and will continue to be developed; Red M out of London is a prime example.

U.S. carriers are no more likely to work with each other than they are to work with varying protocols. Ford, of Pulver.com, adds, "The wireless carriers don't show any signs that they like the idea of cooperating. I mean the U.S. is nothing like Europe, where GSM made it so that you have multiple choices and everybody roams together. My own personal experience is that there's a lot of distrust among carriers. It's hard for them to see how IBM and Intel are going to get the incentives right to get carriers to work together."

But why would IBM and Intel even want to try?

Nationwide 802.11 in Some Form
According to Carney, of Texas Instruments, "The chances for [nationwide 802.11] success are really high. It's very much a patchwork network right now."

We currently see Wi-Fi popping up at Starbucks, hotel chains, and in airports, and more business consumer hotspots will become Wi-Fi hotspots. We have seen or will see hotspots on airplanes and trains, and in malls and metropolitan gathering points where people break for lunch.

On the Highways
If the telematics industry sees value in having highways enabled with Wi-Fi for automobile information and navigation utilities, this could become a reality. Cars could also be fitted with signal boosters. "OnStar technology is already doing stuff like that so the question would be roaming between wide area wireless where there are no local hotspots along the road, versus connecting to a wireless LAN infrastructure if you're in a metropolitan environment," says Carney.

Global Marketplace Analyses
Rasmus says, "The tendency in North America among service providers is to look at this [market] within North American confines. They really should be looking at it globally." To their credit and their benefit, European carriers take a global perspective. The business market served is a market that is internationally mobile; they want the same experience everywhere in the world.

Final Thoughts
There are concerns about the high insecurity of the WLAN protocol. However, the service is so popular and has such great potential to fill the wireless broadband gap (and the pockets of hardware manufacturers), that security issues are likely to be addressed along the way, unfortunately as a secondary concern.

There seem to be subtle comparisons between the fall of the Roman empire and the coming and going of entities of mass power. Do the major telcos presume too much security in their lofty position? Are their bureaucracies too slow for mobility, too resistant to change? Is it already too late for them?

More Stories By David Geer

David Geer is a contributing writer to WBT, a journalist, and a computer technician. He graduated from Lake Erie College in 1993 with a BA in psychology and has worked in the computer industry and in the media since 1998.

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Most Recent Comments
Dan 10/25/02 07:08:00 PM EDT

Community microcell trials by a major wireless carrier several years ago showed people want something that works everywhere or they won't pay for it. Even today macrocellular coverage could be better, much less roll out a new tier based on 300 ft radiuses. The enterprise will drive 802.11, and since laptops will have the antenna built in, some local ISPs will try to make money offering service at particularly "hot" spots. But major carriers, with an appreciation for operations costs, don't like microcells and will never widely deploy 802.11 service.

John Celentano 10/24/02 10:18:00 PM EDT

Telecom is never as black and white nor as homogenous as most people try to portray it. True 3G with high data rates on wireless networks won't be available until 2004-2005 and beyond. So it's still ahead of us. But once deployed, 3G will be ubiquitous, with millions of subscribers on voice and data calling plans. And by then, there will be fewer carriers. At the same time, WLAN hotspots today are like payphones - you need to go where they are to use them. Plus, you have to wonder how the WLAN operators will get paid

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