A challenge to 3G: Lucent start-up targets wireless data equipment

Lucent Technologies' New Ventures Group has unveiled a start-up that could throw a monkey wrench into the implementation of third generation wireless standards.

With first-round financing lead by Bessemer Venture Partners and Charles River Ventures and an additional investment from Pequot capital, Flarion Technologies was launched as a fully independent and operational enterprise in February. Lucent has a minority interest in the company through its New Ventures Group.

Flarion develops wireless data transmission equipment based on a Bell Labs-developed orthogonal frequency division multiplexing (OFDM) technology.

Flash-OFDM is designed to deliver data - including packetized voice - over an all-IP wireless network. "The current 2G and 3G networks will handle a threshold of data on a voice-dominated architecture," said Ray Dolan, president and CEO of Flarion. "We're doing an architecture that's designed from the bottom up for data."

Targeting the 3G spectrum but also applicable to PCS spectrum, Flash-OFDM transmits from 384 kb/s to 3 Mb/s.

The technology can be applied to laptops, handsets and personal digital assistants, among other devices, enabling an always-on wireless IP connection that will allow for real-time interactive and multimedia applications.

The company is in discussions to begin prototype testing with carrier partners in the fourth quarter, with plans to have products on the market sometime during the second half of 2001.

A feature of Flash-OFDM technology that makes it particularly suited for data is its high scalability, said Rajiv Laroia, chief technology officer and a founder of Flarion.

Unlike wireless voice, wireless data networks will require frequent adjustments because of high-bandwidth demands, Laroia said. When adding a base station to a 3G network, he said, every other base station must be adjusted to its presence. "Having all this work to add a base station for voice is fine, but it is completely unreasonable for data."

With Flash-OFDM, base stations are autonomous - a new one can be added with minimal adjustments to the overall network. And although it is easier to migrate from 2G to 3G than from 2G to Flash-OFDM, this scalability makes the technology economical, Laroia said.

Despite Flash-OFDM's high bandwidth and easy scalability, analysts say that much more must happen before 3G is defeated.

"It's going to be essential for [wireless data companies such as Flarion] to form alliances with carriers and device manufacturers," said Naqi Jaffery, mobile communications industry analyst for Dataquest.

Though companies have been preparing for 3G for some time, finding partners could be easier for Flarion than one might expect.

Qualcomm owns many of the patents covering CDMA technology, the basis of 3G in the U.S. Manufacturers of handsets and chips, many of which are Qualcomm competitors, will find themselves paying royalties to Qualcomm if they manufacture 3G-compliant products.

Such businesses may shift their focus from 3G to avoid paying royalties to their competitors if presented with a viable alternative.

"There have been a number of break-away groups," said James Andrew, vice president of Renaissance Strategy. "The question is, will they come and support this new Flash-OFDM? They'd love to find an alternative to Qualcomm."

Still, many of these ulterior motives could be lost on those providers that deploy the equipment.

"Carriers don't care," Andrew said. "They just want something they can sell. They want to get the network up as quickly and as cheaply as possible."