EV-DO MAKES ITS U.S. DEBUT IN UNLIKELY DULUTH LOCATION

When Monet Mobile Networks chose Duluth, Minn., as the site of its first commercial launch of CDMA 1X EV-DO in the U.S. last week, the northern town became an unlikely proving ground for the new wireless broadband technology. In the months to come, domestic and international carriers alike will have reason to keep a close eye on the city known more for its frigid temperatures than as a test bed for new technologies.

Monet's success or failure in this market will answer some of the questions surrounding the business case for EV-DO, which has been met with some hesitation from wireless carriers because it is a data-only technology. EV-DV, which will carry both voice and data, won't be ready for commercial deployment until at least 2005.

“Sometimes it's a good thing, sometimes not such a good thing,” said Monet CEO Greg Tronsrue of bringing a new technology to market for the first time. “You have to blaze a path for others to follow.” Only Seoul, South Korea, saw EV-DO service sooner.

Monet's service uses 18 base stations to blanket 70% of Duluth with wireless broadband. The company will offer data speeds of 300 kb/s to 700 kb/s for two prices: $39.95 a month for residential users (which includes e-mail and Web hosting) and $59.95 a month for businesses (which includes a broader package of amenities such as fax service).

EV-DO is a sort of hybrid — a data-only technology built on voice networks, according to Matt Hoffman, equipment analyst for Soundview Financial Group. And as such, its role will be marginal.

“It's not as fast as some of the Wi-Fi technologies, it doesn't have as many manufacturers making equipment and therefore it's more expensive on the terminal side than some Wi-Fi equipment,” he said. “So we doubt it gets much traction as a replacement for wireless LANs.”

Deepak Mehotra, CEO of Gtran Wireless (which makes the customer premises equipment for Monet's network) defended EV-DO by pointing out that it allows wide-area mobility that Wi-Fi doesn't, and it doesn't share Wi-Fi's high backhaul costs and security shortcomings.

More importantly, Hoffman said, Sprint PCS and Verizon Wireless (the two major domestic carriers with CDMA networks, making them EV-DO's biggest potential U.S. customers) may have a hard time justifying an investment in EV-DO. “Because it's data-only, most operators are not going to take voice capacity offline in urban areas, where they're near capacity, to deploy a data-only technology for which the return is not yet assured.”

Verizon is reportedly trialing EV-DO in two cities, but the carrier may look to Duluth for the first data on the technology's chances in America.

“The eyes of the world will be very much on you,” said Perry LaForge, executive director of the CDMA Development Group, to the Monet team during the launch ceremony.

Duluth was chosen because the 1.9 GHz spectrum necessary for Monet's service was relatively inexpensive in this town of around 80,000 people, and the market wasn't crowded with competitors, Monet President and Chief Operating Officer Richard Kingston said.

“Our model is very conservative,” Kingston said. He added that Monet only needs 6% penetration over 10 years to be successful and expects to break even in the first 12 months.

According to some Duluth residents, Kingston was wise to set his adoption expectations low. “[Monet's service] doesn't sound like something that's going to catch fire real quick,” said a manager at a Duluth RadioShack who requested anonymity. “We're not that high-tech up here yet. Most people aren't that mobile.”