MOBILE DATA'S NEW HOT SPOT

Despite its uncertain future in the context of emerging 3G networks, the wireless data technology standard 802.11, commonly called Wi-Fi, may have finally found an unlikely champion: Starbucks.

Though VoiceStream Wireless already has launched its nationwide GPRS network, its purchase of defunct 802.11b player MobileStar's assets has elevated it from a mere mobile service operator to the coffee giant's wireless ISP.

VoiceStream's Starbucks initiative is just one example of a high-traffic establishment where wireless LAN is creating havens — or hot spots — that benefit consumers who want to access high-speed data wirelessly, though not necessarily via mobile means. Now users can not only peruse data via their wireless-enabled devices when they are mobile, but can also surf the Internet wirelessly when they are spending time in these hot spots.

Indeed, VoiceStream's interest in MobileStar has industry observers betting that evolving Wi-Fi could become a critical piece of carriers' wireless Internet plans.

“With MobileStar, VoiceStream gets closer to becoming a full transport provider,” said Gene Chua, a manager for Deloitte Consulting. “Now it can say that it has hot spot coverage. The carrier can provide consumers with mobile capability and offer high-speed data access when they are traveling.”

802.11b might not seem a likely fit for operators' wireless data agendas because it is not a mobile technology. Still, overlap between the different wireless technology worlds — mobile or landline — is occurring to a small degree. In addition to VoiceStream's MobileStar move, Sierra Wireless has developed a dual-mode CDMA 1X/802.11b PC Card that allows a carrier to provide services over both networks with the same client hardware.

Such initiatives could be an early indication that carriers are realizing they can offer more than one mobile data solution so their customers have options for accessing the wireless Internet. Some argue that the mobile world and the home networking realm will remain separate because the mobile phone will receive relatively high-speed data through 2.5 or 3G services.

“The question is, does the mobile environment converge with the home networking environment?” said Kurt Scherf, vice president of research for Parks Associates. “This is a question that nobody has adequately addressed.”

Wi-Fi technology is currently capable of 11 Mb/s bandwidth, but it is evolving to deliver speeds of 54 Mb/s, compared with 3G technology's peak speed of 144 kb/s or maximum speed of 384 kb/s (some industry experts don't expect them to reach more than 28 to 64 kb/s). Because of this, it is possible that carriers might consider Wi-Fi LANs as an additional tool for capitalizing on wireless data.

“This whole public hot-spot notion has mobile guys scratching their heads,” Chua said. “It will be interesting when the industry comes up with ideas about how and where operators are going to generate 3G revenues and data revenues.”

For instance, because carriers are starting to think that 3G revenues may not come quickly, they might consider extending campus-wide environments or hot spots and offering that as a stand-alone or complementary product. “But when they really start thinking about it, they start to consider whether or not there will be enough spectrum,” Chua added.

The actual speed 3G technologies will generate remains questionable, with many industry experts uncertain if a maximum speed of 384 kb/s is realistic. While some consumers will need that rate, others simply may want to check e-mail wirelessly when passing through various hot spots, Chua said. “If consumers have access to a hot spot that will provide more speed, that might be a good option,” he said.

Texas Instruments believes the evolution of 802.11 opens up the opportunity for devices that have multiple wireless protocols, including wireless LAN, WAN technology, etc. (see "The ABGs of 802.11").

“The goal is to make it so the user is not able to distinguish when he or she is connected to a local hot spot as opposed to a 3G network,” said Bill Carney, director of business development for TI. “At the semiconductor level, we need to create a multiple-technology chipset.”

Carney said that short-range wireless technology, otherwise known as Bluetooth, may operate in the same 2.4 GHz band as 802.11b Wi-Fi, but that's where the similarities end.

“802.11b and Bluetooth often get confused and lumped together,” Carney said. “Our position is that Bluetooth originally was intended to be a short-distance personal area network technology that replaced unwanted cables.”

Considering wireless LAN's progress in the hot spot arena and the work that technology developers like TI are doing to incorporate various networking technologies into their products, industry experts argue that 3G might not be necessary after all. That's because plenty of consumers will opt to use their laptops in public locations such as airports, hotels — or Starbucks.

Parks Associates' Scherf agreed with that assessment because it will be a long time before the majority of consumers will be able to surf the Internet while walking down the street. The idea is that they would prefer to access their Internet content this way rather than rely on a 2-inch mobile phone screen.

TI's Carney believes service providers know they need to explore incorporating wireless LAN technology into their wireless Internet plans. Asked Carney: “Could 802.11 be the precursor to getting people used to 3G cell phones?”