Network With No Strings Attached

Four weeks without a glitch, and Mike Efstratis was sold on wireless.

He was impressed from the start: After watching the simple installation take all of five minutes, the general manager of Tanamera Commercial Development figured he had found a low-cost, high-speed Internet service for the office and the company’s commercial and residential building projects.

In fact, Tanamera may sever the industrial-strength, high-capacity line that runs to its headquarters and the hard-wired phone lines in its construction trailers. Efstratis is arranging to ditch his digital subscriber line at home and replace it with an antenna.

“This is a great system,” he said of the citywide wireless network built by SkyPilot Network Inc. and run by Hot Spot Broadband. “I’m getting 4.5 megs consistently.”

At that super-fast speed -- 4.5 megabits per second -- websites load three times as fast as the typical DSL pace. Before, Efstratis wasn’t even getting close to DSL speed of 1.5 mbps from the so-called T-1 line installed by SBC Communications Inc., the dominant local phone company in Nevada and California.

Wide-area wireless networks are on the brink of deployment nationwide. Although fiber-optic cable is considered the ultimate high-speed connection -- Verizon Communications Inc. is investing $2.5 billion to wire 3 million homes in two years -- wireless broadband technology is advancing at such a torrid pace that it could match hard-wired cable and DSL in popularity.

Cellphone pioneer Craig McCaw has put two companies together to develop citywide wireless clouds, starting in Jacksonville, Fla., and St. Cloud, Minn. Flarion Technologies Inc. is delivering broadband speed to a few thousand cellphone customers with a system similar to SkyPilot’s. A consortium of companies is installing free service in Hermosa Beach. Ottawa Wireless Inc. recently completed a system covering Grand Haven, Mich., offering mobile wireless Internet connections.

Hot Spot, based in Reno, plans to add SkyPilot gear to its Lake Tahoe service area by the end of this week. SkyPilot, based in Belmont, Calif., is in talks with other companies to install its equipment in various U.S. and overseas regions.

SkyPilot’s wireless system appears to be a major step forward for technology that gets around the chokehold that cable and local phone companies have on access to homes and small businesses. It has won kudos from the Federal Communications Commission and was named one of the 10 hottest technologies at June’s Supercomm 2004 telecommunications conference.

“In the last few years, a whole new generation of wireless broadband equipment has been developed,” said Chelsea Fallon, a special assistant at the FCC’s broadband division.

SkyPilot, which has raised $29.4 million in venture capital since its start four years ago, built its system on conventional wireless fidelity, or Wi-Fi, technology that originally was aimed at serving a small indoor market (think bookstore or coffee shop). But SkyPilot boosted the power and added a mesh network -- a series of antennas that talk with one another as well as with the main gateway that connects the entire system to the nation’s phone network and the Internet.

That makes it something much different from the average Wi-Fi hot spot. SkyPilot Chief Executive Mark B. Johnson said it’s robust enough to support a national network that could complement -- or compete head-on with -- phone and cable companies for voice and data service.

“This could serve as a complete replacement for that last mile of wire into the home,” Johnson said, acknowledging that financing such a prospect may be years away.

The system is cheaper than wired or other wireless networks. One 18-inch-high multi-directional gateway, which can serve thousands of computers, has a list price of $2,499. An extender that expands the network costs $499. The foot-high connector antenna on or in a customer’s house runs $349.

A typical T-1 line can cost up to $700 to install at just one business, although the price can be waived with a long-term contract. Monthly T-1 line service fees are $400 to $800, compared with the DSL-like prices that providers probably will charge with SkyPilot equipment.

SkyPilot may have a leg up on most competitors, many of which are still in the research or testing phase.

“Their advantage is that their solution is here today,” said Christopher Rice, director of research technology at AT&T; Labs in Menlo Park, Calif. AT&T; Corp. has been working on a combination of wireless and power-line technologies to get around the so-called last mile into customers’ homes and offices.

Indeed, some major cable and phone companies are quietly looking into SkyPilot’s network. They’re keen on its touted ability to be upgraded easily, quickly and cheaply to newer and faster Wi-Fi technology standards as they are developed.

In Australia, Paul D. Wallace’s PolyFone.com, a wireless Internet service provider, is installing SkyPilot’s system along the affluent Gold Coast resort area south of Brisbane.

“It’s awesome,” Wallace said. “It’s such a game shifter that we’re currently in talks with different carriers to build out three metropolitan areas: Melbourne, Brisbane and Adelaide.”

SkyPilot’s Johnson knows that until he can show his system working flawlessly and economically, many in the industry will remain dubious about basing a broad network on a Wi-Fi technology protocol known as 802.11, after specifications adopted by the standard-setting Institute of Electrical and Electronics Engineers.

Jack Wimmer, MCI Inc.’s vice president of network architecture, said, “802.11 is good technology when applied to applications for which it was designed, like wireless local area networks and hot spots,” areas covering a few hundred feet.

But Wi-Fi wasn’t designed to cover long distances, Wimmer said. What’s more, it operates in unlicensed radio spectrum where interference can be rampant from many types of devices, like microwave ovens, that share the same radio frequencies. AT&T;’s Rice questioned whether a Wi-Fi-based wireless system could handle millions of Internet connections and telephone calls.

Dave Burstein, editor of DSL Prime, an industry newsletter on digital subscriber line service, pointed out that cash-rich cable and phone companies could respond easily to any price war that wireless broadband might start.

“Cable or DSL may cost you $35 a month, but it only costs the providers $8,” Burstein said. “It’s so cheap to upgrade existing DSL and cable that I’m not sure wireless will have a price advantage.”

Matt Davis, an analyst at research firm Yankee Group in Boston, said wireless would have to cause a major disruption in the industry -- either with low prices or far superior mobile technology -- to win over a lot of DSL and cable modem customers.

At the very least, wireless provides a third pipe into the home -- promising to give consumers a choice of providers that they aren’t getting with cable or local phone service.

Johnson believes SkyPilot’s system solves critics’ concerns, and he has two words for them: It works.

“It’s the next big thing,” said Dewayne Hendricks, who runs Dandin Group, a wireless broadband company in Fremont, Calif., and advises the FCC on wireless technology. “Whatever problems there are will be solved by this company or others. This technology is going to happen one way or another.”

Mark Allen, an executive at Vector Resources Inc., a Torrance communications systems provider, said SkyPilot could be a key to a nationwide system. “This technology is pretty easy,” he said. “It’s dynamic and self-configuring. Once you start putting these antennas up, they’re going to find each other very quickly.”

Allen also likes SkyPilot’s strategy of selling its equipment to wireless Internet service providers like Hot Spot Broadband and PolyFone.com. That will help the company work out any bugs before selling to a major regional or national carrier, he said.

Service is rolling out this month in the Reno-Tahoe area through Hot Spot, an offshoot of electrical contractor Garry Gomes’ J.A.G. Wire Electric Inc. The ease of installation and operation, the reliability and the low cost sold him on the system. He expects to be offering phone service within two months.

“It’s exciting to me that I can go in and put a small antenna on a file cabinet, connect it to a computer on your desk and have everything running at top speed in five minutes,” said Gomes, who has more than 200 home and business subscribers so far.

Gomes had been using a more conventional and more costly wireless system requiring that a line of sight be maintained between the main antenna and others in the network. Such a point-to-multipoint system can work in a flat area with few trees or buildings, but not so well in typical urban settings with hills, tall structures and other obstructions.

Since SkyPilot’s mesh network can use its antennas to reroute signals, it can get around obstructions. And Wi-Fi technology can send signals over Lake Tahoe, where radio waves on the point-to-multipoint system break up, Gomes said.

The gear is so easy to install, Johnson said, that the system could be deployed throughout a city as big as Los Angeles in a matter of months -- once city permits were obtained.

“Ultimately, we try to solve the customer’s problem,” Johnson said. “And the real problem is economics: How can you do something economically?”

By relying mostly on technology standards that any manufacturer can meet, SkyPilot has been able to keep the initial outlay for equipment low. Whereas Verizon is spending $2.5 billion to reach 3 million homes with fiber-optic lines in two years, Johnson figures SkyPilot could reach the same homes in a year for less than $50 million.

“It’s not about the best technology,” he said. “It’s about what works and what’s available now. I’m not saying ours will be dominant, but wireless will be the future.”