Wireless LANs and 3G Mobile Get Ready to Dance

At the 2002 CTIA show, VoiceStream becomes the latest mobile provider to embrace wireless LANs.

Wireless service providers arent giving up on next-generation, high-speed data, but theyre starting to acknowledge that there are more ways than one to tap that market.

Thats one message emerging from the 2002 CTIA show, held this week in Orlando. One example: VoiceStream CEO John Stanton admitted that wireless LANs — also known as 802.11 or WiFi — are both friend and foe.

"WiFi is a threat because were vulnerable," Stanton said during his March 18 keynote. Two key weaknesses: Mobile wireless doesnt have enough spectrum to offer wideband to a wide market, and it cant afford to price its high-speed service as low as wireless LANs.

Thats why VoiceStream bought the assets of MobileStar, a wireless LAN provider that went bankrupt trying to put its network in as many public places as possible. "MobileStar fits in as an integral part of our network," Stanton said.

Heres how: VoiceStream will stick with its plan to deploy GPRS and EDGE, two next-gen mobile wireless technologies that promise data rates of up to 168 Kbps and 384 Kbps, respectively. Think of GPRS and EDGE as wide-area networks, serving users and devices moving at speeds ranging from walking to freeways.

WiFi, meanwhile, provides a far fatter pipe: 11 Mbps today and up to 52 Mbps in a year or two. But a WiFi signal peters out after a few hundred feet, so at best its a complement to WANs such as GPRS and EDGE in areas such as airports, hotels and campuses. Chances are that users will need the most bandwidth when theyre sitting down with, say, a laptop, so for a wireless carrier, it makes sense to run that high-bandwidth traffic over wireless LANs so that the mobile network is free to handle voice calls and narrowband data.

"Its coverage where they want it and speed where they need it," Stanton said.

For the past year, some pundits have warned that WiFi would siphon off revenue from next-gen mobile wireless — especially the high-margin business users willing to pay a premium for speed. But Stanton, along with NTT DoCoMo and equipment vendors such as Pascal Debon, president of Nortel Networks wireless business, see WiFi as complementary — or at least a threat great enough to warrant a détente.

The question is how to work together. At CTIA, Stanton shared the stage with Sky Dayton, founder and CEO of Boingo Wireless, which acts as the national brand for hundreds of small, regional wireless LAN operators. (Some analogies include Cellular One and Daytons first company, EarthLink.) At least on the CTIA stage, Dayton seemed more interested in working with Stanton than the other way around, so VoiceStream apparently is confident that MobileStars assets will give it enough of a wireless LAN network that it doesnt need to partner with an aggregator such as Boingo or iPass.

Buying a wireless LAN provider, even at bankruptcy prices, is a risky move, because it means that the mobile operator now has the overhead of operating another network. Another option is to act like Boingo and strike deals with individual wireless LAN operators, but any savings from cutting out the middleman might be outweighed by the additional costs of setting up and maintaining those deals.

One thing is clear: Theres a decent business case for mobile wireless and wireless LANs working together. Said Dayton, "Sooner or later, its Your chocolate fell in my peanut butter."