A consortium of tech titans plans to cash in on the growing interest in wireless Internet access. Intel ( INTC), IBM ( IBM), AT&T ( T) and investment firms Apax Partners and 3i announced a joint venture to create a nationwide network of so-called wireless fidelity, or Wi-Fi, locations that will let consumers access the Net wirelessly in cafes, airport lounges and retail spots. Wi-Fi lets users of computers and handhelds tap into the Net at broadband-like speeds using a wireless connection. By installing relatively low-cost transmitters, computer users equipped with receivers can access local area networks typically within a 300-foot range. Financial details of the joint venture, called Cometa Networks, were unavailable. A UBS Warburg research note said industry sources have indicated that approximately $10 million was invested to install about 20,000 access points in the nation's top 50 markets. The venture plans to resell such services to a combination of Internet service providers and participating wireless carriers. The first of these locations will be opened in 2003. Wi-Fi technology, which is also known as 802.11, has been popular in home and office settings, as the cost of installing the necessary transmitters has come down. In the past year and a half, companies including Boingo Wireless and Deutsche Telekom-owned wireless carrier T-Mobile have begun deploying high-powered transmitters in various cafes, hotels and airport lounges. T-Mobile inked a deal to install transmitters in more than a thousand Starbucks locations last year, and recently signed a deal with Continental Airlines ( CAL), American Airlines and United Airlines ( UAL) to do the same in various domestic airport lounges. The mounting interest in Wi-Fi generally has been viewed as a destructive force to major wireless carriers' plans to deploy high-speed wireless data services accessible by phones. "Mobile operators that have invested in 3G license and networks should become nervous at the idea of other companies' deploying alternative wireless local area networks," wrote former In-Stat MDR analyst Donald Longueuil in a July report. He said such services could potentially "seal" anticipated 3G revenues from carriers.
Carriers worldwide have dumped billions of dollars on costly network upgrades, with hopes of luring subscribers who would use their handsets to download email, play games, and send and receive photos. But consumers have thus far been unwilling to pay more for such services, which critics have deemed as slow and clunky. Most recently, France Telecom ( FTE)-owned Orange SA said it plans to slash capital expenditure by 25% and delay a U.K. 3G network launch until next year. WiFi is "where the market is moving in wireless data, particularly for high-end biz travelers," said InStat-MDR analyst Ken Hyers. "I would imagine that other carriers would be looking to work with
Cometa Networks ."