Wi-Fi in the Walls

By Gerry Blackwell

December 10, 2002

In-building mobile wireless solution provider Innerwireless sees 802.11 as an important part of the overall mix.

Among all the other tragic impacts of September 11, it was a loud wake-up call for commercial building owners on issues of safety and security. That fact has made it a lot easier for vendors like Richardson, TX-based InnerWireless to market their in-building mobile wireless solutions.

"To be honest," says company president and CEO Ed Cantwell, "in-building wireless has always been a phenomenon of, 'Why do you need to use a cellular phone inside anyway?' After 9-11, every big property owner now knows the answer. It was a terrible thing, but for this sector, it gave visibility to the problem."

InnerWireless developed and markets a system that uses co-axial cable and/or fiber and passive distribution devices to carry wireless signals to multi-frequency wireless antennas located on each floor or in each building sector. The system supports wireless services working in frequencies from 400 MHz to 2.5 GHz.

While the primary objective is to extend in-building coverage of commercial PCS and cellular services, the InnerWireless technology also supports a variety of other applications, including in-building paging, low-frequency telemetric applications -- and 802.11.

In fact, using the InnerWireless infrastructure to build a Wi-Fi network -- either for hotspots in public areas of a building or LANs in tenant areas -- generates important efficiencies. In one shopping mall implementation, the premise owner would have had to install 33 Wi-Fi access points without the InnerWireless system to provide facility-wide coverage, but only four access points were needed with coverage in place, says Annette Gieseman, the Innerwireless's vice president of marketing.

Cantwell cautions that the InnerWireless system only addresses issues of RF coverage, though, not capacity. Four access points might provide universal coverage with no dead spots, but may well not provide enough capacity to support anticipated traffic.

Still, the benefits for 802.11 network architects seem clear enough. While it has often been suggested that the cost of access points is not a major part of the economics of building Wi-Fi networks, as Cantwell notes, the InnerWireless solution also eliminates associated costs of routers, switches, cabling, power, etc.

Much less clear is how -- or even if -- Wi-Fi will be supported in buildings that implement the InnerWireless solution. Cantwell admits the 802.11 picture is still muddled.

Although InnerWireless and in-building wireless in general have been flying under the radar, they appear poised to break out. InnerWireless implemented its first facility -- the concourse area of the high-density Rockefeller Center in New York City -- almost a year ago but only announced it recently.

The company is currently working on five other installations, ranging from shopping malls to Class A commercial buildings to casinos. None have been announced officially yet. Cantwell says InnerWireless is on track to start lighting up five to ten new facilities per quarter in 2003.

His preferred business model is to own and manage the infrastructure and relationships with carriers, doling out a share of carrier revenues, based on usage, to the premise owner. However, it will never adopt a CLEC-like <DEFINE: CLEC> build-it-and-they-will come strategy, Cantwell says. InnerWireless needs at least one carrier involved from the get-go to make a project viable.

"We will commit and finance and own and operate [a network] based on a single carrier where we're assured a minimum pay-back, knowing that the second and third carrier will make the pay-back even better," he says. The company is very selective. "We're not putting this in the Masonic Hall in Lubbock, TX," Cantwell quips.

In the case of the Rockefeller Center, AT&T Wireless was the charter wireless carrier involved, but by the end of 2002, three more service providers will be using the system. The same infrastructure will also be used to provide Wi-Fi hotspot service.

Cantwell claims the company has relationships with all the major mobile carriers. "AT&T might be the first in some premises, T-Mobile in others, Sprint in others," he says. "And in some cases a number will come in together." There are examples of all these scenarios among the five implementations underway now, he adds.

The InnerWireless roll-out is still limited by capital. While the company did raise an impressive $25 million, that will only go so far, and it's not a good market in which to try and raise more. "At this point, it's not a game of scale," Cantwell says. "It's a game of demonstrating sound return on investment for every premise."

So the company will pick its spots and it will also work in situations where the premise owner insists on buying the infrastructure, leaving InnerWireless to manage the carrier relationships, or in situations where the building owner wants to co-own the infrastructure with InnerWireless and split carrier revenues.

"It's not the core of our business," Cantwell says of these business models. "But it does help preserve our capital."

Whether it was 9-11, or just the coincidental maturing of in-building wireless technology like InnerWireless's, the market, according to Cantwell, is now ripe.

"We firmly believe that wireless will be the next utility -- something expected to be in every building, like plumbing, electricity, heating and air conditioning," he says. "Once you put in an antenna system, it makes a building RF smart. That will be the next Class A differentiator. And after 9-11, we don't even have to get on our soapbox too much. Tenants are saying [in-building cellular coverage] is a requirement."

Not only will the InnerWireless technology support in-building PCS and cellular coverage, it will also support the wireless technologies used by fire departments, allowing firemen to use their handheld walky-talkies for floor-to-floor communications. It will support other applications such as asset tracking and telemetrics, allowing the building's heating system to communicate its status to a monitoring station, for example.

And it will support 802.11. "We very much embrace the role of 802.11," Cantwell says. "But we recognize that it will be an evolving role. 802.11 is here and it's going to stay, but it will evolve over time, as all other wireless networks evolve."

What exactly does this mean? InnerWireless definitely doesn't want to be in the 802.11 business itself. What's uncertain is who will be in the 802.11 business in InnerWireless buildings.

One possible model is to give the rights to use the distributed antenna infrastructure for Wi-Fi to the premise owner, who could then build a Wi-Fi network, offer a hotspot service, allow other hotspot service providers to "roam" on its infrastructure, and also provide wireless LAN services, free or for a fee, to tenants.

Another model is to let a Wi-Fi hotspot network provider like WayPort or Boingo Wireless come in and build the access point network and provide a managed service. (InnerWireless shares a key investor with WayPort, Cantwell notes.)

The company and the premise-owner partners have gone slow on their 802.11 strategies, he admits. "This 802.11 industry sector is changing so much and so quickly," Cantwell says. "[Owners] are being very cautious. It's a big decision. Is Boingo going to be pervasive -- is WayPort?"

The wildcard is that now the mobile carriers are getting interested in offering hotspot services or perhaps just in keeping Wi-Fi-centric service providers out. While Cantwell doesn't come right out and say it, it would clearly be a lot simpler for InnerWireless and the premise owners to only deal with the mobile carriers.

Furthermore, it may not even be a question of the mobile carriers using 802.11. With 3G or even 2.5G, Cantwell implies, carriers could dispense with Wi-Fi altogether and offer subscribers access using their PCS infrastructures.

Will end users prefer the slower speed and theoretically higher security of 2.5/3G PCS or the high-speed of Wi-Fi, he wonders? Transparent roaming from PCS to Wi-Fi hotspot is also a possibility, he concedes. But the impression is that, one way or the other, InnerWireless is inclined to make its bed with the mobile carriers.

The 802.11 picture will become clearer with the announcements of the first few InnerWireless implementations in the new year, Cantwell says. By then, there will be formal relationships in place for providing Wi-Fi services.



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