Cometa Founder Takes Wi-Fi 'Leap of Faith'

By Erin Joyce

January 29, 2003

A leap of faith that companies can not only sell wireless Internet access, but make money with it, is part of the foundation under Cometa, which plans to provide wholesale Wi-Fi access.

NEW YORK -- Explosive growth in Wi-Fi hotspots during the past year may be fueling start-up company Cometa Networks to sell wholesale wireless broadband access, but faith is the venture's foundation, its founder said.

"If we knew all about where demand for wireless broadband access is going to end up," it would be too late to start the company, said Theodore Schell, chairman and founder of Cometa Networks.

"Clearly, there's a leap of faith required here," he said during an iBreakfast panel discussion about Wi-Fi Wednesday.

Launched in December, 2002 with the backing of Intel , AT&T and IBM , Cometa Networks plans to offer businesses wholesale high-speed Internet access for re-sale, all deployed with 802.11 networking protocols. Other investors are venture firms Apax Partners and 3i.

Rollouts for Wi-Fi service are expected this year, and the company has said it plans to be up to 20,000 business class Wi-Fi hotspots by 2004, or about a five minute walk or drive from one, nationwide.

By Schell's own admission, as well as analysts that track Wi-Fi access networks, 20,000 hotspots nationwide within a year is a lofty goal. To offer that many spots for Ethernet-quality wireless Internet access would require extensive negotiations with major terrestrial broadband providers, as well as "last-mile" providers whose own lines would be used in Cometa's sale of both "business class" high-speed broadband access and consumer-based Wi-Fi access.

And it is still unclear whether consumers would be willing to pay higher rates that the company would have to pass along in order to recoup its network build out costs, estimated to be about $175 million for building 20,000 hotspots, using current market rates for networking hardware.

But Schell said the three tech bellwethers involved with Cometa will be using their existing networks, whose terrestrial bandwidth Cometa will leverage in order to offer wireless access points with a "higher quality of service."

For example, he said, look at IBM's legacy in building and maintaining back-end systems and support in order to sort out billing issues among a convergence of wireline and wireless network providers.

Another backer, AT&T, is already a major (Tier 1) backbone network provider with extensive fiber optic lines and the know-how to manage networks. And Intel's upcoming chipset that supports 802.11b networking in mobile devices, dubbed "Banias", is expected to help drive interest as devices with the networking chips move into the marketplace.

To address data security over wireless Internet access, Schell said the company may deploy a client or a series of applets as part of its service. The extra encryption built on the client would help protect other networked devices from possible attacks once a remote device has landed behind a company's firewall wirelessly.

Despite the challenges facing the company, however, few would dispute the explosive popularity of Wi-Fi. In Manhattan alone there are now some 14,000 802.11b wireless Internet access points documented. About 60 percent of those are open access spots, according to Public Internet Access Project.

The New York-based organization, which completed its count last fall with a map of access points, advocates for free but limited use of broadband providers' networks at lower data transmission rates. (The organization also notes that access points that are owned by businesses are increasingly deploying security that keeps users from piggybacking on to the Internet using others' bandwidth.)

"I think they've got the right idea," Marcos Lara, founder and managing director of Public Internet Project, said of Cometa Networks. "Better to take a swing at it than not at all. But I don't want to see them fail because it will hurt everyone," said Lara, who also spoke at the iBreakfast panel discussion.

Lara points to wireless Internet access provider Ricochet, which is now targeting municipal markets after first falling into Chapter 11 bankruptcy in 2001, as a cautionary tale.

"My point is, the model for Ricochet was no different," he said of Cometa Networks. "It's unclear to me how they plan to leverage the existing network" once the service goes to last mile providers' networks, which would entail extra business-user fees.

Schell, who played a key role in launching and founding Sprint's PCS consumer wireless offerings before launching Cometa Networks, is acutely aware of the challenges before the company. But with a coming generation of advanced chips embedded in mobile devices, along with tech heavies putting their own bandwidth into the equation, he sees Cometa playing a key role in driving pervasive network connections.

David Rose, chairman of Urban Hotspots, a provider of on-the-spot wireless access, also pointed out that businesses are rapidly deploying high quality network access points, especially for use in remote monitoring. Examples include DisneyWorld, SouthWest airlines, and fast food franchises.

The challenges, Schell added, include not letting "the sizzle of the market lead to expectations that can't be met. There's a leap of faith (required) that people will use it."

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