RealTime IT News

Rumors of MobileStar's Demise Greatly Exaggerated

Contrary to reports of its demise, wireless Internet service provider Mobilestar Network Corp. said it has not shut down its national wireless network and has no plans to do so.

"Our demise has been greatly exaggerated. The network is working," President and CEO Robert Kaiser told InternetNews.com.

Word of the network's demise first surfaced earlier this month when MobileStar failed to secure additional funding and was forced to lay off most of its workforce during the week of Oct. 10. "Unfortunately, at the eleventh hour a term sheet and arrangement to further develop the company and its national wireless network was withdrawn," according to a prepared statement issued by former board member Dan Skaff.

But the collapse wasn't only contained to the Richardson, Texas-based company. The fallout sent ripples throughout the nascent Wi-Fi community because MobileStar was one of the highest-profile players that adopted the IEEE 802.11b wireless standard, which is designed to transmit data through the eletro-magnetic spectrum at 11 megabits per second (Mbps) -- in other words, faster than a dial-up modem.

During a telephone interview, Kaiser was hesitant to comment on the company's prospects until "plans" are finalized. However, the former WorldCom executive, who joined MobileStar in June, did confirm that plans could be finalized within the next two weeks.

The latest development represent a boon to MobileStar's partners such as Starbucks Coffee Co. and San Jose, Calif.-based HereUAre.com, which provides back-end billing and session-recording services to MobileStar customers. Earlier this month, Starbucks reaffirmed its commitment "to offering customers wireless internet access within its retail location."

Even now, Kaiser said his company's relationship with Starbucks still remains strong in the interim.

The fact that MobileStar's network has not been shut down means certain customers can still utilize the service at Starbucks locations that have installed 802.11b equipment. And to motivate new customers to sign onto the service, HereUAre.com is offering a pilot program called Jumpstart where customers can access MobileStar's network for free. The pilot program, which began even before MobileStar's problems hit the media spotlight on Sept. 5, will be offered through the early part of next year.

"The Jumpstart program is a pilot program for free usage for any of our partners. We're looking at wrapping up the program and going for pay in Q1," said Spencer Doherty, manager of network operations at HereUAre.com.

Doherty confirmed Kaiser's remarks about the MobileStar network operations. "If you have signed up for a Jumpstart account with us, you can use MobileStar...I haven't heard anything about de-commissioning locations," Doherty told InternetNews.com.

To be sure, MobileStar is not alone in offering free wireless Internet access. Earlier this week, Austin, Texas-based Wayport, which hopes to bring high-speed Internet access to the business traveler, also unveiled a free-service promotion tied to Microsoft launch of its Windows XP operating system. Under the arrangement, customers using Windows XP can access Wayport's network at more than 420 Wayport-enabled hotels and airports across the country from today through Jan. 31, 2002.

Yet, even the biggest proponents of 802.11 technology in so-called "public hotspots" (i.e. airports, coffee shops, conference centers, etc.) warn against free promotions as a rollout tactic.

"You get what you pay for," said Joshua Wise, senior analyst at Allied Business Intelligence, an Oyster Bay, N.Y.-based consulting group. Wise penned a report that forecasts the public Wi-Fi hotspot market to grow to $868 million of subscriber revenue by 2006 from the $1.1 million that was generated in North America in 2000.

Still, despite that bullishness, Wise concluded: "I don't see the public hotspot domain being free. It won't pay off in the long-run. If they just did it for six months to a year but I don't know if I see that as viable for the operator. I don't see it being beneficial in the big picture."