802.11 Takes Center Stage

The setting seems all too familiar: a technology standard gets grassroots support and a movement starts, shedding light on a once-vague notion. As popularity grows, venture capitalists rush in; big business takes notice; and evangelists predict this will change how we work and live.

To paraphrase Yankee legend Yogi Berra, the hype around 802.11 technology, which promises an un-tethered world of lightening-fast Internet speeds, is sometimes “dij` vu all over again.” But without a doubt, 802.11 is moving ahead at a blistering pace. In just a few years of existence, 16 million people used 802.11 in 2001, according to researcher Allied Business Intelligence. It estimates that number will grow to 60 million by 2006.

With the industry taking off, it has reached a crossroads. The gee-whiz
early days of wireless local area networks (LANs) are now over, while the nettlesome issues of future standards, security, and business models remain. How the 802.11 community answers these questions is likely to decide whether 802.11 lives up to its billing.

(Click here to view the entire Special Report on 802.11.)


Setting the Standard


The 802.11 craze began with the popularity of 802.11b, now commonly known as Wi-Fi, which
allows users to wirelessly extend their networks. Since it was approved in
1999, Wi-Fi networks popped up from Berkeley to Brooklyn.

“I have not found someone who’s used it and says it’s bad,” says Gartner
Group analyst Ken Delaney. “It’s definitely the Wild West, but it’s a fun
Wild West.”

802.11b chipsets use a modulation scheme known as Complementary Code Keying (CCK) — a form of Direct Sequence Spread
Spectrum (DSSS) — to transmit data signals at 11 Mbps through an unlicensed
portion of the spectrum at about 2.4Ghz, sharing the space with low-power
signals from home electronics like cordless phones, microwaves, and
garage-door openers. With an access point (AP) serving as a bridge to a
wired LAN, Wi-Fi has a range of about 100 meters.

As evidenced by its user numbers, Wi-Fi has been a quick hit, but it left
many thirsting for faster speeds. The Institute of Electrical and
Electronics Engineers (IEEE) formed Task Group G to develop a new standard,
with an eye to boosting data transmission while maintaining interoperability
with 802.11b.

Meanwhile, 802.11b had company with 802.11a, a companion standard published
in 1999. 802.11a uses Orthogonal Frequency Division Multiplexing (OFDM)
modulation to provide data rates of up to 54 Mbps in the 5 GHz Unlicensed
National Information Infrastructure band. This would quadruple the number of
non-overlapping channels, from four to twelve, yielding less interference.

But 802.11a comes with some major downsides: the 5 GHz path, despite
lowering interference, means more path loss, thanks to more radio frequency
energy getting absorbed by walls, desks, even people. Also, 802.11a has a
range of just 50 meters, half that of 802.11b, requiring more APs and using
more power. Also, it only operates in North America, while 802.11b can
operate in Europe and Asia.

802.11g’s boosters claim it will be a boon to the industry, with 2.4 GHz
that offers double the data rates of 802.11b (22 Mbps) and uses OFDM. Most
importantly, it would be backward compatible with 802.11b. Also, higher data
rates would be possible using two different modulation methods – 33 Mbps
with Packet Binary Convolution Coding -DSSS, and 54 Mbps with Complimentary
Code Keying-OFDM. The bonuses are many: higher data rates, backwards
compatibility, and less path loss.

In November, Task Group G finally agreed to a set of standards for 802.11g. However, it is unlikely to
be finalized until the end of this year at the earliest.

Despite the alphabet soup of modulations, many experts say there won’t be
much conflict between the two standards. Russ Craig, an analyst at the
Aberdeen Group, says 802.11a offers a great opportunity in home-networking
applications needing lots of bandwidth, like networked gaming grids and
streaming video.

“The way the market is looking at this is 11b is going to be the market
leader because of cost,” says Navin Sabharwal, an analyst with Allied
Business Intelligence. “Some product lines will migrate from 11b to 11g,
others will migrate to the 11a.”

And increasingly, the differences will blur, as more chipset makers roll out
dual-band solutions, taking into account all standards. Just this week, chipset maker Intersil announced a dual-band chipset for 802.11a and
802.11g.

“These technologies are all going to converge into a single technology in a
single chipset solution,” says Dennis Eaton, an industry executive who is
chairman of Wireless Ethernet Compatibility Alliance (WECA), an 802.11 trade
group.

Securing the System


Dave Juitt, chief technology officer for BlueSocket, a wireless LAN security
firm, recounts a scene from just off the onramp to Highway One in Silicon
Valley. Bumper to bumper, rush-hour drivers would pull out laptops and hook
into vulnerable wireless networks by using the default value for Cisco APs,
“tsunami”. No one was harmed, just some bored commuters checking their
email, but Juitt says it is an important lesson in how open to attacks Wi-Fi
can be.

Wireless LANs are encrypted through the Wired Equivalent Privacy (WEP)
option, which most in the industry agrees is not very robust. Juitt calls
WEP a “Band-Aid.” Beginning with Jesse Walker’s “Unsafe At Any Key Length”
report in October 2000, various papers were published regarding WEP’s
shortcomings. Meanwhile, the practice of “war driving” for insecure wireless
LANs received media attention.

However, not everyone agrees that the security situation is so dire.

“To some extent, there’s been some scare-mongering out there,” says Allied
Business Intelligence’s Sabharwal. “The reality is there’s a lot of
potential for mischief, but there haven’t been a lot of instances.”

IEEE is trying to remedy the problem with next-generation security
standards. The IEEE’s Task Group I is preparing three security enhancements, collectively known as
Temporal Key Integrity Protocol (TKIP), as a short-term fix to WEP. WECA,
which verifies product compatibility, would like TKIP to be available by the
end of the year. In the long term, 802.11g is expected to include beefed-up
security that is backwards compatible with 802.11b.

WECA’s Eaton points out that the biggest problem is probably one of
educating people that wireless communications are inherently less secure
than wired. On top of that, Sabharawal says most enterprises running 802.11
networks would use a virtual private network (VPN) in any case, making them
much more secure than just using WEP. One 802.11 aggregator, Boingo, for
example, now offers VPN service for free to customers.

Rik Farrow, an independent security expert, says the threat to wireless LANs
is not overblown at all “My bottom line is if someone wanted to do a
directed attack against someone, finding a wireless network is wonderful,”
he says.

Life After MobileStar

Wi-Fi’s popularity has democratic roots: community 802.11 groups, from
NYCWireless to the Bay Area Wireless Users Group, showed its promise by
setting up “hotspots” of publicly accessible wireless LANs across the
country. Now, research group IDC estimates there are over 3,000 hotspots, a number forecasted
to grow to 40,000 in 2006.

The most high-profile business trying to make money off the explosion of
hotspots was Wi-Fi provider MobileStar Network, which inked a pact in
January 2001 with Starbucks to bring 802.11 to the java-sipping masses.

Yet instead of becoming Wi-Fi’s Amazon, MobileStar was destined to be its
Kozmo. In October 2001, after running through $60 million in venture
funding, the company filed for bankruptcy, leaving the nascent Wi-Fi
industry with its own
cautionary tale
.

The reasons for MobileStar’s demise, according to analysts, were not
surprising: the company expanded too much, trying to be all things to all
people. The remaining 802.11 service providers looked to develop niches,
like WiFi
Metro’s urban hotzones
, or to share the
hefty start-up costs with hotels and airports
, like WayPort.

In the end, however, the legacy of MobileStar might be what happened to it
after bankruptcy. In November 2001, VoiceStream Wireless bought MobileStar’s assets, giving the cellular carrier
an instant foothold in the wireless LAN market, including over 500 Starbucks
hotspots. In the aftermath of Deutsche Telekom’s acquisition of VoiceStream,
the MobileStar Wi-Fi network is part of T-Mobile.

The fate of MobileStar could augur a shift in cellular carriers approach to
802.11. Instead of viewing it as a threat to the billions the industry has
spent on 3G, cellular companies might be changing their tune.

“Carriers have started realizing it’s in their best interest to acquire or
partner with these networks,” says Allied Business Intelligence’s Sabharwal.
“They’re worrying about cannibalization that doesn’t exist.”

Following up VoiceStream, Sprint PCs invested an undisclosed sum in
EarthLink founder Sky Dayton’s Wi-Fi play Boingo, which launched an aggregated national network of hotspots in January.

In Europe and Asia, cellular carriers have been more aggressive. Telia has
dotted Sweden with hotspots, two carriers in South Korea announced plans for
as many as 25,000 hotspots there by the end of the year, and Nokia will
offer PC cards later this year to allow laptop users to move seamlessly
between its cellular network and Wi-Fi.

Gartner’s Delaney says carriers’ entry is inevitable, since, despite their
recent financial woes, they have the deep pockets necessary to pay the
upfront costs to make 802.11 truly ubiquitous. “These [small] companies
can’t survive long term,” he says, likening the fragmented public 802.11
market to the early days of ISPs.

“The biggest issue for the big carriers is the investment they have to
make,” Delaney says. “I think it will take three to four years before people
will make money off this.”

In the meantime, at least 20 companies have started making 802.11 chipsets.
Despite sluggish tech spending and a disastrous telecom market, $1.45 billion of wireless LAN equipment was sold in 2001, up 34 percent from the
previous year, according to IDC. The researcher estimates wireless LAN sales
will reach $3.72 billion in 2006. Gartner Dataquest estimates the number of
chipsets produced will quintuple by 2006, reaching over 45 million. The
proliferation has also driven down prices, likely speeding mass adoption.

Businesses have embraced the technology, despite the widespread talk of
security concerns. According to Gartner, more than half the companies it
contacted had wireless LAN plans in the works.

And some analysts say the home-networking market will take off when
consumer-electronics are brought into the mix. “The early market is
connecting computers together,” says Kurt Scherf, an analyst with Parks
Associates. “The final frontier is multimedia and entertainment products in
the home.”

Even with the many strides 802.11 has made in the last three years, WECA’s
Eaton says its best days might lie ahead.

“We’re very early in the development and adoption of the industry,” he says.
“We’re seeing a significant ramp-up in Wi-Fi, but we think it’s got a long
ways to go yet.”

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