5 Wireless Technologies to Bet Your Business On

If wireless technology were a horse race—as many believe it is—the racing form would be written in Sanskrit. The technology is a nightmare of competing standards, sliding costs, iffy service, and tenuous devices. Unfortunately, the decisions you make today will affect your company's bottom line six months to two years from now.

By 2004, nearly 800 million people will use mobile devices daily, forcing at least half of Fortune 2000 companies to support wireless systems, according to market research firm Gartner. For most companies, the technology will arrive piecemeal, complicating any kind of cold-eyed analysis for return on investment. Meanwhile, costs are all over the map. And the technology continues to change at breakneck speeds.

Obviously, you don't want costs to lock you into soon-to-be-obsolete hardware and services. But betting big on promised technologies could come back to haunt you. Making these wagers today isn't a comfortable gamble for anyone. Avoiding them is worse.

So consider this your racing form. We've handicapped five key wireless technologies you're likely to encounter in the coming months. Each has its long and short odds. All can pay for themselves many times over. Place your bets accordingly.

WI-FI: Easy, Fast, and Financially Smart

Payoff: Hook employees into your network wherever they roam, inside the office or in public places. Odds: Good to excellent—but take security measures.

Wells' Dairy, makers of Blue Bunny Ice Cream, went wireless with a network based on the 802.11b standard (Wi-Fi). You wouldn't expect the 88-year-old Le Mars, Iowa, firm to be a technology leader. But what started as an interim connection for a new satellite office grew into a wireless network that now supports about 300 employees.

Wi-Fi (short for wireless fidelity) plugs into a company's existing internal network. It provides Ethernet-fast connections without the wires, transmitting data digitally through a two-way radio signal. Employees can roam the office: Wi-Fi PC Cards or built-in receivers in laptops instantly pick up a wireless signal from base stations located throughout the building.

Wi-Fi runs at 2.5GHz and offers connection speeds as fast as 11Mbps. Networking systems based on two different versions of the standard, 802.11a and 802.11g, are expected to roll out in early to mid-2002. The 802.11g standard runs on the same frequency as Wi-Fi but promises speeds up to 54Mbps; 802.11a offers the same rates and runs at 5GHz.

Either way, much of wireless networking's cost savings are hidden. Many companies save big by not installing cable in every nook and cranny of their office buildings. Wells' Dairy saved more than $10,000 this way.

A Wi-Fi network for a single office costs $250 to $350 per base station and about $100 per PC Card. A large-scale hookup starts at $1,200, plus $150 to $180 for each PC Card. Wells' Dairy uses Cisco Systems' Aironet 350. So far the company has installed 42 base stations. Each one costs around $2,500, which includes PC Cards and labor, and supports two to 15 employees.

Wi-Fi is affordable, but it's not trouble-free. Most Wi-Fi networks are painless to set up, but the technology shares the same frequency with Bluetooth (see "Make Instant Connections"). When the two conflict, the Wi-Fi connection slows by about 30 percent.

Even so, Wi-Fi has Bluetooth beat for practical uses outside the office. You can find it in a number of airport lounges and hotels, as well as at Starbucks in Dallas, San Francisco, and New York City, with many more to come.

Security is another drawback. Tests show that Wi-Fi's current encryption system is vulnerable to crafty hackers (see "Wireless Security"), or even freeloaders looking for bootleg wireless bandwidth. What's more, most prebuilt Wi-Fi networks come with the security code turned off (because this supposedly makes them easier to install).

Connections also get sluggish as users move away from the base stations. The number of walls a signal must penetrate affects performance as well. Realistically, speeds range from 4Mbps to 7Mbps. Wells' Dairy employees suffer spotty connections at more than 130 feet—far from the promised 300-foot range.

And while Wi-Fi can free you from network cables, power cables are another matter; Wi-Fi PC Card receivers burn up notebook battery life about 20 to 30 percent faster. However, notebook makers are beginning to address this problem. The IBM ThinkPad A30m ($2,449) stays charged longer because Wi-Fi is built into the machine. Hewlett-Packard, Toshiba, and others are following suit, offering laptops with Wi-Fi built in.

BLUETOOTH: Make Instant Connections

Payoff: No more tangled cords, lost drivers, or confusing sync operations. Link devices directly, in seconds. Odds: Poor today—particularly due to lack of devices. But keep it on your radar.

When the check-in line at the Holiday Inn Wall Street in New York City twists through the lobby, some smart hotel guests aren't even fazed. They skip the wait by checking in automatically with Bluetooth-powered wireless phones.

Designed by VoiceFlash Networks, a Boca Raton, Florida–based software company, and installed in January as a trial run, the system makes checking out just as easy. "When you get up in the morning, instead of having a bill under your door, it will be on your computer screen or on your phone screen," says hotel general manager and area director Frank Nicholas.

The technology is novel, all right. Unfortunately, so far it's little more than a trade show gimmick. The only guests who have actually used the check-in system have been reporters covering the technology, says Nicholas.

Initially developed in the mid-1990s by Ericsson—now backed by a consortium of telecom giants—Bluetooth allows devices to communicate wirelessly via radio waves. It transmits 1Mbps within 30 feet.

So, for example, Bluetooth makes it possible to send e-mail from your wireless phone using addresses stored in your laptop. One day soon your Bluetooth phone will be able to pay for a cold soda by connecting wirelessly to the dispenser and adding the drink to your phone bill.

Trouble is, will you have a Bluetooth device on hand every time you're thirsty? The few Bluetooth products and services on the market haven't won many converts. Most devices are sold only overseas. The $400 Bluetooth-capable Hewlett-Packard Deskjet 995c, shipping by now, is one of the few such printers available in the United States.

For now, the technology is caught in a chicken-or-egg dilemma. No one wants to pay the $150 to $190 premium for a Bluetooth add-on card until enough other Bluetooth devices circulate to make it worthwhile. Bluetooth chips are expected to drop to about $5 by 2003, which should help.

Meanwhile, it's got some problems to resolve. Even though Bluetooth uses authentication, encryption, and frequency-hopping to keep communications secure, the systems aren't foolproof. Say you're at a conference, looking for information about Web advertising. Armed with your criteria, your Bluetooth phone scans the room for people from companies that match the profile. When detected, the devices swap identification codes to initiate the conversation.

But when you finish, that open line doesn't shut off automatically. That person "can still have access to your phone," says Ken Dulaney, a Gartner analyst. "Then, he can do other things, like load up a virus."

Security isn't a big deal if you're sending e-mail addresses from your PDA to your cell phone. But if you want to link employees wirelessly—as in a local area network—Wi-Fi is the cheaper and smarter choice.

For connecting computers and other devices (like printers), you're best off waiting until Bluetooth is free of kinks and widely available. And until Bluetooth and Wi-Fi can operate in the same office without conflicting, your money's best spent on the one with the longer reach. Mobilian, formed by execs from Intel and Qualcomm, is working on a chip for adapter cards that will let the two technologies work together, but no release date has been set.

At least one company is working on a Bluetooth system to address a common problem: keeping workers who roam large buildings or campuses, or those who don't have permanent desks, in constant touch with a land-line phone. Norwood Systems, a Richmond, U.K.–based office network provider, is designing software that connects Bluetooth headsets and wireless phones to your company's PBX. Employees can make and take calls from anywhere in the office. Since about one-quarter of wireless phone calls originate inside corporate offices, says wireless giant Nokia, a system like Norwood's reduces this expense from the start.

Due out by the time you read this, Norwood's system will probably cost about $450 per employee.

FREE-SPACE OPTICS: Control Your Own Pipe

Payoff: Buy only the bandwidth you need. Odds: Great, if you're lucky enough to be in a service area. Otherwise, take your bet elsewhere.

When the posh Four Seasons Olympic hotel in downtown Seattle first went looking for a high-speed Internet connection, it found that local providers couldn't yet deliver wide bandwidth on demand so that large companies like Microsoft and Starbucks could do teleconferencing at the hotel.

In March, Seattle-based Terabeam stepped in with a system: free-space optics, which offers rates that can surpass 650 T1 lines. The technology requires line-of-sight access from a transceiver, situated on the top of your building or inside near a window, to a central hub, which then attaches to a fiber-optic line. To break the connection, something must interrupt the laser beam—usually transmitted hundreds of feet in the air.

More than 70 percent of U.S. businesses are within one mile of fiber-optic lines, yet less than 10 percent of those have installed a direct connection. Free-space optics lets you use fiber optics without tearing up the streets. It also works well as a wireless LAN for a series of buildings. A system from LightPointe, for example, links the Smithsonian Institution buildings located along the National Mall in Washington, D.C.

But free-space optics isn't perfect. Fog can interfere with the signal (although Seattle's weather has yet to cause problems at Four Seasons). You also can't find it everywhere. Terabeam offers service only in Seattle and Denver now, but plans to expand into Dallas and one other major market by year's end.

The technology doesn't come cheap. Four Seasons pays $2,500 to $3,500 per month for its service. Although individual guests use it without charge, companies that use the conference facilities pay anywhere from $400 to $2,500 plus $75 for each connected computer.

During its annual investors' conference in March, aerospace manufacturer Boeing used Four Seasons' free-space optics connection to provide attendees with real-time stock prices and better control over the conference Webcast.

2.5G: Phones That Aren't All Talk

Payoff: Zippier, always-on wireless means you can send faxes, query databases, or view simple graphics via devices that today can barely handle voice or text. Odds: Tough to call, but the risk-averse should wait for true 3G service.

When the question is not how fast—but how soon—you can get wireless service that offers voice and data, a 2.5G system begins to look awfully smart. But the costs may come back to haunt you.

The technology's cryptic name refers to a half generation between today's second-generation digital cellular networks (2G) and tomorrow's third-generation high-speed cellular (3G). These 2.5G networks seem to have a lot in their favor. First, they're about 10 times faster than the 14.4Kbps speeds of today's Web phones and wireless modems. Even better, 2.5G offers always-on connections. Plus, you'll pay only for the amount of data you send and retrieve; per-minute costs are history. Service from AT&T Wireless, for example, costs $50 per month for 1MB of data and 400 voice minutes.

Trouble is, 2.5G is a stopgap measure. Although its top speed could reach 144Kbps, you're more likely to get 50Kbps to 60Kbps. And despite what you'd assume, a 2.5G phone won't ramp up to 3G speeds (up to 2Mbps or roughly 140 times as fast as today's rates) when those become available. Worse, a hodgepodge of standards makes it hard to find a carrier that can serve your long-term needs—or one that can cover your offices in San Francisco, Helsinki, and Tokyo.

Even so, services are going live. AT&T Wireless rolled out its first wave of 2.5G service in the Seattle area in July. Sprint PCS and Verizon Wireless are set to start offering higher-speed wireless connections in the next few months. As more carriers join the fray, costs will drop. And like current wireless service, when you leave the high-speed network's coverage area, your device will automatically register with a slower but compatible network.

As if the technology weren't sufficiently complicated, 2.5G standards come in two flavors: GPRS and cdma2000, which is based on CDMA. In theory, the standards deliver similar results. But the carrier and technology you choose affect your ability to upgrade to 3G when it becomes available.

Sprint PCS says that its cdma2000-based network will offer quicker transitions to the higher-speed connections: Any handset you purchase now will work on its network forever, although you can't take advantage of faster speeds with older devices. If you go with a carrier that uses GPRS (AT&T and Cingular Wireless are key providers), you'll have to junk your equipment to buy new hardware for faster access speeds as they become available.

This alone should tell you that the smart money is on cdma2000. Verizon and Sprint will begin rolling out 144Kbps service late this year in limited markets, with wide availability next year.

Some businesses are already preparing. Option One, the largest subprime wholesale mortgage lender in the United States, has already outfitted most of its 220-employee sales force with wireless PC Card modems from Sprint PCS. Sales representatives can now access pricing, underwriting info, and other key data anywhere they travel. Jim Pathman, tech consultant for Option One, says he paid about $300 per card—with the agreement that Sprint PCS would upgrade the cards for free later.

Pathman figures it's an up-front investment that will pay for itself quickly. When 3G arrives, he says, "we're going to be a lot further ahead than any of our competitors—or anyone else." Option One sales reps download data wirelessly using notebook PCs, but employees will at some point be able to get to the same data on handhelds or mobile phones.

If you'd rather go with a stable, proven technology, Research In Motion's BlackBerry Service, Cingular Interactive, and Motient provide speedy wireless e-mail and instant messaging for about $300 to $350 per device and around $50 per month for service.

3G: Business at Lightning Speed

Payoff: Pocket your office. Voice, data—even video and other bandwidth hogs—won't faze this fast, reliable wireless network. Odds: Zero for now. Look for the first 3G products and services to arrive in the United States in 2003.

Ultimately, you want the speed of your office T1 connection to be piped directly to your notebook PC, cell phone, or handheld PC. This and more is the promise of third-generation (3G) wireless connections. But when oh when can you expect such service to be available?

More than a few industry analysts have made red-faced retractions of their predictions. Last May, Japan's NTT DoCoMo released the world's first 3G wireless voice and data service, offering speeds of 384Kbps to about 4,500 subscribers. Although the system crashed in less than 24 hours, it signaled a major breakthrough in wireless communications.

The United States is well behind Japan in establishing 3G networks. Third-generation is coming, but not any time soon. American carriers such as AT&T Wireless will need to spend billions of dollars over the next few years to upgrade today's TDMA networks to W-CDMA technology—the same protocol that NTT DoCoMo uses for its immensely popular i-Mode service. And Cingular Wireless and VoiceStream must expand their networks across the country before they can offer businesses compelling third-generation service. Considering the expense, some wireless providers in the United States might wait until they're absolutely certain that customers will bite.

Still, AT&T Wireless expects to begin offering complete 3G service in limited markets in 2003. Sprint PCS says its network will offer data-only speeds of 2.2Mbps by the end of 2003. Verizon Wireless will keep pace, offering service at 2.4Mbps in that time frame. For any company plotting its wireless strategy, 3G is obviously a long-range investment: four to 10 years for large companies. Today, U.S. businesses funnel about 16 percent of their total telecom spending toward wireless, according to Cahners In-Stat Group—and that amount is sure to grow.

Expect to pay from $200 to $400 each for new 3G handsets and PC Card modems for laptops and handhelds. Your company's monthly wireless bill will depend on capacity and usage—but no one in the industry is willing to say how much more you'll pay for greater speeds and feeds.

Given the uncertainty about just when 3G services will become available—as well as how much they'll cost—it's no surprise that 44 percent of the companies Zona Research surveyed recently said they have no plans to give employees access to the high-speed mobile Internet.

Carolyn Abate is an associate editor for Ziff Davis Smart Business. Eve Tahmincioglu is a freelance business and technology writer based in Tampa, Florida.

LOCATION-BASED SERVICES: Put Yourself in Your Customers' Shoes— No Matter Where They Are

Payoff: Keep employees on course and ping customers at the precise moment they're ready to buy. Odds: Stuff your money in your pocket—and keep it there—until this technology reaches critical mass.

Thanks to a federal mandate, October marked the deadline for mobile phone providers to install Global Positioning Systems in each handset they manufacture. The requirement is meant to help emergency response centers locate a distressed caller to within 500 feet. The tracking technology is expected to add another $20 to $30 to current wireless phone prices. But it's also had the unintended consequence of ushering a new set of wireless services into the hands of businesses everywhere.

GPS, of course, isn't new. Scores of businesses—and the U.S. military, which designed it—use it. Webraska, for example, uses GPS to provide electronic maps and driving directions in cars. Vindigo offers location-based content, including movie times and restaurant details, to Palm and Handspring PDA users. And At Road, an Internet-based mobile tracking company in Fremont, California, develops software that lets companies keep track of fleet vehicles as well as goods and services.

When GPS becomes standard mobile phone equipment, At Road plans to offer businesses tracking services for cell phone-toting workers for about $40 to $60 per vehicle per month, according to John Lankes, At Road VP of strategic sales.

Once wireless phone companies decide on which technology to use to meet FCC requirements—satellite-based GPS or network-based tracking systems—expect more of these business applications to appear. The market for location-based services is expected to be more than $13 billion in 2005, according to market research firm Cahners In-Stat Group.

Not surprisingly, marketers want to be part of this. Location-based advertisements target audiences like sharpshooters. After all, what's better than targeting a consumer primed to buy, whether it's a Frappuccino from the nearest Starbucks or a silk tie from Saks? Marketers have dollar signs in their eyes, despite recent research from Jupiter Media Metrix that says a mere 5.4 percent of wireless device users want to receive such ads.

But GPS-driven ads are about two to three years away. Manufacturers must select a cell phone standard, and technology costs to create wireless ads must come down. "Location-based advertising is going to come around, once a common language is established," says Jim Wells, senior vice president and COO for GeePS, a wireless services provider in Cranbury, New Jersey. Until then, the industry will move in baby steps. Advertisers will locate mobile device users to send targeted ads to using cell towers and cell ID numbers, not satellites.

Lucent Technologies, which provides the infrastructure for geolocation-based systems, is partnering with Profilium, a Canadian advertising applications firm, to deliver on-demand advertising using cell ID numbers next year. The companies expect to test phone ads in Mexico and other Latin American countries this year.

"We host the database with the anonymous information and the carrier hosts the database that contains the user's phone and ID number," says Aaron deMello, CEO of Profilium. When the two match up, that consumer receives an ad.

Profilium expects to charge carriers around $4 per subscriber, while advertisers will be charged per ad, although the company remains tight-lipped about specific pricing.

Wireless Security

Hack-proof your Wi-Fi network by taking one—or all—of these precautions to beef up its relatively skimpy built-in security system.

Set up a virtual private network (VPN). VPNs secure information on networks that allow remote access. Top makers include 3Com, Cisco Systems, and Lucent Technologies. Prices range from $100 to $17,000, depending on your network size and additional security features you desire.

Put a double lock on it. Make sure your VPN uses IPSec, the toughest standard for protecting data in transit. The SSH IPVia Complete VPN is built around IPSec; pricing was not available at press time.

Cover your individual assets. Personal firewalls keep viruses out of the company network, and sensitive info under wraps. Zone Labs ZoneAlarm Pro ($40) also defends against hackers.

Keep freeloaders off your network. Make sure casual passers-by can't plug into your Wi-Fi network. Enlist a remote authentication dial-in user service (RADIUS). It knows who can and can't log into your network. Starting at $1,000, Lucent's NavisRadius Authentication Server can handle hundreds of servers.

Copyright © 2004 Ziff Davis Media Inc. All Rights Reserved. Originally appearing in Ziff Davis Smart Business.