RESEARCH TRIANGLE PARK — The chicken versus the egg syndrome is back.

The “If you build it, they will come!” cliché has returned.

A new gold rush is starting to build. But is there gold in them hills?

The next thing, or next wave, or whatever “bubble”, new economy term you wish to apply to is concerns the growing mania surrounding 802.11 wireless standard “hot spots.”

Wi-Fi is the buzzword of the day.

Wireless local area networks (WLANs) are definitely taking root and are forecast to generate more than $4 billion in revenues by 2005, according to an InfoTech survey.

But what about the consumer hot spots? Is there a market, or is all the talk just hype?

Big Macs and WiFi

In the hope that executives and techies can’t stand to be without their laptops or PDAs and want high-speed bandwidth, companies such as Starbucks and Borders are setting up wireless hot spot network connections.

Even a few McDonald’s are setting up hot spot access in New York City.

“Buy an ‘Extra Value Meal’ and get one free hour of access to the network!”

McDonald’s is offering the deal as part of a pilot program in conjunction with Cometa Networks, the fledgling Wi-Fi network being pieced together by AT&T and IBM Global Services, which has been a Wi-Fi and wireless leader.

Cisco has built a whole line of products, called Aironet, around the 802.11 WLAN standard.

And as Local Tech Wire already has reported, Winston-Salem is setting up a Wi-Fi network along its downtown restaurant row.

This week, both Intel (“Centrino”) and AMD (“XP-M”) announced a new series of high-speed wireless modems. Intel also said it was investing $150 million in four wireless firms focused on Wi-Fi. They include Vivato, Broadreach Networks, and Pronto Networks.

Atlanta firm jumps in

US RealTel, which is based in Atlanta, is among the telecoms jumping on Wi-Fi. RealTel is partnering with Vivato, one of the Intel-backed firms, to deploy Wi-Fi across its networks in Class A office space across the country.

Cypress Communications and Intermedia Advanced Building Networks are the RealTel leads on the building project. RealTel acquired them from WorldCom as the telecom giant spun its way into bankruptcy. Through the two firms, RealTel owns access rights to 2,000 multi-tenant buildings in 25 major metropolitan networks.

“By leveraging our relationships with the nation’s most prominent commercial property owners and utilizing our existing property access rights, US RealTel is uniquely positioned to quickly and successfully deploy a premium national Wi-Fi networking utilizing the 802.11 technology,” said Charles McNamee, the firm’s chief executive officer. “These building access rights represent a significant competitive barrier to entry and time to market advantages and will help us to effectively accelerate our business plan.”

Is the market ready?

An office enterprise seems a likely target. But just how many people are there who want to spend an hour at a noisy McDonald’s reading e-mail?

T-Mobile USA already has cut the fees it charges for access. At least one provider already has pulled the plug on its offering as well.

Amy Craven, an analyst at In-Stat/MDR, recently expressed caution. “Operators are facing the classic chicken-and-egg scenario,” she told CNET “The principal challenge is to get subscribers onto the networks, but (hot-spot operators) can’t get the subscribers unless they have the network.”

Building, providing and supporting those networks with high-speed backbone connections isn’t cheap.

If you put faith in forecasts and studies, a growing number of users do want to surf while having a coffee or browsing a magazine. The firm Analysis predicted in a study a year ago that than more than 21 million Americans will be using hot-spot WLANS by 2007. That same study said the number of hot spots would swell to 41,000 by 2007, a 10-fold increase.


Tim will tell. Hot spots and WiFi could be more bait leading lemmings over the cliff. And tech and telecom can’t afford any more major blunders. These hot spots also face competition from the growing expanse of high-speed cellular networks.

3G wireless cellular networks are, unfortunately, only now coming to fruition. But look at the carnage in the cellular and wireless tower (SpectraSite) business as a result. ISDN turned out to be a boondoggle (yes, the acronym “It Still Does Nothing” fits). How much money did Nortel alone lose on optics?

The telecom landscape is littered with failures and desperately needs a success. Maybe the hot spots will be one.

As for me, I seriously doubt I’ll ever take my laptop to McDonald’s or Starbucks. Klutz that I am, I’m sure to spill coffee into the keyboard or drop ketchup on the touch pad.

Rick Smith is managing editor of Local Tech Wire.