Cell carriers pursuing wireless LANs worldwide

Cellular and conventional telephone companies have latched onto public access wireless LANs as a cheap way of offering high-speed mobile data services to customers.

Voicestream Wireless Corp., a nationwide cellular carrier, reached an agreement earlier this month to purchase the assets of bankrupt Mobilestar Network Corp., which provided public-access wireless LAN service, and said the ability to offer high-speed data service will provide it with a "significant new channel'' to serve both the enterprise and consumer market.

In a related development, GRIC Communications Inc., a global remote access service provider for Internet service providers and enterprises, announced Tuesday that China Netcom Corp. in Beijing, a nationwide Chinese data carrier, has turned on 13 industry standard WiFi 802.11b wireless LAN public access points and expects to have 60 in use by early next year. All of them will be tied into GRIC's global network.

Analysts said Voicestream's agreement to acquire Richardson, Texas-based Mobilestar, which is subject to the approval of bankruptcy court, as well as China Netcom's entry into the wireless LAN market, signals a shift in the development and operation of 11M bit/sec. service in such "hot spots'' as airports and hotels.

Alan Reiter, an analyst at Wireless Internet & Mobile Computing in Chevy Chase, Md., said the public access wireless LAN market is ripe for cellular carriers who can provide not only financing but also have the ability to handle "nationwide roaming, billing and interoperability.'' Kim Thompson, a spokeswoman for Bellevue, Wash.-based Voicestream, which submitted its asset purchase agreement for Mobilestar just before Thanksgiving, said Mobilestar's network would provide customers with "additional access to high-speed data at high-traffic locations such as airports, hotels and conference centers.'' Before it filed for bankruptcy, Mobilestar had an agreement to provide wireless LAN access at 3,000 coffee shops operated by Seattle-based Starbucks Corp. in the U.S. and also had an agreement to provide service at Fort Worth, Texas-based American Airlines Inc. clubs and gates.

Thompson said the Mobilestar network will be a "nice complement'' to the company's nationwide cellular network, which operates on the Global System for Mobile (GSM) standard used throughout Europe, as well as its next-generation General Packet Radio Service (GPRS) follow-on.

Reiter said Nokia Corp. in Espoo, Finland, has already started to develop dual-mode phones that work on both the GSM and WiFi standards.

The acquisition of Mobilestar would provide Voicestream "with a significant new channel of distribution'' to serve cellular customers who are already wireless LAN users, Thompson said. Reiter said that by using wireless LANs, cellular carriers could offer high-speed data services to users more quickly and cheaply than if they upgrade their networks to provide third generation high-speed wireless data with much higher throughput.

GPRS systems today, Reiter said, provide users with speeds of only 30K to 50K bit/sec., compared with the 11M bit/sec. offered by WiFi networks operated by Mobilestar.

John Rasmus, vice president for business development at Milpitas, Calif.-based GRIC, said he believes the public access wireless LAN market will increasingly be dominated by large telcos or their cellular subsidiaries. He noted that GRIC is in discussion with a number of major European companies to provide GRIC users with wireless LAN access. GRIC already provides remote access globally for users of both America Online and EarthLink Internet service.

Major carriers around the globe, including Telia in Sweden, British Telecom, Sonera in Finland and ONE in Austria, have now started an aggressive push to incorporate WiFi service into their networks, Reiter said.

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