Visionary-and cheap-chief executives could learn a lot from the wireless network at Dartmouth College. The 1-square-mile campus in Hanover, N.H. has high-speed Internet connectivity almost everywhere, thanks to 600 cheap Wi-Fi antennas in 150 buildings. The college relies on the network for telephone and intercom services, video surveillance, six school-run cable channels and thermostat control. Teachers post class handouts and video demonstrations on the network, and students use it for everything from studies to “laundry view” software that helps find and reserve unused washing machines around campus, even paying for them over the network.
Technology services director S. Bradley Noblet plans to put up 900 more antennas before he is done, bringing the total cost of the system to $1.7 million. That is half what it cost him for his last upgrade of cable in the wired network. The new system, he figures, can be run on one-third of a single staffer’s time.
This sounds like the kind of productivity-on-the-cheap deal any business would want. But Wi-Fi, ubiquitous in airports, hotels and coffee shops, is still not very welcome in business. Researcher IDC says only half of U.S. companies with more than 100 employees have experimented with wireless, and two-thirds of those deploy it to fewer than 30% of their staff.
The big problem is control. Wi-Fi’s little antennas are easy for anyone to plug into a network and, unless well managed, easy for outsiders to hack into, exposing the whole corporate network. At Time Warner Cable engineer Anthony Nowinowski has been looking for such rogue antennas in company offices since mid-November, finding “3 for sure and another 15 or 20 suspicious things. I figure it’s 50% to 60% of what’s there.” For each one, he adds, “you might as well run a network cable out to the parking lot, offering [hackers] your payroll, employee and customer data.”
The problem has stemmed from the way giants in the Wi-Fi hardware business, like Cisco Systems and 3Com, build their antennas: They’re like little computers, with a lot of networking and security intelligence in the box. But once a hacker gets past one box, there is little left to stop him. Employers are making the problem more acute by issuing their workers laptops now as frequently as desktops, so mobility and the presence of rogue antennas will likely increase.
Now any number of fledgling companies are hoping to soothe big business’ fear of Wi-Fi by making the antennas dumber and the central switches that control them smarter. Centralized switches can monitor several thousand points receiving Wi-Fi signals over several buildings, checking laptops and other devices for viruses and quarantining infected machines. The centralized approach is cheaper, too, running roughly $7,000 per 100 employees compared with $25,000 for a Cisco setup.
These hardware upstarts include Airespace, Colubris Networks and Trapeze Networks, as well as Aruba Wireless Networks, which runs most of Dartmouth’s campus, and Symbol Technologies, a publicly traded company known for its bar code scanners. In less than a year centralized Wi-Fi has come from near nothing to 11% of the $900 million corporate Wi-Fi market.
Internet search and entertainment company Yahoo will have Aruba managing thousands of points at more than 40 sites worldwide, all run from one desk. Financial services company Fidelity Investments is deploying Airespace over a half-dozen buildings around Boston, in part to kick off rogue signals from non-Fidelity access points whose signals stray onto their turf.
The central-switch business could rattle Cisco’s hammerlock on wired networking, too. Sharp HealthCare uses Aruba to manage wired connections in conference rooms at the 6 hospitals and 40 clinics it operates around San Diego. It used to use unsecured Wi-Fi in those rooms but replaced that with Ethernet ports connected via cables to an Aruba box that manages who has access to the network.
Aruba Chief Executive Donald LeBeau, who ran Cisco’s worldwide sales from 1992 to 1997, calls centralized Wi-Fi a way to “reshape the wiring closet” that Cisco has controlled for years. “Centralized security is a different architecture from what they have. They could switch, but they need revenue growth, and if this takes from that it’s hard for them to lead a charge.” Aruba has raised $59 million from investors including Sequoia Capital, Trinity Ventures and Matrix Partners.
So far Cisco, with its profit of $1.4 billion in the quarter ended Oct. 30, is not too worried about the likes of Aruba, which hopes to break even in mid-2005. The upstarts, says William Rossi, vice president of Cisco’s wireless business networking, “are going to have a hard time convincing their customers they have the expertise in security and network management.”
Tell that to Microsoft, which is looking for a new Wi-Fi system to replace its Cisco-based network. Microsoft says it needs better security features. Cisco says it can meet those needs, adding that the software giant is just aiming to sweat price and service guarantees out of Cisco.
Aruba’s LeBeau figures it is too early in this game to say which of the central Wi-Fi players will prevail. “This is a ball. Everyone is trying something a little different from the other guy,” he says. “Hopefully we’ll be the ones who deliver it, but that’s still part of the battle.”
THIS IS A SIDEBAR TO THE STORY ABOVE
Companies, People, Ideas
Untapped Market
Michael Freedman, 01.10.05
Back to Wi-Fi With a Coat and Tie
After a successful entrepreneurial career in San Francisco, James N. Baker left the area in August 2003 and headed home with his family to the southeast of England, where he bought a small home in rural Elmsted. “Fabulous house,” he says. “Loved the place. But no cellular service, no Sky TV and, worst of all, no broadband.”
Baker, 39, moved to a larger house with all the amenities, but his experience underscored a simple fact that most city-dwellers ignore: Even in a prosperous country like Britain, hundreds of thousands of people still lack high-speed Internet service, particularly in rural areas, where homes are just too far from telephone exchanges to get a megabit connection. Baker estimates that only 16% of people living in rural English villages have broadband access. He estimates there are 500,000 potential residential and small-business subscribers waiting for DSL service, representing a potential $280 million in annual sales.
So a year ago he founded Telabria, using money he pocketed in 2000 from the $5 million sale of his streaming media company, 21st Century Media. He linked up with Shepherd Neame, Britain’s oldest brewer and owner of 368 pubs, mostly in rural southeast England, and built a wireless network in three communities using antennas set atop pubs as access points. A 2-megabit-per-second Internet connection is accessible in the pub itself and throughout a village.
The first hot spot was Chequers Inn in Doddington, once a stopping-point for religious pilgrims en route to nearby Canterbury. By the end of 2004 Baker expects to have 60 hot spots in southeast England (including 20 in London), and more than 400 by the end of 2005. Walk-up customers now pay $5.60 per hour or $19 a day for the service, but the service will drop to $38 per month once Baker upgrades the network with the as-yet-unproven WiMax technology by midyear.
BT Group is a competitor now, and Baker knows his rates may have to fall. He may also have to underwrite $349 wireless WiMax receivers for residential customers. Still Baker wants to acquire thousands of customers over the next several years: “There are very few people who are focusing on this right now.”
