RadioFrame Networks expects most US and European carriers to have defined strategies for integrating WLAN access into their wireless networks by the end of the year, and hopes to sell them the equipment to develop this capacity. In a few weeks' time it will have a channel carrying its technology in the shape of the 'world's largest infrastructure supplier' -- Ericsson. It's also about to close a $10-15m third round of funding in which Ericsson may participate.
Context The embrace of WLANs by operators has long been expected in some quarters, although as recently as six months ago operators were largely ignoring WLAN (as both a threat and opportunity), and instead focusing on the rollout of packet-switched networks and data services. RadioFrame predicts that operators' co-opting of WLAN will mean the end of the wireless ISP (WISP) market, which it believes was always unsustainable from a business point of view anyway. Even the largest WISP, MobileStar, has all but crumbled. VoiceStream, Deutsche Telekom's GSM operator in the US, has an option on MobileStar, perhaps pointing to the way ahead for other WISPs.
Technology RadioFrame has been shipping revenue-generating products for two months now to its primary customer, Nextel, which is using an iDEN (integrated digital enhanced network) version of the company's RadioFrame System hardware and software. The technology has been designed principally to support the development of the corporate indoor voice and WLAN (802.11b) connectivity markets.
The system comprises airlink, base, network and gateway chassis units. RadioBlades antennas supporting different network protocols (iDEN, WLAN, GSM) plug into the units, which means that the system can be upgraded to new air interfaces as required. Internal software configures the system according to each network requirement. Wall-mounted RadioFrame units (about the size of exit signs) send the signals to the RadioBlades. Each can cover a 30-meter radius.
The system accepts radio frequency from, or sends it to, the user device over an airlink. It samples and converts RF signal into digital format and sends the packetized signal over an Ethernet connection. Workers can connect laptops, PDAs and other wireless devices to high-capacity WLAN networks provided by operators, and use standard wireless voice services. Most attractive are those users that already use wireless networks for a high proportion of the voice traffic.
RadioFrame expects operators to absorb the cost of the technology and to make money on services. It charges about 100,000 pounds ($143,000) for a wireless system covering one million square feet and supporting 1,800 users. Adding WLAN will cost some 18,000 pounds on top of this.
Competition Simply increasing power on outdoor cells to penetrate buildings is not cost-effective and unbalances the entire system, RadioFrame argues. Other solutions from the likes of Foxcom, LGC Wireless and ADC are focused on distributed antenna systems, which amplify or repeat connections from the outdoor cell. RadioFrame says these are expensive, low capacity, interfere with the outside system and don't support the addition of new services. Picocell solutions such as interWave, Siemens and MNET are expensive (on a per-user basis), low capacity and can't hand off from calls originating on the outdoor system. Nokia's so-called converged wireless and WLAN solution requires two separate wiring runs to two separate antennas, separate management and can't readily be upgraded if an operator changes its air interfaces. Nortel and Ericsson had both begun developing technology like RadioFrame's, but have lost the projects to cost-cutting measures.
Sales and marketing RadioFrame is 75% of the way toward finishing its GSM product, which will ship in the second quarter. The product will be used by Orange, its first European customer, and will be released in three versions. The first will support voice, SMS and circuit-switched data, the second GPRS and the third EDGE.
Orange will offer WLAN access to businesses as the on-ramp to other corporate data services -- as a way of increasing ARPU from data services. It already owns about 75% of the corporate wireless market in France, where it's the incumbent operator, and wants to take on Vodafone and mmO2 in the UK corporate market. The operator plans to announce its integrated WLAN strategy in the second quarter.
Financial impact RadioFrame has netted $11.5m in funding since inception in 1999. Its founders came from McCaw Cellular. With Nextel committed to spending several million dollars on its technology this year alone, RadioFrame expects revenue in the tens of millions in 2002, and for that to grow 50-100% annually. It has 52 employees.
Conclusion Operators, which are struggling to repay 3G license costs, were never going to let independent WLANs take away wireless data business. Embracing it will smother most of the WISP market but stimulate WLAN interest and momentum. A couple of pieces of the jigsaw remain unaddressed however. First is roaming between networks (a WLAN is only as good as workers' ability to connect to it), and second are regulatory hurdles; in the UK, operators are prevented from selling per-minute WLAN use. Operators are said to be both lobbying the government for changes and constructing other payment schemes. With Ericsson carrying its product to market, RadioFrame should quickly establish itself as a leading player in developing operators' WLAN product portfolios.