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Weekly Column

Array of Hope: How One Little Company Throws Into Doubt Some of theThird-Generation Cellular Hype

Status: [CLOSED]
By Robert X. Cringely
bob@cringely.com

Sure, we could debate for weeks the fate of Microsoft, its guilt or innocence (guilty), and the likely best remedy (my favorite suggested remedy this week was a $60 billion cash payment spread among all registered Microsoft users with no payment to lawyers). Let's see, that's $60 billion divided by approximately 100 million, or $600 per user. The theory here is that such a fine would drain Microsoft's war chest, knock the stock down, and probably put a crimp in Bill's mayhem budget even without fracturing the company. I like it, but that's not what we are here for. It is time to take the high ground and start looking for positive models in high technology. For the next several weeks I'll be concentrating on interesting companies with interesting ideas, outfits that — whether they succeed or not — help us all progress through their innovation. This is the best part of both high tech and business.

Behind door number one we find Arraycomm, a Silicon Valley company determined to change the world through the deployment of smart antennas. A smart antenna in this case is actually an array of antennas (hence Arraycomm, get it?) managed by a very smart computer. By processing received signals from, say, a portable cellphone, the smart antenna can literally shape its own transmission and reception patterns to increase both range and the ability to discriminate between different phone operating on the same frequency. Arraycomm's antennas are VERY smart. Five years ago, I saw a company demonstration in which two cellphones could operate on the same frequency in the same room and still not interfere, even as the cellphone users walked around the room and passed in front of each other. The signal lock was never lost.

What this means, or more properly what it could have meant, was that three to four times as many users could have been crammed onto a cell system that actually had fewer cell sites. Performance would have been better, interference less, and range increased, perhaps at a reduction in system price. Only it pretty much didn't happen that way, which suggests that the price model wasn't that favorable. And it really shouldn't be surprising, given that the kind of signal processing taking place in an Arraycomm antenna is analogous to what happens in an MRI machine down at the hospital. Time for Plan B. Remember that startups nearly always have to abandon at least some aspect of their original idea and turn to Plan B.For Arraycomm, Plan B appeared to be using the same smart antenna technology to create what the company called a Wireless Local Loop (WLL). This would have been a non-portable, but still wireless phone that operated just like a desk or wall phone. By making the phones non-portable, the computing load on the antenna system was dramatically reduced, making it possible to support even more users at a lower cost. Dropping the wires would have appealed to an outfit like AT&T that wanted to get back into the local phone business and was seriously considering a wireless local loop, but that was before AT&T spent almost $100 billion trying to do the same thing by purchasing McCaw Cellular and the TCI cable TV system. So much for an AT&T.

And now Arraycomm has returned with Plan C, which doesn't involve phones at all. The new-old technology is called I-burst, and is a fixed and semi-mobile, data-only service planned to support zillions of users with an always-on signal that peaks at one megabit-per-second. Think of I-burst as wireless DSL.

I have no doubt that I-burst will work, though whether it will be a commercial success is another matter. The folks at Arraycomm have certainly proved their smart antenna technology over and over again, though apparently not at a good enough price. Certainly these folks know what they are doing. Arraycomm's CEO, Martin Cooper, was generally acknowledged as the inventor of the cellular telephone when he worked at Motorola. It's hard to fight success like that. ("But what have you done before, Mr. Cooper," asks the haughty 29-year-old VC. "Not that much, I only INVENTED THE CELLPHONE!!!!!!") But this is Plan C, remember. What makes ArrayComm think it will be successful this time? The answer is Arraycomm's new best friend and investor Sony.

Sony has a hunger for broadband Internet so strong that we should be able to hear corporate stomach growls all the way from Tokyo. Under CEO Mr. Idei, Sony has lately shown a new desire to license its music, video, and film content over the Net at precisely the same time the company is abandoning much of its snotty Not-Invented-Here bias of the past. That's why Sony just put $8 million into Arraycomm. It could be a very cheap investment.

Here's why. Arraycomm could have attached its smart antennas to almost any radio technology, but I-burst seems intended to roll-out operating in the 2.3-GHz band. This is a frequency that can easily support those one megabit-per-second datarates, but more importantly, it's available without having to buy a license from the Federal Communication Commission. If Sony should desire to install 8,000 to 10,000 smart cell sites in the top 100 U.S. media markets over the next couple years, it could do so without having to mess with the Feds, with local governments, with anyone except the 7-11s and Starbucks that would be likely places to plant those antennas (the entire array is 60 cm across smaller than a table for two). For something less than $1 billion, Sony could have a broadband system bigger than most U.S. cable TV and telephone companies, able to offer a variety of IP services to tens of millions of simultaneous users.

Maybe this will happen, maybe it won't, but the very possibility has to send the market into a frenzy. Those third-generation wireless phone licenses that are expected to bring tens or even hundreds of billions in auction fees to the FCC, are they really worth it? That's just one example of the type of second guessing that will be shortly going on. I love it.

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