T-Net British Columbia: Home

Member Login | Employer Login 

Tech News Tech Events Tech Careers Tech Directory Tech Stocks
T-Net 100 T-Net Members Feedback Advertising About T-Net

Wi Fi Fo Fum
A bi-weekly column with timely, relevant and possibly irreverent insight into the BC technology industry.

Something Ventured:
June 14th, 2002

By Brent Holliday
Greenstone Venture Partners


“I'll tip my hat to the new constitution
Take a bow for the new revolution
Smile and grin at the change all around…” – The Who, Won’t Get Fooled Again


I wasn’t writing a column back in 1994, but I was observing a phenomenon a little bit ahead of most of the rest of the business world.  It was thing called Mosaic that you could download onto your computer using arcane Unix commands through a 2400 Baud modem.  Once installed, the software opened up the world of hypertext, a nice clickable GUI interface for the Internet that made Gopher look like, well, Fred Grandy naked. {Look it up, you’ll laugh}


After seeing the Web for the first time, I was convinced that it would be a very big thing. But, for at least another 18 months, the business world yawned.  One only needs to point to “the memo” as the coming of age of the Internet.  In December 1995, Bill Gates fired off an e-mail that shifted his entire company towards the Net and the race for legitimate business applications was on.


The knock against the Internet’s usefulness in business was the underlying unreliability of the network.  Packet networks did not guarantee timely delivery or dedicated bandwidth.  The Internet was a hodge podge of networks forming a larger network that nobody owned and was therefore, insecure for real business data. Big business preferred the safety of what BC Tel and others sold them (frame relay, dedicated T1, leased lines, Datapac).


The idea of voice traffic being digitized and sent over this network was utterly preposterous.  Science fiction.  And these new ISPs (Internet Service Providers) that provided access to the Internet to end users and businesses were former bulletin board operators who made nerds look like nerds.  They couldn’t run real businesses could they?  Do you remember the largest providers of Internet Access in Vancouver before the giant woke up and created Sympatico?  Hands up those of you that had a Wimsey, Mindlink, Helix or UBC Interchange account.


Why did the Internet gain so much momentum so fast?  There were a bunch of reasons, but the main one was that the network’s core was essentially free. In the span of one short decade, the entire data (and most of the voice) infrastructure in the world has moved to the Internet’s IP structure and standards (away from expensive dedicated networks owned by telcos). 


Fast forward to 2002.  A revolution is starting out on the periphery of the Internet.  It smacks of all of the same characteristics of the coming of age of the Internet.  It has nerds, many detractors in the business world, an expensive alternative touted by the telcos and it’s underlying fabric is free.  Did I mention nerds?


It’s your old friend WiFi.  Also known as 802.11b (802.11a is just coming out now. Yup, they launched b before a.  I warned you about the nerds)  These rather poorly named standards are wireless networking protocols that allow the interconnection of computing devices at high bandwidth over a short range (<100 feet).  Like any good technology story, this standard was not intended for its current use and a well conceived industry standard was supposed to work (Bluetooth).  WiFi has been around for a few years and was always intended to be used as a LAN protocol.  That is, it was meant to work in your office, behind your firewall, connecting your to a printer for example.  The thought was that in the absence of good Cat 5 cabling through a building, wireless would be a cheaper way to network computers.


Then the proverbial light bulb went on.  The part of the radio spectrum being used for WiFi was free.  Still is.  It is the 2.4Ghz range and it is not sold/auctioned/governed by the FCC or CRTC.  So, if you attached your 802.11b transceiver (cost $300) to a high speed Internet connection (a cable modem or DSL connection) then you could hook people up to the Internet within 100 feet (as long as they could afford the $200 PCMCIA WLAN card for their laptop).  For only the cost of your wireline connection.  Have a few people dining on your fixed cost bandwidth and you could make some coin.  Enter the airport lounge/hotel/coffee shop WISP (Wireless Internet Service Provider) as a new category of business.


Some smarter nerds have figured out ways to daisy chain the 802.11 transceivers to extend their 100 feet to 5,000 feet.  The latest way to boost your own transceiver range is by adding a Pringles can to the antenna.  I kid you not.  Warnings have just been issued to people concentrating the radiation like this that it may be unsafe.  I think it just adds to the revenue stream for the WISP.  Cook your noodles or heat your coffee while surfing the Net.


I had a conversation with a Telus Mobility executive a few weeks back that went something like this:

Her: “I think the roll out of 1xrtt (the new faster, almost 3G network for data) will go very well for us later this year.  Businesses really like the speed and functionality.”

Me: “Really.  How much will it cost for a user?”

Her: “A rate per bit is anticipated.  The average business user doing e-mail and running corporate applications could see bills of up to $200 to $300 a month.”

Me: “That’s a lot of cash for 56Kbps data speeds”

Her: “Remember, it’s accessible almost anywhere in the cell footprint.  So they can use it all over Canada in urban areas”

Me: “I think your 1xrtt is toast.”

Her: “I beg your pardon?”

Me: “Where do people want access to high bandwidth?  I mean the ad campaign of the guy on the beach with high speed access is a joke.  They want it at their desk, where they meet at the office or other people’s offices, at home, at airport lounges, in hotels and at school.”

Her: “People will want it when they commute in trains or buses.”

Me: “Sure and that is the only time they want it when they are moving.  People want bandwidth when they are standing or sitting still.”

Her: “Well, silly, it (1xrtt) works then too.”

Me: “So does 802.11b and it costs next to nothing for 5 x the bandwidth of your 3G network {snicker}”

Her: “Are you giving me your phone number?  You sick puppy.  I’m married.”

Me: “No. {blushing} Eight-Oh-Two-Dot-Eleven-B is a wireless networking standard.  By the way, how much for the antenna/receiver for the 1xrtt network that goes in my laptop?”

Her: “Ahem.  On volume they should get below $600.”

Me: “A WiFi card is less than half that already.  The access is all you can eat bandwidth for a low cost per hour from a WISP like Fatport here in Vancouver. They even have a roaming agreement with other WISPs worldwide that means that you land in an airport or check into a hotel and sign on the same way.  And, pay only when you are using it if you want.”

Her: “Sounds like a hodge podge of unsecure networks over free spectrum, run by nerds who don’t know how to run business and serve customers.  Enterprises won’t go for this “cheap alternative”.  It will be a fringe business. We know our business customers want 1xrtt.”

Me: “Wanna put a fiver on that, lady?”


Ok, you get the point.  I think that the enormous investment by telco’s in 3G spectrum (they spent billions buying it), the 3G equipment infrastructure and cost of all new handsets will be tough to recoup if what they are selling is higher wireless bandwidth.  They need applications that go point to point and phone to phone to be a success.  They need killer consumer apps.  They will not make money on the business user whose alternative is the much cheaper nodes of high bandwidth offered by the 802.11b local nets. 


There are technical problems with 802.11b. The largest of those is the fact that channelization on the current transceivers limits the number of actual users and their bandwidth allocation.  The other major knock is the inherent insecurity of the wireless bubble around your computer when receiving and sending data in this manner.  A final hurdle is the fact that the standard was not meant for Internet access, but for LAN access.  IP addressing, dynamic sign-on and other administration issues need to be solved to make it really transparent like a 1xrtt network is supposed to be.


Innovation comes to the rescue when the momentum grows for a solution.  802.11a increases the bandwidth and solves some of the channelization issues in b.  802.11g (please don’t ask where c, d, e and f went) is just around the corner with all functionality aimed at the casual broadband access user.


In 1994, the Internet was poo-pooed as a business class network. Oh how wrong those detractors were.  I think that the smart entrepreneurs will see that WiFi will be a business class wireless network real soon.


Random Thoughts –


This Stock Market Brought To You By The Letter W – Oh the humanity!  With the NASDAQ settling in below 1500 again, the tech wreck seems to be continuing.  Set your NASDAQ chart to 1 year and see if a W is starting to form.  Only the last “up” part on the right hasn’t occurred just yet.  Most people, my self included, have deluded themselves into thinking that the stock market’s broad indexes have something to do with the underlying economy.  The logic goes like this:  Economy does well, companies do well, profits go up, growth is assumed and stock prices rise.  None other than Warren Buffet pointed out to me the other day (Ok, me and 1.5M watchers on CNBC) that this is absolute horse hockey.  Over a 17 year period beginning in 1966, the wise Oracle of Omaha said, the economy grew at an average pace of 3.5% per year in the U.S.  But the Dow Jones average went up 1 point.  Yes, you read that right.  Imagine a 17 year period, beginning in September 2001, when the market indices don’t improve. And you thought you were depressed now. 

Gordon Campbell Redux – How is the man with the plan doing for us techies one year after he wiped the floor with the NDP?  First, we have the tax reductions. No complaints there.  Second, we have the cutting of red tape for business.  Lots of work to do, but definitely making progress.  Third, doubling the pipeline for engineers.  This seems to be in the works, but it is something that is impossible for us to measure for years.  We will not feel this impact for a long time.  Fourth, has he created a business friendly climate for BC to get us investment and interested entrepreneurs?  Doesn’t feel like it yet, does it?  This is a very subjective perceptual thing.  One year after the 10 year NDP debacle ended, I don’t see how we could possibly have turned the perception ship around.

Finally, his government recently made the move to open up the labour-sponsored fund monopoly. By passing the bill in the legislature a few weeks ago, the government has created two new venture firms for early stage technology.  Sounds great right?  Well, um, not really.  Reducing the amount that Working Opportunity Fund can raise only hurts them.  It doesn’t help the community at large.  Adding two new players with $20M to invest each and a mandate to invest it across all tech fields like biotech, alternative energy, IT and other areas means that you will have two funds with generalist venture capitalists overlapping a lot of ground already covered by existing venture firms.  The right way to do this is specialized funds where the managers can put all of that money to work and build expertise and networks to genuinely help the companies that they invest in.  A minor kvetch for Rick Thorpe and his ministry, but it would make the new funds more effective.

At the end of the day, the Campbell government has 4 years left to make sure that the NDP doesn’t win the next election so that the meaningful changes to this province are done over a decade.  Ten years is the right time frame to work under for real meaningful results.

What Do You Think? Talk Back To Brent Holliday


Something Ventured
is a bi-weekly column designed to supplement the T-Net British Columbia web site with some timely, relevant and possibly irreverent insight into the industry. I hope to share some of the perspective and trends that I see in my role as a VC. The column is always followed by feedback (if its positive or constructive. I'll keep the flames to myself, thanks).

Something Ventured Archive

Online Venture Capital Guide

Printable edition