Tech titans cast a new wireless net

SAN FRANCISCO - In forming a Wi-Fi company last week, partners IBM, AT&T and Intel have a lofty goal: install wireless antennas and offer high-speed Internet access within 5 minutes driving time of customers anywhere in the 50 largest U.S. cities. But it wasn't clear how the ambitious effort would address a number of issues, including security and pricing.

The company, Cometa Networks, which includes venture firms 3i and Apex Partners, is aimed squarely at enterprise mobile users and promises to increase the number of wireless access hot spots by installing network devices in retail stores, restaurants, hotels and gas stations.

Cometa will work with telephone companies, wireless carriers and other providers to help create and resell the service that could be accessed by any device with an 802.11b or 802.11a wireless LAN adapter.

Cometa joins a group of companies that have been struggling to find ways to use 802.11 technology, dubbed Wi-Fi, to create inexpensive broadband (up to 11M bit/sec) public access to the Internet and corporate intranets. These companies include start-up Boingo Wireless; cellular carrier T-Mobile, which offers Wi-Fi access in Starbucks coffee shops; and Verizon, which recently announced a wireless service for businesses.

Cometa will pack clout, as it has some serious players with deep pockets in AT&T, IBM and Intel.

And the potential stakes are significant. According to a study by The Yankee Group in October, North American public wireless LAN revenue will jump from $9.1 million this year to $82.4 million in 2003, and to $216.6 million in 2004, when Cometa plans to have 20,000 wireless access points deployed. In 2007, Forrester predicts, revenue will be more than $1.6 billion.

Cometa executives, including Chairman Ted Schell, a general partner with private equity investment firm Apax Partners, and CEO Larry Brilliant, co-founder of The Well online service in the 1980s, and SoftNet, an early broadband Internet access company, last week made optimistic promises about the company's prospects.

"More than 100 million Internet users in the U.S. will be able to access their current Internet accounts, office systems and corporate networks via their current [service] provider, and their existing billing arrangements," Brilliant says. "The only thing that's new is that once Cometa is in place, all of us will be able to sign on from anywhere, at any time."

But after spending nearly a year researching the project, with about 40 employees of the Cometa partners involved in hammering out details, Cometa executives and representatives of AT&T and IBM Global Services remain vague on a host of issues.

They decline to comment on how Cometa is to be structured, what the equity arrangements of the partners will be or even how much money they'll invest.

"Apax and 3i have very substantial [financial] capabilities," Schell says. "We don't see any problems around [Cometa] having enough capital to carry this out."

He also says that several carriers already have approached Cometa with offers of "incremental investments as needed." Intel Capital, the chip maker's investment arm, also will participate. Intel recently announced it would spend $150 million to fund companies that are focused on Wi-Fi networks.