The Business and Regulatory
Environment for Wi-Fi Services
Wireless Community and Mobile User Conference
Monterey, California
June 2, 2004
Stefan Lopatkiewicz
Dorsey & Whitney LLP
1
What Is “Wi-Fi”?
• “Wireless Fidelity”: a trademark for Wireless Local Area
Network (WLAN) configuration
– Wireless high-speed access to the Internet
• Registered by Wi-Fi Alliance
– Organization of equipment vendors and service providers
interested in the deployment of wireless LAN
2
Visualizing the Fixed Wireless Context
Metro Area Network
25 kilometers
“Wi-Max”
MAN
Local Area Network
100 meters
“Wi-Fi”
LAN
PAN
3
Personal Area Network
“Bluetooth”
10 meters
Wi-Fi and Wireless Ubiquity
+
=
4
PERSONAL
BROADBAND
Some Fixed Wireless
Historical Background
• 1990’s: LMDS (Local Multipoint Distribution Service)
Voice, data, video distribution
Above 25 GHz range
MMDS (Multipoint Multichannel Distribution Service)
“Wireless Cable”
2.5/2.7 GHz
• Heavy investment by carriers in MMDS (MCI, Sprint,
BellSouth) and start-up ventures in LMDS (Teligent, Winstar)
• Business plans never materialized
Line-of-sight restrictions
Heavy debt from spectrum auctions
Could not compete with cable, DSL
5
Wi-Fi: The Legal Environment
• Technical Standardization
• Unlicensed Spectrum
6
ABCs of Technical Standards
Spectrum
Maximum
Bit Rate
Maximum
Range
802.11b
(Wi-Fi)
2.4 GHz
11 Mbps
100 meters
Most widely deployed original WLAN standard; good
penetration in residential market
802.11a
(Wi-Fi)
5.0 GHz
54 Mbps
30 meters
Attempted successor to 802.11b because of higher
throughput; lower access range limited acceptability
802.11g
(Wi-Fi)
2.4 GHz
54 Mbps
100 meters
Backward compatible with 802.11b and improved
throughput rate; popular successor to 802.11b for
enterprise market
802.11i
n/a
n/a
n/a
IEEE working group focused on improving WLAN
security; produced initial WPA standard in 2003
802.11n
2.4 & 5 GHz
300 Mbps
100 meters
Current working group seeks to advance throughput
capabilities exponentially
700 Kbps
10 meters
Personal area network standard
100 Mbps
25 kilometers
Metropolitan area standard; anticipated backhaul
solution focuses on non-line-of-sight transmissions
25 kilometers
Mobility standard based on 802.16a
802.15
(Bluetooth)
7
802.16a
(Wi-Max)
2-11 GHz
802.16e
2-6 GHz
802.20
Below 3.5
GHz
Characteristics
New Mobility standard for WLAN/WMAN
Institute of Electrical and
Electronics Engineers (IEEE)
• Global private, non-profit industry association
– 375,000 individual members
– 150 countries
• A leading world authority in technical disciplines
including information services, telecommunications,
electric power, consumer electronics
– 1898 – first dedicated efforts toward standardization of
electrotechnology in U.S.
8
Structure of IEEE
37 Technical Societies
Communications Society
Computer Society
Board of Directors
Executive
Committee
Executive Director
Staff
Standards Association
9
IEEE-SA
• Membership organization
• 12,000 individual members in 107 countries (2003)
• 41 corporate members in 11 countries – vendors seek to
advance/protect own interests
Broadcom
Deutsche Telekom
IBM
Intel
Lucent
Microsoft
Mitel Networks
SBC
Siemens AG
Sonera
Tata Consultancy
Thales Communications
10
Scope of IEEE 802
Standards Committee
• Specifications ensure
– the highly reliable delivery of data frames
– over a variety of physical media
• coax, twisted pair, fiber and wireless
– distances covered from 10 meters to 10+ kilometers
• Data frames may transport any protocol and/or
information within certain size limits
11
802 Standards Committee Organization
802
Architecture
Wireline
Wireless
Advisory
802.1
Bridging
802.3
Ethernet
802.11
WLAN
802.18
Regulatory
802.17
Resilient
Packet Ring
802.15
WPAN
802.19
Coexistence
802.16
WMAN
802.20
Mobile BWA
12
IEEE Standardization Process
A world-respected technical consensus process
Standard
Sponsor Group
Working Group
Task Group
Study Group
Ad Hoc Group
Process supported by enterprise/academic sponsors
Passage requires 75% or greater approval
13
IEEE-SA Intellectual
Property Requirement
• IEEE standards may include the known use of patent(s),
including patent applications, provided the IEEE receives
assurance from the patent holder or applicant with respect to
patents essential for compliance with both mandatory and
optional portions of the standard. This assurance shall be a
letter that is in the form of either
(a) A general disclaimer of intention to enforce patent against any
person or entity using the patent to comply with the standard or
(b) Agreement to license patent without compensation or under
reasonable rates, free of any unfair discrimination
• This assurance shall apply, at a minimum, from the date of the
standard’s approval to the date of the standard’s withdrawal and
is irrevocable during that period.
Approved by IEEE-SA Standards Board December 2002
14
The 802.11 Project
• Launched in 1990 to “develop a Medium Access Control
(MAC) and Physical Layer (PHY) specification for
wireless connectivity for fixed portable and moving
stations within an area.”
1997 – First standard proposed with a throughput
capability of 1-2 Mbps
1999 – 802.11b 11 Mbps throughput
802.11a 54 Mbps throughput
2003 – 802.11g 54 Mbps throughput
2003 – Launched 802.11n to increase throughput;
results not expected until 2006.
15
Wi-Fi Alliance
• Organization of primarily equipment manufacturers
originally founded as Wireless Ethernet Compatibility
Association.
– Certifies interoperability of 802.11 devices
– Not to be confused with IEEE
16
Wi-Fi Alliance Membership
RELATED
CELL
COMPUTERS EQUIPMENT PHONES
CARRIERS
OTHERS
Apple
Canon
Alcatel
AT&T
Pronto Network
Dell
Cisco Systems
Ericsson
NTT
Proxim
Gateway
Fujitsu
Motorola
SBC
Hewlett Packard
Intel
Nokia
Sprint
Trapeze
Network
IBM
Microsoft
Palm One
Samsung
Texas
Instruments
Toshiba
17
Verisign
Basic Mechanics of Wi-Fi
ROUTER
SERVER
SWITCH
CAT 5 Cable
Backhaul
Wireless
Access
Points
(Hot Spots)
18
WI-MAX v. Wi-Fi
• January 2003, IEEE approved 802.16a Standard
– Provides WLAN access over “Metropolitan” radius
– 2-11GHz (both licensed and unlicensed bands)
• Offers promise of wireless “last mile” backbone
– Potential backhaul solution
– Presents threat of making Wi-Fi irrelevant?
• July 2003, Intel announced it would begin manufacturing
chips to support the standard
19
WI-MAX Forum
• Seeks to do for 802.16 what Wi-Fi Alliance did for 802.11
• Members show much overlap with Wi-Fi Alliance,
including computer manufacturers, related equipment
manufacturers
• Some start-up equipment and service providers are
focusing on WiMax products in place of Wi-Fi, such as
Flarion and Navini Networks
• 25% are service providers, including several fixed-line
carriers
20
The U.S. Tradition of
Unlicensed Spectrum
• In 1934 Communications Act, FCC established as federal
agency responsible for licensing use of radio spectrum
• In contrast to most national telecommunications
administrators, FCC has long followed a tradition of
permitting use of some frequencies on unlicensed basis
• Beginning in 1938, FCC created Part 15 of its rules,
governing devices operating in designated bands at low
power levels that would not cause interference
21
Part 15 Devices
• Realm of Part 15 devices has gradually grown
– Unintentional radiators – computer peripheral devices
– Incidental radiators – automobile engines
– Intentional radiators – low power transmitters
• Great growth in 1960’s and 1970’s with consumer
applications
• Examples include television interface devices, baby
monitors, garage door openers, microwave ovens, wireless
microphones
• Cordless phones became single most import application in
1980’s, and in 1997 surpassed wired phones in U.S.
productivity
22
ISM, U-PCS and U-NII Bands
• Industrial, Scientific and Medical Bands (immunity to
interference and low probability of intercept)
– 900 MHz
– 2.4 - 2.483 GHz
– 5.725 – 5.825 GHz
• Unlicensed Personal Communications Services (1993 –
digital narrowband voice for communication and highspeed data transfer)
– 1910 – 1930 MHz
– 2390 – 2400 MHz
23
ISM, U-PCS and U-NII Bands (cont’d)
• Unlicensed National Information Infrastructure
(1997 – short-range, high-speed digital communications)
– 5.15 – 5.35 GHz
• As popularity and importance of unlicensed devices has
grown, pressure has built for higher power levels in
higher frequency ranges
24
Importance of “Smart” Radios
for Unlicensed Use
• Use of unlicensed frequencies is non-exclusive,
not protected from interference
• Consequently, focus has shifted to technical capabilities
of radios operating in these frequencies
– Emission standards
– Digital modulation controls
• FCC has adopted regulation of transmitter in place of
regulation of licensee
• Philosophical debate growing over “command and
control” licensing of spectrum versus “commons”
approach
25
Use of Unlicensed Spectrum
for Standardized Devices
• IEEE – SA has recognized import of unlicensed
frequencies for interoperability
– 802.11a – 5
GHz (U-NII)
– 802.11b – 2.4 GHz (ISM)
– 802.11g – 2.4 GHz (ISM)
– 802.16 – 2-11 GHz (licensed and unlicensed bands)
• Unlicensed does not mean unregulated
26
Spectrum Regulatory Agencies
U.S. – Federal Communications Commission
National Telecommunications and Information
Administration (Commerce)
State public utility commissions
Int’l – International Telecommunications Union (U.N.)
National administrations
27
Growth of Unlicensed Spectrum for WLAN
• January 2002, Wi-Fi Alliance (formerly known as WECA),
petitioned FCC to allocate additional 255 MHz of
spectrum on 5 GH band for unlicensed WLAN
applications
• January 2003, interagency group, including NTIA, DoD
and FCC, in consultation with ITU-R, reached agreement
on sharing the requested spectrum without causing
undue interference into military systems
– Dynamic Frequency Selection – “Listen before talk” – looks
for RADAR use of frequency before transmitting, and seeks
out clear channels
– Transmitter Power Control (TPC) – reduces maximum
power when possible to promote more efficient frequency
reuse
28
Growth of Unlicensed Spectrum for WLAN
(cont’d)
• January 2003 inter-agency agreement led to U.S. position
advocating 455 MHz for RLAN use at ITU, summer 2003
• July 2003, ITU approved allocation of 455 MHz for RLAN
in 5 GHz range
– Not necessarily unlicensed; depends on national
administration
• November 2003, FCC approved Wi-Fi Alliance petition for
additional 255 MHz of unlicensed band in 5 GHz range
– Harmonized U.S. allocation with international allocation
29
5 GHz Spectrum Available for WLAN
30
ITU
(July 2003)
5.150-5.350
MHz
5.470-5.725
MHz
U.S.
(Pre-ITU)
5.150-5.350
MHz
5.725-5.825
MHz
U.S.
(Nov 2003)
5.470-5.725
MHz
Total U.S.
5.150-5.350
MHz
5.470-5.825
MHz
455 MHz
300 MHz
255 MHz
555 MHz
FCC 3650-3700 MHz Rulemaking
• April 2004, NPRM proposes permitting wireless broadband
use for 3650-3700 MHz band on either licensed or
unlicensed basis
• Current Fixed Satellite Services (FSS) band
• Would require use of “cognitive” (smart) radio devices
– “look before talk”
– Self-identifying signal
– Preserve zone of protection around existing satellite facilities
on coasts
• Anticipated benefit for WLAN in rural areas
– Permit use at higher power levels than normal Part 15 devices
• Located in middle of 2.4/5 GHz bands
31
Unlicensed Broadband in Unused TV
Channels
• May 2004, FCC NPRM to allow unlicensed broadband
devices in unused portions (“white spaces”) of
broadcast TV spectrum
– Below 1 GHz
• Propagation characteristics seen beneficial to permit
greater service range for WLAN
• Need to employ “smart” radios to avoid interference with
TV service
• Part of effort to transition to digital TV
32
Greater Flexibility in Use of Unlicensed
Devices
• September 2003, FCC NPRM to permit use of more
advanced antenna technologies in 2.4 and 5 GHz
unlicensed bands
• Permit broader use of spread spectrum devices under
part 15
• Modify replacement antenna restrictions
• Expressly intended to support manufacturers and users
of unlicensed devices for wireless networks, particularly
in rural areas
33
FCC Policy Objectives
• May 5, 2004, FCC formed inter-bureau wireless
broadband access task force to develop policies
• FCC asked for comments so that task force can produce
recommendations on how to advance deployment of
WISPs by October 2004
• At least two objectives identified
– Encourage creation of competitive delivery systems to
wireline (DSL), cable
– Help deploy broadband to rural areas to reduce “digital
divide”
34
Congressional Support for WLAN
• 2003 Jump Start Broadband Act
– Would require FCC to allocate at least 255 MHz in 5 GHz
band for unlicensed broadband use
– Direct NTIA to establish standards for interference
protection for government users
• 2003 Spectrum Commons and Digital Dividends Act
– Encourages reallocation of 1700-1800 MHz for wireless
broadband and payment for relocation of existing users
35
Wi-Fi: The Business Environment
36
Wi-Fi’s Potential Disadvantages
• Limited range – typically up to 100 feet and transmission
rates can be slowed by physical obstructions, like walls
• Because unlicensed, risk of interference from multiplesource users
• Security concerns – how to prevent “rogue” users
– Accessing confidential databases
– Disrupting legitimate users
37
WPA – THE Wi-Fi Alliance Security
Solution
• Prior to 2003, Wired Equivalent Privacy (WEP) standard
was only Wi-Fi security tool available, and required for
Wi-Fi Alliance certification
– Determined to be flawed
• 802.11i Working Group was dedicated to overcome this
challenge
• Early 2003, consensus reached on new standard, Wi-Fi
Protected Access (WPA), an advanced encryption
technology
• Consensus that problem has been solved
• China made an abortive attempt to advance its own WAPI
standard
38
Wi-Fi’s Cost / Deployment Advantage
• Access points (hotspots, nodes) can be installed for
small cost ($120 residential), assuming backhaul
• Deployment is rapid; not much infrastructure required
• Networking card has declined from $100 to $30
• Wi-Fi chip now commoditized at $10
39
Delivering the Wi-Fi Signal to the End User
PC, Laptop
Mobile Phone
ACCESS
POINT
Play Station
PDA
40
DVD Player
Metrics of Wi-Fi Usage
Exponential growth; niche wireless market
• U.S. users will increase from 4.2 million to 31 million in
four years (Gartner Group)
– 80% of laptops sold in 2005 will be
Wi-Fi enabled by next year (Gartner)
• U.S. revenues have tripled in two years to $1 billion (out
of $140 billion wireless market) (Instat/Cahner)
– 3.5% of total wireless market by 2009 (BCWS/Sensa)
– $11.5 billion global market by 2009 (On World)
41
Four Primary Wi-Fi Markets
Low Visibility
Residential
Enterprise / Campus
Internet
Public “Hot Spot”
Private “Hot Spot”
High Visibility
42
Wi-Fi Residential Market
• In U.S., this has proven early successful Wi-Fi
application
• Growth will remain strong, doubling to 8% of high-speed
residential market this year, i.e., up to 4 million homes
(Jupiter Research)
• Next stage of growth: linking pc to home entertainment
devices (television, DVD player, etc.)
– Could accelerate growth of this market
• Two visions: the pc versus the Play Station as the “hub”
of residential use; Intel v. Sony/Nintendo/Microsoft
43
Wi-Fi Enterprise / College Campus
Market
• Colleges adopted relatively quickly as low-priced
campus communication system, intense need for
Internet access
• Specific other vertical applications also made early
investments – e.g., health care
• Enterprise market has held back due to security
concerns, although is already 10x more valuable than
residential market in terms of revenue
• WPA has “solved” these concerns
• 50% of Fortune 1000 will have extensive Wi-Fi
deployment by end 2005, integrating 802.11g with
wireline systems (Gartner)
44
Wi-Fi “Private” Hot Spots
Commercial WISP market
Hotels –
exponential growth in three years (Wayport, STSN,
iPass)
1000 U.S. hotels today, 27,000 by 2007 (Pyramid
Group)
Evolved from lobbies, conference rooms into guest
rooms
Airports – captive market (e.g., Boingo)
Coffee shops – Starbucks (T-Mobile), McDonald’s (Wayport)
Asia Pacific has 53% of private hot spots globally
A la carte or monthly subscription to provider
“Roaming” agreements needed
Some facilities have elected offering as no-charge amenity
45
Airport Hot Spots FCC Petition
• Industrial Telecommunications Association petition to
FCC to preempt airports’ efforts to control tenants’
provision of Wi-Fi services (January 2004)
• Airports claim need to avoid “spectrum interference,”
but are clearly offering service to public for a fee
• Airports’ position impacts not only coffee houses,
restaurants, but potentially airlines
– Airlines are deploying RFID systems for baggage control
using Wi-Fi frequencies
• Query whether landlord rights will prevail
46
Wi-Fi “Public” Hot Spots
• Municipalities, urban organizations are deploying “Wi-Fi”
zones as means of attracting commerce and tourism,
spurring redevelopment
• Approaches vary broadly, typically involving some
combination of government / chamber of commerce /
private sector participation
• Washington, D.C. – New “Open Park Project” has
launched wireless zone to cover entire Mall area,
including Capitol
• New York – Bryant Park model
• Boston, Portland – Wi-Fi in public housing
• Intel list of most “unwired” cities
47
Long Beach, California
Who:
What:
When:
Where:
Why:
City + high tech companies
High-speed access at no charge
May, 2004
Downtown and Airport Wireless
Internet Districts
Marketing campaign to attract
tourists and new businesses
Fox, Smolen & Associates
Austin, Texas
48
Athens, Georgia
Who:
What:
When:
Where:
Why:
U. of Georgia
Wireless LAN w/ 9 sites
2004
24 blocks of downtown
Mobile Media Consortium
Fox, Smolen &
Associates
Austin, Texas
49
Athens, Georgia
Fox, Smolen &
Associates
50
Austin, Texas
New Supreme Court Ruling on
Municipal Authority
• Section 253 of 1996 Telecom Act authorizes FCC to
preempt state and local laws “prohibiting … any entity”
from providing telecommunications services
• FCC denied a petition by Missouri League of Municipalities
to preempt state government from denying cities’ ability to
provide telecom services
• March 2004, Supreme Court upheld this decision: Telecom
Act was not intended to reach state regulation of its own
political subdivisions
• Whether and extent cities and local governments can
establish and operate “wireless zones” is governed by
state law
51
Community Wireless Access Systems
• Spontaneous, voluntary, municipally-based systems
comprised of residential and retail users making access
points available for public use
– SF Wireless
– NYC Wireless
– Seattle Wireless
– Personal Telco Project (Portland)
• Ad hoc in structure – to follow no master plan
• 2002 survey in Manhattan reflected 30% residential
systems were “locked”
52
The Impact on “Private” Hot Spot Market
• Global commercial WISPs will generate only $80 million
in current year (Gartner)
– $28 million in U.S.
– Equals Verizon Wireless revenues in 12 Hours
• Problems identified
– Too expensive
– No ubiquitous network coverage
– Growth of “public” hot spots
• Cometa Networks (Intel / AT&T / IBM joint venture) is
withdrawing from the market
• Not a stand-alone business, but many bundled and niche
applications
53
Rural Wi-Fi Opportunities
• End 2003, Alvarion estimates that unlicensed wireless
broadband systems are available in over 3000 U.S. cities
and towns, with trend toward smaller, rural communities
• Fixed operators recognize Wi-Fi as a tool to bring
broadband to more remote areas
– As Wi-Max certified systems deploy, “last mile” issue of
backhaul could be addressed
• Even without backhaul for Internet access, community
Intranet can be established
– Peer-peer bulletin boards and e-mail
– Some tribal communities are starting to use this
54
WAS Case Study: Southern California
Tribal Digital Village
• San Diego County,
USA
• Project funded and
supported by Hewlett
Packard
The Challenge
• Over 7,600 Native American Indians live on
reservations in isolated and scattered communities in
Southern California, near the Mexican border
• Area spans more than 150 miles and takes more 4
hours to visit by car
• 18 Native American Indian reservations
• 50% unemployment
Tribal Digital Village: Areas of Focus
• Access to Education – distance learning, including
University of California at San Diego
• Cultural Preservation – e.g., language preservation and
Web link to specialized cultural library
• Community Development
• Economic Development
• Internet Infrastructure
Tribal Digital Village Network
Using IEEE 802.11b
Power Sources and Network Access Points
• Flexible, solar and even
car batteries
• Access points used as
community centers
Community Bulletin Board
• E-mail exchange
• Events calendar
• Health information
• Education and school
resources information
• Job opportunities
Rural Wi-Fi Opportunities
• LARIAT – non-profit community wireless network in
Laramie, WY
• MagnoliaRoad.net – rural Wi-Fi coop in Colorado
• BRAIN – Broadband Rural Access Information Network
– Public/private partnership between regional WISP and school
districts in western PA
– Access points installed at schools
• Free use at schools
• Residential users pay for access
• E-rate funding is helping subsidize
– Now expanding into western MD
– Applying to Dept. Agriculture / RUS for broadband grants and
loans
61
Voice Applications of Wi-Fi
• Delivery of narrowband voice signal via Wi-Fi is a
growing application
– Dartmouth, U. of Arkansas systems
– Laptops, PDAs become “softphones”
– Substantial cost savings to institutions
• Hospitals use as push-to-talk
• Commercial VOIP applications now being offered
– IDT system in Newark, NJ using Net2Phone handsets and
LMDS spectrum for backhaul
62
Wi-Fi / Wi-Max – Mobile Complement or
Competitor
• Mobile operators hope to offer broadband in 2.5G and
3G models
– UMTs promised in Europe by end of year
• Wi-Fi greater throughput poses challenge
– Nokia and Motorola both rolling out “hybrid” Wi-Fi capable
handsets in 2004
– 85% mobile handsets will be Wi-Fi capable by 2010
(On World)
• Wi-Max starting to blur the lines between portability and
mobility
– 802.16 is attracting carriers for fixed opportunities
– 802.20 is viewed with some hostility because it is looking to
full mobility
63
RFID – A New Wi-Fi Driver
• Radio Frequency Identification
– Inventory and asset control
– Security
– Industrial tracking
• 2004-05 anticipated to be breakthrough year
• Wal-mart requiring 100 top suppliers to have pallets and
cases tagged by January 2005
• Homeland security application?
• Privacy concerns?
64
The Policy Perspective of Wi-Fi
• Should wireless access to the Internet be free to the
public?
– Is it our latest form of highways, bridges?
• Industrial applications indicate there will be a
commercial role
• Should also be an ancillary commercial service for
mobile carriers, DSL
65
STEFAN M. LOPATKIEWICZ
Dorsey & Whitney LLP
Suite 400 South
1001 Pennsylvania Avenue NW
Washington, DC 20004-2533
Phone: (202) 442-3553
Fax: (202) 442-3199
lopatkiewicz.stefan@dorsey.com
66