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IBM, AT&T, Intel Form Wireless Venture

December 5, 2002

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NEW YORK (AP) _ A joint venture between technology giant IBM Corp., long-distance carrier AT&T Corp., and chipmaker Intel Corp. will set up high-speed wireless Internet access ``hot spots″ in hotels, universities and other buildings in the 50 largest U.S. cities, the companies announced Thursday.

Analysts had long hinted at the formation of the new company, called Cometa Networks, during discussions which were leaked under the name Project Rainbow. Financial details were not immediately available.

The new company plans to sell high-speed WiFi, or 802.11, Internet access to retail chains, hotels, universities and real estate firms who want to set up corporate or retail networks.

Cometa will also sell wholesale WiFi access to telecommunications companies, Internet service providers, cable operators and wireless carriers, who then can resell the service. The service will begin appearing in 2003.

Cometa will join a growing field of companies offering WiFi networks, including Boingo Wireless Inc., a California-based start-up launched by Earthlink Inc. founder Sky Dayton; cellular carrier T-Mobile, which offers WiFi access in Starbucks coffee shops; and Verizon Communications, which announced it would set up wireless networks for businesses last month.

Verizon’s initiative started in Boston and was expected to move to other cities.

WiFi uses radio waves to extend the Internet and company networks through the air for short distances _ around 300 feet, using current technology _ with data transfers at speeds of up to 11 megabits per second, far faster than dial-up connections.

Access has popped up in cafes, airports and hotels. Some stores offer it free for their customers, others, like Starbucks, charge an access fee.

Cometa Networks will be headed by Lawrence B. Brilliant, the former chief executive of broadband access company SoftNet Systems who stepped down in 2000 due to health concerns.

``WiFi technology gives mobile workers high-performance productivity tools that help them boost performance and customer service, whenever and wherever they’re working,″ Brilliant said in a statement.

In addition to many offices, WiFi is already being used by courier companies, auto assembly plants and even some hospitals.

Analysts say pricing issues are among the main hurdles for companies selling WiFi access. Other tough issues include assuring the security of hotspots from hackers and those who try to use it without paying.

Home WiFi networking equipment that sells for around $200 has allowed homegrown networks to spread beyond the control of bandwidth providers like AT&T and Verizon. Some cable companies have asked customers to stop sharing WiFi Internet access, calling it theft of service.

Big phone companies in other countries, especially South Korea, the United Kingdom, Sweden and Japan, have been quicker to embrace WiFi and offer public hotspots, said C. Brian Grimm, spokesman for the WiFi Alliance, an organization that promotes the technology.

The deal announced Thursday includes funding from venture capitalists Apax Partners and 3i, besides investments from IBM, AT&T and Intel’s investment arm. Cometa said it is in talks with customers and additional partners.

Cometa Networks will have offices in San Francisco and New York. The company’s initial board of directors will consist of Brilliant, along with Ted Schell, general partner of Apax Partners; and Robin Murray, General Partner at 3i.

AT&T plans to provide the venture’s network infrastructure and management, with IBM handling wireless site installations and back-office systems.

The announcement said Cometa’s service, which will support two WiFi formats _ 802.11b and 802.11a _ will allow users to keep existing sign-on procedures, e-mail addresses, IDs, passwords and payment methods, regardless of their method of access.


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