WiMax: The next generation for better, cheaper Net access?

Vern Fotheringham is a prolific entrepreneur whose drive to find the next breakthrough in communications has led to the formation of more than a dozen companies.

By JOHN COOK
SEATTLE POST-INTELLIGENCER REPORTER

(Many thanks to Lou Fontana for passing this along- Russ)

http://seattlepi.nwsource.com/business/186582_adaptix17.html

But while Fotheringham is considered by many to be a pioneer in the field of wireless communications, he has often found himself on the cutting edge of technology before the market is ready.

Adaptix CEO Vern Fotheringham

"I’ve made a career out of being too early," admits Fotheringham, co-founder of failed efforts such as Bazillion, Advanced Radio Telecom and Vectrad Networks.

Despite missed opportunities in the past, Fotheringham thinks the timing is right for his latest startup. And the 56-year-old entrepreneur has landed more than $10 million in funding to turn a compelling idea from a University of Washington electrical engineering professor into a worldwide business.

Fotheringham’s latest effort, which is emerging from stealth mode this week with the name Adaptix Inc., builds on his long-held vision that wireless Internet communications can be done better, cheaper and faster.

Under the radar for the past year, Adaptix sprang from the ashes of Broadstorm — a Bothell company that collapsed last summer after burning through $18.5 million from VantagePoint and Vulcan. Fotheringham, who led the group that bought the company’s assets last fall, thinks the technology is revolutionary.

The Adaptix team is working in the emerging area known as WiMax (Worldwide Interoperability for Microwave Access) — a souped-up version of Wi-Fi that can provide high-speed Internet coverage to entire college campuses, municipalities or corporate headquarters. Unlike Wi-Fi, which covers about 300 feet in an indoor area, WiMax can cover entire towns with a range that reaches up to five miles. Typically, it does not require a clear line of sight — meaning the Internet connections can penetrate buildings without the need for rooftop radio equipment. For the end user, all it takes is a small device about the size of a paperback book that plugs into a computer network.

Adaptix’s radio frequency-based software and hardware system can cover more than a square mile at speeds up to 20 megabits per sector — allowing carriers to provide connections that are faster than a T-1 at about half the cost. That has some corporate customers salivating over a system that is already being dubbed 4G or fourth generation.

When Fotheringham was introduced to the work of UW professor Hui Liu two years ago, he knew right away that it could change the way people receive phone calls, watch movies or send e-mails.

"Everything I had been looking for was suddenly sitting there in a unified, software-defined next-generation package," Fotheringham said. "It was a jolting, but wonderful introduction."

For the past two years, the company’s equipment has powered wireless Internet service in Churchill, Manitoba — a town of about 1,000 people on the western edge of Hudson Bay that is better known for polar bears than new technologies. A transceiver attached to a grain silo broadcasts Internet service to about 80 subscribers, who receive the signals on wireless modems connected to personal computers or laptops.

Mike Iwanowsky, president of the Churchill Community Network, a volunteer effort that runs the system, said it replaced a clunky dial-up service that tied up phone lines. He calls Adaptix’s technology "solid," perfect for the extreme environment of Churchill.

"We were initially looking at a cable-type system," Iwanowsky said. "For a good portion of the year it is below minus 30, so if we have any breaks, we have to go out and repair that in extremely cold temperatures. So this avoids that situation."

Because the Adaptix technology can be deployed without tearing up city streets, other remote outposts are considering the company’s WiMax solution.

Later this year, Phonevision Australia will roll out Adaptix’s technology in an effort to bring Internet-based phone and data service to the Albury-Wodonga region.

"We see Adaptix right at the leading edge of all of this," said Phonevision CEO David Blanks. "And I believe they will become the trendsetters of WiMax."

Adaptix also is working with an Internet service provider in Beijing, China. Discussions are ongoing with companies in India, Korea and other locations, Fotheringham said.

Rolling out the technology in areas that are underserved by traditional phone or cellular service is an important part of Adaptix’s business, said Fotheringham.

"Countries like China and India have huge disenfranchised portions of the population that they need to bring into the 21st century," he said. "Those countries have industrial development initiatives that are looking to leverage technologies like this as a cost-effective solution that can be deployed widely at much lower prices than the cellular build out required."

David Willis, vice president of the Meta Group, a Stamford, Conn.-based research firm, said it makes sense to target opportunities in emerging nations.

"The operational costs of wireless technology are much lower than having to tear up the street and lay fiber," Willis said. "The first network is always easy. It is building the next version that is hard."

With existing cable and DSL networks in place nationally, it could take a couple years for WiMax technology to catch on here.

"We are really talking about this as a 2006 phenomena, where the economics really start to make sense," Willis said. By that time, WiMax could reduce installation and maintenance costs by 41 percent when compared with the current wire-line costs of cable or DSL, he said.

The benefits of wireless Internet have been promised for years. But the market is littered with the carcasses of heavily funded companies such as Advanced Radio Telecom, Metricom, Teligent and Winstar.

Still, it is starting to attract major players. Mobile phone pioneer Craig McCaw recently introduced Clearwire, a Kirkland startup that plans to deliver high-speed Internet to the 75 percent of Americans lacking broadband. AT&T Wireless and Verizon also are rolling out next generation wireless networks.

Unlike past pursuits, Fotheringham said he plans to prove the Adaptix technology on a "modest footprint" before it is widely deployed. That was not the strategy at Advanced Radio Telecom, which expanded its wireless Internet service too quickly. The Bellevue company filed for bankruptcy in 2001 — three years after Fotheringham resigned from the board.

"We got ambushed by the investment community pulling us into waters that an older, wiser me would have never tried to swim in," he said.

Fotheringham — who founded Advanced Radio Telecom in 1993 and took it public in 1996 — said he will not make the same mistake with Adaptix.

But as with all new technologies, it comes down to timing. Willis, the analyst at the Meta Group, said forces are coming together to make WiMax a reality. "I think it is the next viable alternative to cable and DSL," said Willis. "The timing is right as standardization drives pricing down and there becomes a strong business case for carriers."

After enduring several failures, timing is something that Fotheringham hopes is on his side.

The 31-member company plans to triple in size in the next year in order to seize the WiMax opportunity. And the recent money from Baker Capital, along with sales in Australia and China, are endorsements that the company is on the right track in an increasingly competitive field.

With industry leaders such as Intel and emerging countries such as India supporting the development of WiMax, Fotheringham said he is confident that Adaptix is hitting the market in stride.

"We are not years and years early," he said. "But I think we are right on time."

ADAPTIX INC.

# Headquarters:
Bothell

# Founded:
September 2003

# Employees:
31

# Investors:
Baker Capital

# Overview:
The company formed last year after a group of investors bought the assets of Broadstorm, a venture-backed company that shut down in July 2003. Adaptix makes wireless broadband connectivity software and hardware products.

# Customers:
Internet service providers, phone companies and municipalities.

#
Competitors: Airspan Networks, Alvarion, Flarion, IP Wireless and Navini Networks

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P-I reporter John Cook can be reached at 206-448-8075 or [email protected]