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The Most Unwired Town in America

Are the promised wonders of third-generation wireless for real? Yep, and here’s the living proof.

Nikhil Hutheesing, Forbes.com

Cruising down Minnesota Avenue in Sioux Falls, S.D., in a jeep, Shane Hampton flips open his Toshiba Portege, logs on to Yahoo and starts downloading a Britney Spears music video at 112 kilobits per
second–twice as fast as a standard dial-up connection. Hampton, 34, vice president of field sales for Seattle, Wash.-based Monet Mobile Networks, is showing off the third-generation (3G) wireless
network his company launched here in October–the first such network to go live in this country. "It doesn’t get better than this," says Hampton. "What you are seeing here is the future of wireless."

A lot of locals agree. Already 300 Sioux Falls residents have signed up for Monet’s $50-per-month, third-generation wireless service plan. Using 12 base stations located throughout this former prairie
settlement, Monet’s broadband wireless service is accessible to some 100,000 people living within 30 square miles. Monet is now deploying another 3G network in the nearby Fargo-Moorhead region.
Monet’s network offers peak speeds of 144kbps, the minimum required to qualify as a 3G network.

But customers get more than Britney Spears. Mike Rost is director of business development for Healthcare Medical Technologies (HCMT). One of this managed health care outfit’s biggest clients is the City
Department of Corrections, whose jails hold 3,000 inmates.

Before the 3G wireless network was in place, Rost says registered nurses who worked for HCMT would have to make multiple trips between the prison and headquarters when checking for habitual
malingerers. First they would go to the corrections facility and check the inmate for symptoms, then return to HCMT to search the electronic medical records. Did the sick prisoner have a history of bogus
claims? Was the prisoner legitimately sick or just anxious to leave the prison?

Today, nurses bring laptops and download the medical records from anywhere in the prison. What once took anywhere from half a day to several days now takes about an hour.

"The really eye-popping thing about what we are doing is that people can be miles away from where they work and do things that you would otherwise have to run back to the office to do," says Monet
Chief Executive George Tronsrue.

Chuck Shaver agrees. He is sales manager at Connecting Point, a computer hardware and software reseller on West 49th Street. A few days before Christmas last year Shaver visited client LodgeNet
Entertainment, which offers hotel guests movies on demand. LodgeNet wanted 12 HP Omnibook notebooks, provided it could get them before Jan. 1. It was 11 a.m. and Shaver knew he had to file the order
within the hour so that it could be processed by his firm and shipped for delivery before year end.

Using Monet’s 3G network and his preconfigured laptop, Shaver located distributors that had the product in inventory and logged in to his company’s network to authorize the $20,000 order. "If I didn’t have
this service, I could have lost a day, which could have cost me the deal," says Shaver.

Small things, but they add up.

Before tapping into his company’s network, Shaver had to make sure his connection was secure. He’s comfortable with Monet’s service in part because it employs code division multiple access (CDMA)
technology which has security protocols built in. The technology, first used during World War II by the English allies to foil German attempts at jamming transmissions, is digitized, convolutedly coded, and
broken up into two data streams, making it difficult to decode. He also uses a virtual private network from Cisco Systems which allows him to pass his company’s firewall while encrypting traffic
downloaded from the Web. Monet will offer its own VPN later this year.

Not everyone needs that much security. Josh Anderson, a 24-year-old student at Southeast Technical Institute in Sioux Falls, accesses his school’s local area network via Monet, downloads assignments
and exchanges instant messages with friends. He wirelessly connects with people all over the world to play 3D Ultra Cool, a game from Sierra. "I’m on the network all day, every day," says Anderson. "I
even get reception from my house, which is high on a hill far from any towers."

How did tiny Monet beat the wireless giants to market with its data-only 3G system? By being nimble. Unlike AT&T Wireless (nyse: AWE – news – people)and Sprint PCS (nyse: PCS – news – people), little
Monet is not burdened by an existing wireless voice business. It built its 3G network in Sioux Falls from scratch starting in June, 2000.

The wonders of third-generation wireless are closer to you than you may realize. In January Verizon Wireless (nyse: VZ – news – people) announced that it was launching its 3G network on the East
Coast and in the Pacific Northwest. Sprint PCS will launch its broadband wireless network this summer.

Other service providers are lagging behind. AT&T Wireless and Cingular Wireless operate voice networks on a technology called time division multiple access (TDMA). But voice networks can’t efficiently
carry music, medical records and games. For that they must upgrade to a general packet radio service (GPRS) based network. That means building a parallel network, a complicated upgrading process that
will take three more years and cost each carrier over $4 billion. Even then, their networks will still be less efficient than the one Monet, Verizon Wireless and Sprint PCS are using–a system developed by
Qualcomm (nasd: QCOM – news – people) known as CDMA.

Qualcomm’s CDMA is widely regarded as superior to TDMA-based technologies because it sends data in packets, allowing for the most efficient use of spectrum. Although a CDMA signal uses from 6 to 40
times more bandwidth than a typical TDMA signal or analog signal, it is shared among hundreds of users, making CDMA about 25 times more spectrally efficient than analog and six times more efficient than
TDMA.

Another bonus with CDMA: Sprint PCS and Verizon Wireless already operate CDMA-based voice service. To add data, which is based on CDMA2000 1X technology, they need only add channel cards to
their base stations and some code to their software. Total cost: about $1 billion.

Monet isn’t trying to compete with the giants, but instead, offer 3G services in second-tier cities like Sioux Falls, where the coverage area is small, the spectrum is cheap and the market is outside of the big
carriers’ immediate focus. After Sioux Falls, Fargo, N.D. and Moorhead, Minn., Monet plans by the end of 2002 to extend service to Manhattan, Kans., Eauclaire, Wis. and Duluth, Minn. Its service is aimed at
desktop, laptop and PDA users, not cell phone users.

"In these markets, it’s us against dial up," says Tronsrue, 45, a former airborne ranger and infantry captain. Tronsrue joined Monet after 20 years’ experience in telecommunications, including senior
management positions at MCI, MFS Communications and Craig McCaw’s Nextlink.

"We have more running room in Sioux Falls than in San Francisco," Tronsrue says. His backers agree. The company, created in 1999 by the Menlo Park venture capital fund, Mayfield, raised $77 million from
Soros Capital, Qualcomm and Intel, among others. Originally called Burst Wireless, it spent $5 million on software and hardware, including the base stations built by Seoul’s L.G. Electronics, to build its Sioux
Falls system. Monet issued $8 billion in stock to VoiceStream, in exchange for spectrum that covered the region.

Monet only operates a data network, which gives it an additional advantage over big wireless carriers which have to worry about cannibalizing spectrum used in their lucrative voice business. As a result,
the wireless carriers are reluctant to lure customers with low pricing plans. Verizon Wireless, for example, is pricing its upcoming 3G data service in the stratosphere, with a basic charge of $30 per month
plus 16 cents per minute. Monet is charging a flat rate of $50 per month for unlimited use of its network. Its system works on any desktop PC or laptop running Windows, IPAQ handheld or Microsoft Pocket
PC.

The software and PC card modem for connecting to Monet are on sale at Blockbuster and Best Buy stores for $200 after rebate, or you can order the equipment from Monet’s Web site:
http://www.monetmobile.com. Just insert the accompanying CD-ROM, install the software and plug in the modem card. Within ten minutes you are ready to surf without wires.

Monet has learned lessons from the failure of two other pioneering wireless data networks, Metricom and MobileStar–both of which tanked last year. Metricom’s Ricochet data-only network failed because
its prices were too high and its initial speed was too slow: $350 for a modem and $80 per month for the service at a sluggish 28.8kbps. Metricom never signed on more than 51,000 subscribers–not enough
to cover its costs.

MobileStar built "hotspots"–high-speed wireless local area networks accessible only in certain places, such as Starbucks and airline club lounges. Lack of funding kept it from building enough hotspots to
attract many subscribers. Last October MobileStar closed and was later acquired by VoiceStream.

But Monet is still very much in the running. Tronsrue says that by the middle of this year Monet will offer the second iteration of Qualcomm’s 3G technology–CDMA2000 1x-EVDO. This system will shoot data
through the air at peak speeds of 2.4 megabits per second, offering performance similar to a cable modem. The only other place on the planet with a comparable network is Seoul, where SK Telecom has
already launched an EVDO system.

That’s great news for Mike Hall, the head of emergency management in Sioux Falls. Today, the town’s seven fire stations are equipped with clunky three-ring binders that contain floor plans for schools,
hospitals and office buildings. The information is often outdated: In an emergency, rescue workers may not have the latest details about buildings.

But Hall has developed a database that contains detailed information about things like the city’s apartment houses and the location of gas lines, sewer lines and hydrants. The database is designed to
cross-reference the information with the floor plans and three-dimensional pictures of buildings in town. Once Monet’s EVDO system is in place, emergency workers will have a rich resource that they can
quickly access while they speed to the problem.

http://www.forbes.com/best/2002/0325/002.html

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