Stefan Lopatkiewicz Dorsey & Whitney LLP

1. The Business and Regulatory Environment for Wi-Fi ServicesWireless Community and Mobile User ConferenceMonterey, CaliforniaJune 2, 2004 Stefan Lopatkiewicz Dorsey & Whitney LLP

2. 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

3. Visualizing the Fixed Wireless Context Metro Area Network 25 kilometers “Wi-Max” MAN Local Area Network 100 meters “Wi-Fi” LAN Personal Area Network “Bluetooth” 10 meters PAN

4. Wi-Fi and Wireless Ubiquity + = PERSONAL BROADBAND

5. 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 materializedLine-of-sight restrictions Heavy debt from spectrum auctions Could not compete with cable, DSL

6. Wi-Fi: The Legal Environment • Technical Standardization • Unlicensed Spectrum

7. ABCs of Technical Standards

8. Institute of Electrical andElectronics 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 ofelectrotechnology in U.S.

9. Structure of IEEE 37 Technical Societies Communications Society Computer Society Board of Directors Executive Committee Executive Director Staff Standards Association

10. 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

11. Scope of IEEE 802Standards 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

12. 802 Standards Committee Organization

13. IEEE Standardization Process A world-respected technical consensus processProcess supported by enterprise/academic sponsorsPassage requires 75% or greater approval Standard Sponsor Group Working Group Task Group Study Group Ad Hoc Group

14. IEEE-SA IntellectualProperty 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

15. 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.

16. 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

17. Wi-Fi Alliance Membership

18. Basic Mechanics of Wi-Fi ROUTER SERVER SWITCH CAT 5 Cable Backhaul Wireless Access Points (Hot Spots)

19. 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

20. 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

21. The U.S. Tradition ofUnlicensed 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

22. 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

23. 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 high-speed data transfer) • 1910 – 1930 MHz • 2390 – 2400 MHz

24. 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

25. 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

26. 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

27. Spectrum Regulatory Agencies U.S. – Federal Communications CommissionNational Telecommunications and Information Administration (Commerce) State public utility commissions Int’l – International Telecommunications Union (U.N.)National administrations

28. 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

29. 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

30. 5 GHz Spectrum Available for WLAN

31. 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

32. 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

33. 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

34. 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”

35. 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

36. Wi-Fi: The Business Environment

37. 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 multiple-source users • Security concerns – how to prevent “rogue” users • Accessing confidential databases • Disrupting legitimate users

38. 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

39. 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

40. Delivering the Wi-Fi Signal to the End User PC, Laptop Mobile Phone ACCESS POINT Play Station PDA DVD Player

41. 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)

42. Four Primary Wi-Fi Markets Low Visibility Residential Enterprise / Campus Internet Public “Hot Spot” Private “Hot Spot” High Visibility

43. 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

44. 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)

45. 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

46. 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

47. 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

48. Long Beach, California Who: City + high tech companies What: High-speed access at no charge When: May, 2004 Where: Downtown and Airport Wireless Internet Districts Why: Marketing campaign to attract tourists and new businesses Fox, Smolen & Associates Austin, Texas

49. Athens, Georgia Who: U. of Georgia What: Wireless LAN w/ 9 sites When: 2004 Where: 24 blocks of downtown Why: Mobile Media Consortium Fox, Smolen & Associates Austin, Texas

50. Athens, Georgia Fox, Smolen & Associates Austin, Texas