Article from todays Globe & Mail! Cheers!!!
Wi-LAN plays with the big boys
MATHEW INGRAM
Thursday, November 4, 1999
Calgary -- So you've been working on some cutting-edge technology for about 10 years and no one has really paid that much attention. All of a sudden, an industry titan -- a company that spends as much on paper clips as your entire company makes in a year -- says it's going after the same technology. This is great, since it raises the profile of your work. The only problem is you now find yourself going up against King Kong. Welcome to Wi-LAN's world.
Just a few months ago, Wi-LAN was a tiny Calgary company with a high-speed wireless technology that probably half a dozen people in North America understand. One of them is Dr. Hatim Zaghloul, who started Wi-LAN in 1992 with fellow telecom researcher, Dr. Michel Fattouche. Wi-LAN (for wireless local area network) went public on the Alberta Stock Exchange last year and got a small following, but things were going pretty slowly.
That all changed in the past week: Wi-LAN listed on the Toronto Stock Exchange and the stock rocketed skyward, climbing as high as $29.20 on Tuesday -- up 170 per cent from the middle of October and more than 10 times higher than its initial public offering price of $2.50. Most of the boost came as a result of an announcement last Tuesday by Cisco Systems, one of the world's largest makers of networking equipment. Cisco said it had formed a consortium of 10 companies to develop wireless products -- products based on a standard that just happens to be similar to one patented several years ago by Wi-LAN.
Wi-LAN's technology is known as wide-band OFDM, which stands for orthogonal frequency-division multiplexing, a sophisticated method of broadcasting radio signals across a number of channels simultaneously at high frequencies. It can be used for virtually any kind of data transfer, including Internet or phone traffic -- and it can do so at speeds several times faster than anything cable or telephone lines can currently provide.
The benefit to telecom companies is twofold: Speed of setup and low cost. Cable and phone lines are fine in cities but the farther you get from a major centre, the more expensive high-speed networks become. Even within a metropolitan centre, it can be time-consuming and expensive to upgrade a cable or phone system. Wireless networking at high speeds would allow telecom companies to expand their services quickly and cheaply.
Cisco said it has formed a consortium that includes Texas Instruments and Motorola, and that the group plans products based on something called vector OFDM. This proposal appears to be built on technology that Cisco acquired last year when it bought a privately held networking company called Clarity Wireless, which has a patent relating to the vector part of the system. However, Dr. Zaghloul says that from his understanding of Cisco's proposal, it would likely overlap Wi-LAN's patent on wide-band OFDM.
This could produce a number of different outcomes for the Calgary company, some good and some not so good: For example, Cisco could admit that its technology is covered by Wi-LAN's patent, and pay royalties on it. This could produce a revenue stream much like that enjoyed by Qualcomm Inc., a U.S. telecom equipment provider, which gets royalties from almost all the major cellular telephone companies as a result of patents it holds on the code-division multiple access (CDMA) telecom standard.
Just as CDMA has become the major standard for cellular telecommunications, Dr. Zaghloul says OFDM is in the process of becoming a major standard for high-speed wireless data, and the Cisco announcement is proof of that. The technology -- and Wi-LAN -- also got a boost earlier this year when the international electrical engineering body IEEE adopted OFDM as a standard, and when Wi-LAN signed an agreement with Dutch electronics giant Philips Electronics to make products using wide-band OFDM.
At the moment, Dr. Zaghloul said, it's unclear whether Cisco intends to adopt Wi-LAN's technology or argue that its proposal doesn't infringe on the company's patents. The Wi-LAN co-founder said his company has talked to Cisco in the past about the idea of vector OFDM, and made it clear that it would likely raise the patent issue.
Dr. Zaghloul said he couldn't comment on whether there had been any further talks with the U.S. giant, but said the company is prepared for a sustained legal battle if necessary.
And this isn't the only technology Wi-LAN has that could produce either future benefits or legal tussles: The company also has a patent on a standard known as MC-DSSS, which stands for multicode direct-sequence spread spectrum. According to early comments from the IEEE, this kind of technology is being looked at for third-generation cellular telephone networks, and Wi-LAN recently brought to the agency's attention that its patent would likely apply.
In the end, even if there is a struggle with Cisco over OFDM, Dr. Zaghloul said the endorsement of the technology is positive for Wi-LAN -- and analysts say it helps make the Calgary firm an attractive target for some other networking company. Interestingly enough, Dr. Zaghloul says, the Cisco consortium doesn't include large telecom equipment providers such as Lucent, Ericsson or Nortel Networks. Either way, it would appear that Wi-LAN's days as a little-known technology developer are over.
Business West readers can reach Mathew Ingram by fax at (403) 244-9809 or by E-mail at
mingram@globeandmail.ca
|
