Watch this company, not public yet though.
Terabeam, this company is the focus of this months Gilder technology letter.
Out of AT&T and at the speed of light
New company brings the data in on laser waves
Friday, March 10, 2000
By DAN RICHMAN
SEATTLE POST-INTELLIGENCER REPORTER
Dan Hesse, the innovative head of AT&T's Wireless Services in
Bellevue, made some sacrifices yesterday when he ended a 23-year
career at AT&T.
Hesse, 46, has become president and chief executive of TeraBeam
Networks Inc. The privately held, 130-person company uses laser
beams to carry high-speed data streams that give urban businesses
wireless, high-speed Internet access.
The company already is testing in Seattle what it hopes will become an
internationally used technology.
But Hesse says he leaves behind co-workers who are "like family," a
record of innovation -- and considerable wealth, in the form of stock
options that could skyrocket with an intial stock sale when AT&T
spins off its wireless unit, just weeks from now, into a separate,
publicly held company. Analysts say that could be the largest initial
public offering ever.
Why did he do it?
"From an excitement and financial perspective, there couldn't be a
worse time to leave," he said. "I love AT&T. But I passed that
(money) by for the excitement of being able to create a great company
from scratch, with a superb team. I've never seen a technology
breakthrough in telecommunications that's as significant or radical as
what I've seen over at TeraBeam."
Hesse, who holds master's degrees from MIT and Cornell, joined
AT&T in 1977 and served there in a variety of positions, including
domestic and international sales, services, network engineering and
operations, human resources, business development, product
management, and manager of Internet services.
After stepping up to run AT&T Wireless Services in May 1997, he
created the highly successful Digital One Rate plan, which eliminated
roaming and long-distance charges for cell phone users.
"I did everything there is to do in a large company," he said. In doing
so, he became "a brand name in the wireless business," said
independent analyst Jeffrey Kagan.
But in December, Hesse was passed over as the head of AT&T's
Wireless Group, which includes the Wireless Services division he
headed. After that, "many industry watchers knew (his departure) was
just a matter of time," Kagan said.
Hesse joins a growing list of top executives to have left AT&T over the
past two years since C. Michael Armstrong became chairman and chief
executive of the largest American long-distance company. Hesse is
succeeded at AT&T Wireless Services by Mohan Gyani, 48.
When TeraBeam founder and Chairman Greg Amadon first called
Hesse, in January, "I had this curiosity, but I was very skeptical about
what he described," Hesse said.
What Amadon -- who calls himself a serial entrepreneur -- described
was a technology based on free-space optics, broadcasting infrared
light beams carrying Internet data at a rate of gigabits per second.
High-capacity Internet service is widely available among nations and
cities through fiber-optic networks, and within companies through
wire-based local- or wide-area networks. It's the so-called last mile,
between where the fiber-optic line ends and the corporate network
begins, that has proved difficult to bridge.
"From the POP (point of presence, where the fiber optic connection
ends) to the office building, the Information Superhighway turns into a
dirt road," Hesse said.
That's where TeraBeam's technology comes in. Customers receive the
data-bearing light beam through a dish-shaped receiver mounted inside
the office window.
"Essentially, it's fiber-optic technology, but it doesn't use wires and
it's beamed to multiple points," Amadon said.
Once the gap between the end of fiber optic lines and the office is
bridged, "it will open the door for high-definition TV
videoconferencing on every desktop," Hesse predicted. It will allow
"grabbing hunks of video the way you grab Web pages today, having
databases talk to each other, and being able to have servers based
locally, for better control, rather than at remote facilities," Amadon
said.
While last-mile fiber-optic cabling can take three years to lay within a
city, Amadon said his company can deploy its technology in a city
within six weeks. The light beams can be blocked by heavy fog, which
is why mist-shrouded Seattle was chosen as a test market. Blockage
can be minimized by placing cell sites closer together, he said.
"If it works here, it will work anywhere," Hesse said. The company
will guarantee 99.99 percent reliability, he said.
Technologist George Gilder, of Housatonic, Mass., called TeraBeam's
technology "truly revolutionary," saying it "shatters the last-mile
bottleneck into shards of light."
TeraBeam has one paying customer, a Seattle e-commerce concern.
The company has hired top officers for marketing, engineering and
manufacturing and is now focusing on building its service team,
Amadon said. It's "very well financed" and is about to complete
another round of financing, he said, declining to elaborate.
After keeping a low profile here for 30 months, the company will
debut officially at PC Forum in Scottsdale, Ariz., next week. It will
move from small offices near I-5 to 25,000 feet downtown by April 1.
"I initially wanted Dan as a board member, but he got the CEO bid
because of good chemistry and his incredible background," Amadon
said.
Hesse says his plan is to take TeraBeam national and international,
penetrating the top 50 markets worldwide. Business will be good in
Europe as well as here, he said, because the last-mile problem is even
bigger overseas. That's because state-owned telephone companies
have excluded the competition that has improved the American
telecommunications infrastructure. "It is a huge potential market," he
said.
Hesse said the ramp-up, from 130 employees and one customer, will
be "very significant," but he declined to discuss timing. "There's an
awful lot that goes into rolling out a national company from scratch,"
he said.
TeraBeam holds about 10 patents and has a competitive lead of two to
three years with its technology, he estimated.
"There's a hell of a lot you can do to get way ahead" in that much time,
he said. Potential competitors include US West, GTE, Nextlink,
Teligent and WinStar, he said.
Bellevue-based Advanced Radio Telecom Corp. uses a competing
technology, radio signals, to achieve similar results.
"This is not just a technology. It's industry-changing," Hesse said. "I
think this company will be one more thing that puts Seattle on the map,
up there with McCaw (Cellular), Microsoft and Boeing."
When asked what his biggest challenge will be in the new job, Hesse
paused.
"I'd have to say that might be crossing from the Eastside to my Seattle
office on the 520 bridge every day," he said. "I dread it."
P-I reporter Dan Richman can be reached at 206-448-8032 or
danrichman@seattle-pi.com
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