Soma to Roll Out Technology That Bypasses Phone Utilities
By DON CLARK
Staff Reporter of THE WALL STREET JOURNAL
SAN FRANCISCO -- Many offbeat ideas were funded at the height of the Internet bubble. But major venture capitalists shunned Soma Networks Inc., which has a rather audacious plan to bypass local telephone utilities.
"We got laughed at by everybody," said Yatish Pathak, Soma's chief executive.
Yet the secretive start-up went on to raise $70 million from individuals including Ben Rosen, co-founder of Compaq Computer Corp., and Bill Bradley, the former U.S. senator. After three years of work, Soma finally is close to customer trials of its technology, which combines communications with computing and delivers phone calls and data using an unusual wireless technology.
Long-distance communications has plenty of competition and a glut of capacity. But regional phone and cable companies still dominate the markets for residential voice and high-speed Internet access. Soma's founders -- including two Canadian electrical-engineering professors -- set out to solve that "last mile" problem in ways that could be profitable for services that want to enter local markets.
Creative Customization
To dodge costs that have hurt other broadband-service providers, Soma set out to develop a kind of network that carriers could roll out without maintaining service trucks or having to operate call centers to answer customer questions. Soma also wanted to let home phones be programmed as creatively as personal computers, so third-party software companies could devise fundamentally new features.
All that requires innovation in software, microchip design and radio modems, among other things.
"It's an incredibly ambitious undertaking," said Jim Manzi, the former CEO of Lotus Development Corp., who invested in Soma and sits on its board.
The company developed a computer-like device that sits next to home personal computers and phones, and serves as a kind of nerve center to pass phone calls and data traffic to the Internet and public phone system. That device, dubbed the NetPort, usually can transmit digital information without requiring a separate antenna outside the home or a direct line of sight to a transmission tower. Most fixed-wireless data services have trouble reaching inside buildings, or when they are blocked by buildings or other obstacles.
Soma also developed refrigerator-sized base stations that transmit data to the NetPorts, based on technologies and frequencies used by conventional digital cellular networks. Users can receive data at up to 12 million bits per second, faster than most other wired or wireless broadband services, Mr. Pathak says.
Ready, Set, Go
A key goal was to let a consumer order a NetPort from a store or a service provider's Web page, plug it in and have it work immediately. So Soma developed a special operating system that has pieces in the home and in the base stations, and can be programmed by the service provider or other companies.
All this to do what?
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Phone System Programming
Soma Networks wants to make it easier to have features such as:
Selectivity: By setting parameters on a Web page, consumers could determine whether to accept, block or forward calls from specific numbers.
Voice disguise: Special filtering software could let a woman or child make a caller think a man is answering.
Usage restrictions: A parent might limit the hours a child could make calls, or accept long-distance calls only from relatives.
Record-keeping: A phone could keep track of calls made by visiting relatives, and let them print out a Web page bill to reimburse their hosts.
Transcription: A conference call could be automatically recorded and forwarded to a service that would e-mail a transcript to a customer in a few hours.
Source: Soma Networks
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Mr. Pathak and his colleagues talk about phones that could automatically keep records about important conversations, for instance. That might come in handy when talking to a customer-service representative about a persistent problem, for example, or to check the accuracy of a lawyer's bill for a phone consultation.
More often, customers might just set up conventional services more easily. They could simply call up a Web page to quickly enter the numbers for a 10-way conference call, or program a phone to refuse calls from a certain number. And NetPorts equipped with add-on devices also could coordinate wireless networking inside a home; in a demonstration here, a Soma engineer shows how a phone call can tell the system to turn off a living-room light.
Soma, which has development operations in Toronto, expects to start private field trials with unspecified carriers this summer and broader trials with consumers later in the year. It initially is targeting companies that have unused digital wireless capacity, but the NetPort units and infrastructure also could work with wired technology, such as cable modems and digital-subscriber-line services.
"The Soma architecture is very innovative and is a breakthrough on a number of levels," said Russell Wiseman, a senior vice president at Nucentrix Broadband Networks Inc., a Plano, Texas, wireless-services company that is considering using Soma's technology.
Cost Questions
That may not be a slam-dunk decision, he adds. One advantage is that the NetPort, which could be subsidized by carriers as cellphones are today, is expected to cost from $50 to $200. Comparable devices for other fixed-wireless carriers now cost $600 to $1,000, Mr. Wiseman estimates. But the rest of Soma's infrastructure might be more costly than alternative technologies, at least for some carriers, Mr. Wiseman believes.
A single base station can send data about three miles, a shorter distance than a competing technology dubbed OFDM (for orthogonal frequency digital multiplexing). A company such as Nucentrix, which doesn't have cellular towers in major cities yet, therefore might be less likely to use Soma than a carrier with such equipment already in place, he says.
Soma, which has 230 employees, also has to keep raising money in a difficult climate and courting customers, some of which face their own financial problems. Mr. Pathak, a former cellular-technology researcher at Lucent Technologies Inc.'s Bell Laboratories, acknowledges that some carriers instinctively think Soma's technology is too good to be true. But he is confident field trials will settle the matter.
"They have a logical explanation for everything they did," said Emmy Johnson, an analyst at Synergy Research, a research firm in Phoenix. "If they can get some mainstream service providers to buy into this, I think they would be pretty well set."
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