Ken - Thanks for posting this exciting info. I saw a press release about this without the NT part earlier today. I just got off the phone with my telco friend about it. He says that there are unanswered questions regarding connecting air fiber networks to one other and managing bandwidth. It seems, at this stage of development, air fiber systems have the same problem managing bandwidth that the current high bandwidth cable systems do.
The price for using the mesh architecture for redundancy is that some of the available bandwidth must be used for backhauling. Also, he would want to see more data to accept the weatherproof claims.
Nevertheless, I am delighted to see that NT has been on top of this promising technology. With what precious little technical information is available, it sounds like AirFiber may have a superior product to Terabeam's offering. My friend says, however, that LU has been working with air fiber longer than anyone else and LU's current problems do seem to be more related to inept management rather than technical brainpower.
Dale Russel posted this link on the G&K board forbes.com. I think it is now appropriate to post here since the announced AirFiber/NT deal.
May 2000 issue
Even by today's standards for high-tech hype, Terabeam and its plan for speedy laser networks in the air has gotten an extraordinary share of it. Now about that technology ...
Shameless In Seattle By Scott Woolley
It sure sounds neat, but it always does at first. Instead of going through the hassle of digging up the streets to lay fiber optic cables, why not just shoot lasers from building to building? Zapping bits through the air is safer than it sounds. The lasers are too weak to fry the human eyeball. And they are cheaper and faster to deploy than fiber in the ground. Theoretically, at least.
So begins the next chapter in optical networking, an industry as hypervalued, or maybe just plain overvalued, as they come. JDS Uniphase carries a rich market valuation of $79 billion, or 516 times earnings. Now comes the Next Big Thing: "wireless optics." A key generator of the fever pitch in this segment is C. Gregory Amadon, the 49-year-old founder of a Seattle startup called Terabeam.
Amadon is an unlikely laser jock. He majored in political science at Stanford and worked as a cameraman for CBSNews (where he invented a super-zoom lens).He turned entrepreneur in the late 1980s, renting cell phones in airports. Long on enthusiasm but short on technical training, he has a history of backing gee-whiz technologies--fraud-sifting software, virtual reality goggles--and losing lots of money in the process.
This time Amadon says he's got it right. The come-on: Terabeam's laser transmitters, which are supposedly able to zap bits of laser light over the air at a terabit, or one trillion bits per second. So far the company, founded by Amadon in 1997, hasn't proven this will work; it has run only a limited test involving a single customer.
But one telecom veteran, Daniel Hesse, the top executive at AT & T Wireless, was sufficiently impressed. In February he left behind options likely to be worth at least $20 million--just as AT & T is preparing what may be the biggest initial public offering ever--to join Terabeam as chief executive. In return, Hesse got a 5% stake and the promise of an even bigger jackpot.
Amadon recently raised $105 million by selling one-sixth of the company to big-name investors, including the ubiquitous Softbank and Merrill Lynch. And Wall Street banks are already pitching Terabeam on going public.
Jack B. Grubman, the star Salomon Smith Barney telecom analyst with an unmatched talent for drumming up underwriting work, was quoted in a Seattle-area paper touting Terabeam as "the next meteoric rise in the emerging telecom space ... this is the first example of revolutionary technology I've seen in 23 years." Further buffing Terabeam's sheen: FORBES ASAP's own techno-pundit, George Gilder, wrote a rave review of optical wireless, praising Terabeam.
Public relation coups all. But beyond the hype is a company with dubious technology, scads of well-funded rivals--Lucent is now selling an airborne laser--and a strategy so grandiose that it leaves no room for error.
The concept of creating laser networks in the air has been around for years. It has never been particularly successful. The biggest problem is that it is very, very hard for a laser to reliably hit a 16-inch-wide receiver from more than a mile away. Doing it cheaply is even harder. One thorny issue is "solar loading," when a building warmed by the sun expands, moving the delicate laser off-target. Other stumbling blocks: fog, snow, birds and dirty windows.
Terabeam's scheme is even more complicated. Instead of using one laser to serve one customer as rivals do, Tera-beam aims to use a single laser transmitter, with beams up to 10 feet in diameter, to serve up to 96 accounts. It has not done this even on a trial basis as yet.
Despite the hurdles, the ultimate promise of the technology has attracted at least a half-dozen other companies. Incredibly, Amadon claims Terabeam already has surmounted all obstacles, and that its gear offers a quantum leap over rival technologies in terms of performance, reliability and price. "No one else comes close to doing what we can do," Amadon declares.
Selling the virtues of an unproven technology is old hat for Amadon. He last made such grandiose predictions as founder and chief executive of Virtual I/O, a failed maker of virtual-reality goggles. Much like laser networks, goggles have a potentially huge market--if only someone could find a way to make them work.
Amadon kept Virtual I/O alive for almost three years, selling investors on his vision of the glasses as the next great consumer appliance. But the products, always so close, never quite materialized. In 1996 investors, led by cable giant Tele-Communications, booted Amadon. TCI and others lost $35 million, and Virtual I/O ended up owing creditors for $20 million; it later liquidated.
Prior to Virtual I/O, Amadon had another abortive stint as chief executive, this time at Cellular Technical Services, which sold software for billing and fraud-detection. Though it never made any money under Amadon, he declares it a "home run" because the company went public at a split-adjusted $12 1/2 a share in 1992 and rose up past $200 by 1996. Reality footnote: He lasted as chief executive for only five months after the firm went public; the stock later jumped on takeover speculation--and it since has fallen to $10.
With Hesse supplanting Amadon at the top, the founder now functions as chairman and chief technology officer. Yet he lacks any formal technical background. As a job qualification, he points to a long-standing amateur interest in optics. He boasts six patents, one jointly held for a miniature laser lens.
Such proprietary technology is the linchpin of Amadon's long-term strategy. He plans to keep Terabeam's laser gear to itself, making its own supply to become a full-fledged carrier. That is all-but-unheard-of in telecom. "If Tera-beam's technology is as great as they say it is, why limit it to one customer?" asks an executive at a rival maker.
In telecom, acting as both carrier and manufacturer usually makes for an unhappy marriage; it is why AT & T spun off its switchmaker into what is now Lucent. That deal was wildly successful, freeing Lucent to sell to any carrier and letting AT & T buy switches from other suppliers. Stand-alone telecom-gear makers, especially those with great technology, command far higher valuations than carriers.
But Terabeam argues its equipment is so good that it will be able to capture the entire fixed-wireless market. "We will have nuclear weapons, and everyone else will only have conventional weapons," gloats Hesse.
Standing in the way of this towering ambition are a bevy of hungry rivals, from startups to Lucent. Moreover, Teligent, Winstar and other fixed-wireless carriers currently send data straight to office buildings, using far cheaper microwave technology. Whether Tera-beam can deliver on its own hype will ultimately depend on its ability to produce evidence that its lasers really can work magic. There's a very good chance that some company will strike it rich in wireless optics. The chance that it will be Terabeam? Not so good. |
