Cisco and Wi-LAN Face Off on Wireless

A dispute brewing between Wi-LAN Inc. of Calgary and Cisco Systems Inc. over setting the standard for wireless Internet may be a result of bad advice given to Cisco, according to one telecommunications analyst.

The dispute arose as a result of Cisco’s announcement it would adopt a vector-based orthogonal frequency division multiplexing (OFDM) standard — a technology the CEO and chairman of Wi-LAN, Hatim Zaghloul, has said may infringe on his company’s patented wide-band OFDM.

Rob Millham, an analyst with Research Capital Group in Vancouver, suggested former employees of Clarity Wireless Corp., who were developing wireless Internet technology before their company was bought by Cisco in 1998, may be providing misinformation to company management about OFDM technology.

“Some people have told me, and again I don’t know if this is true, that Cisco…because it is new to wireless is just getting bad advice and who are its advisers? Clarity,” Millham said.

Millham also speculated that Cisco may have tried to enter into talks to purchase Wi-LAN, but was shocked by Wi-LAN’s selling price.

“You ask Hatim what he thinks his company is worth and he’ll tell you $140 [per share] as he’s told me. If in fact, as the market was speculating a few weeks ago, there were overtures made by Cisco to Wi-LAN it may be in fact that they (Cisco) came back by being blown away by what the principals of Wi-LAN thought their company was worth,” Millham said.

Cisco’s entry into various wireless markets, from broadband technology to Internet data systems, is a result of customer demand forcing the company to get onboard as the technology has begun to prove itself, Millham said.

In November Wi-LAN’s stock rose on speculation that Cisco, which has historically acquired technology it doesn’t have rather than develop it, would purchase Wi-LAN. Then Cisco suddenly announced it would in fact be developing its own wireless Internet technology.

The move by Cisco touched off an angry response from Wi-LAN’s Zaghloul that Cisco may be infringing on his company’s patented wide-band OFDM.

Cisco has insisted that its new wireless technology is superior and completely independent of the wireless efforts of Wi-LAN. Cisco claimed its version does away with the need for line of sight between a subscriber and a transmission tower.

“Both [developments] use the same modulation scheme. What we’ve done is layered a different set of algorithms and access technologies on top of that modulation scheme to make our system. It’s completely different than the Wi-LAN system,” Derick Linegar, consulting systems engineer with Cisco Systems Canada Co. in Toronto, said.

Wi-LAN’s Zaghloul said that one of the problems with OFDM was that it required a linear amplifier and Wi-LAN’s patent mitigated that. Wide-band (Wi-LAN technology) involves changing the modulation scheme, while vector (Cisco

is the use of more than one antenna and this does not really compensate for line of sight, according to Zaghloul.

“What it does is that it uses more than one antenna as a receiver, but the OFDM itself, in all likelihood, is wide-band OFDM. The vector part is in the use of more than one antenna,” Zaghloul said.

Zaghloul added that Cisco’s claims are a result of its inexperience with wireless.

Linegar said Cisco has completed the first phase of its development. In the initial-phase demonstration labs connecting two buildings with a point-to-point system, transmitters and receivers are erected to send and receive transmissions of 48Mbps. The second phase will see the beginning of commercial development with an actual point-to-multipoint system in a circular area. This phase will see the use of DOCSIS (data over cable service interface specification), a standard developed by cable companies and universities for running a multi-service environment over a cable infrastructure.

The final phase will be a full consumer rollout.

“Consumers will be able to walk into a Radio Shack and pick up one of these boxes, for let’s say $299, take it home and plunk up an antenna and not have to worry about all sorts of RF (radio frequency) studies about how to point this thing or whatever,” Linegar said.

Earlier this year, Cisco announced a broad alliance with a consortium of 10 companies, including Motorola and Texas Instruments Inc., to develop a series of Internet-based technologies for wireless phones and other untethered devices. Both companies have pledged US$1 billion to develop a new set of Internet-based wireless technologies.

Meanwhile, Zaghloul has made it clear that he does not want Cisco to buy his company. He believes that OFDM will mean a revolution in high-speed wireless. Wi-LAN’s founders think if OFDM were adopted as a standard then they will be supported by many companies and make a lot more money.

Last month, Wi-LAN held a symposium in Santa Clara, Calif., to build an industry alliance to support its technology. The meeting was well attended and many major industry players showed a keen interest, said Zaghloul. Currently, Phillips Electronics NV has partnered with Wi-LAN, and Nortel Networks and Lucent Technologies have expressed interest in the technology.

Analysts have said that any alliance Wi-LAN forges will put it in conflict with Cisco’s own alliance resulting in one major industry group pitted against another.