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Terabeam Trains Lasers On Denver and Seattle

A burgeoning technology that uses laser beams to link business customers to a high-speed data backbone for data services is finally starting to fulfill some of its promises.

The potential of that technology — dubbed free-space optics, or wireless-optical networking — has lured a spate of companies into the space, including Terabeam Networks, AirFiber Inc., Canobeam, Optical Access and LightPointe Communications Inc.

Among that group, Tera- beam is the one company that both manufactures the equipment and takes on the service-provider role. So far, the company has launched services in two cities: its hometown of Seattle and, more recently, Denver.

Terabeam, which spent three years working to bring the technology to market, will offer services in four more large "NFL cities" before the year is out, said company CEO Dan Hesse, the former CEO of AT&T Wireless Services.

Terabeam believes its strength is its ability to deliver fiber-like speeds to buildings that traditional landline fiber networks have yet to reach. While Terabeam's technology acts like fiber and uses the same frequency spectrum (1550 nanometer), the company makes its hay over the air.

Terabeam's largest backer is Lucent Technologies, which invested $450 million in Terabeam Labs, its equipment division. Another Tera- beam unit serves as an Internet service provider, offering plain-vanilla access in 5-, 10- and 100-megabit-per-second tiers and more advanced services such as video conferencing and data-center connections over a 1.25 gigabit backbone that can be outfitted to scale even higher.

The service doesn't come cheap. The starting price points equate to about three T-1s, which typically run about $2,000 to $4,000 per month.

Costs aside, Terabeam's Star Wars
-like technology is impressive just because it actually works and is servicing customers such as Seattle's Four Seasons Olympic Hotel. But the company has to do plenty of footwork in each market before the service can be launched.

For instance, Terabeam spent 120 days to develop its service footprint in Denver.

Terabeam also has some advantages over its fixed-wireless cousin. For example, Terabeam doesn't need to buy a spectrum license from the Federal Communications Commission or pay for roof rights.

It does have to secure hub sites to build out its wireless footprint. Terabeam's hubs (it has four in Denver and 12 in Seattle) are housed in rented office buildings and mounted on poles in specific locations connected to the company's backbone. Terabeam's four-foot-high customer-premises equipment is aimed out a window and connected to the backbone via an on-board laser.

In Denver, four hubs "see" 70 percent of the area's potential customers. "It's a cost-effective set-up," Hesse said.

The "shape" of a city determines how many hubs are required. New York City, with dense arrays of skyscrapers that create long and deep canyons, would require many more hubs. New York "is the toughest one you'll find," Hesse explained.

At the same time, Terabeam's technology has to deal with its share of limitations and obstacles.

Fog is one of them. Though Terabeam's lasers can cut through a downpour or a blinding snowstorm, fog can bend and impede light.

To remedy that, Terabeam employs "link budgets," which correlate fog patterns calculated over a city's 30-year weather history. Seattle, a relatively foggy city, required shorter links than downtown Denver did. Meanwhile, an "auto-gain" technology embedded in Terabeam's equipment automatically boosts the power of the beam when it senses bad weather.

Building sway caused by wind and earthquakes also can disrupt a customer's service. To fix that, Terabeam's "auto-tracking" technology "pings" crosshairs between buildings to keep its laser links aligned.

In addition to those potential problems, Terabeam's lasers could also fall prey to a drawn curtain blocking the beam. Were that to happen, a camera hidden inside the CPE would alert Terabeam to treat the problem.

Though Terabeam's service is still not cost-effective enough for individual home use, the multiple-dwelling-unit sector "definitely has some future upside," Hesse said.

On the downside, Terabeam, like dozens of other tech companies, initiated some cutbacks in May. It laid off 54 employees, or about 10 percent of its entire staff.

Hesse called the soft economy a "concern," and noted that he has started talks with international carriers about using Terabeam's equipment.

AirFiber, which prefers the term "wireless optical networking" and is financially backed by Nortel Networks Inc., is a Terabeam competitor that sells its line of wireless equipment to carriers but does not take on the service-provider role.

And instead of accessing the backbone through a window, AirFiber's lasers are mounted to a building's rooftop. The system itself uses a "mesh" technique that enables every deployed node to also serve as a hub, explained senior vice president of marketing Michael Sabo.

So far, AirFiber's traction has come internationally, including a deployment with Alua, a Madrid, Spain-based carrier that competes with incumbent Telefónica S.A. Sabo said AirFiber is in deployment discussions with three domestic carriers, but would not name them.

LightPointe made waves at this month's National Fiber Optic Engineers Conference in Baltimore by demonstrating its new "FlightSpectrum" system, expected to launch commercially this fall. The company said the 2.5-gigabit system, which supports a range of 1,000 meters, is currently in field and lab trials with more than a dozen U.S. and international carriers.

The free-space optics sector would solve the bandwidth riddle for cities that don't yet have access to fiber, said The Yankee Group senior analyst Marian Stasney, as long as the technology's overriding reliability and security is up to snuff.

"But I'm not sure if we're there yet," she said.