SAN FRANCISCO (CNN/Money) -
Although some companies cheered louder than others last week when the Federal Communications Commission announced its allocation of a wide swath of spectrum to boost the signals used by wireless devices, the praise from the industry was unanimous.
Companies such as Intel (INTC: Research, Estimates) and Motorola (MOT: Research, Estimates), which make the chipsets that run some wireless access points (devices that beam wireless signals to computers on a network), had pushed hard for the allocation.
"The deployment of additional spectrum is key to the next wave of growth in wireless services," explains an Intel spokesperson. And once consumers grasp what the decision means, they'll give, at the very least, an approving nod.
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For you geeks keeping score at home, here are the details: The FCC allocated 255 megahertz of spectrum in the 5-gigahertz range to devices such as high-speed wireless access points, increasing the total spectrum available for these devices by 80 percent.
For consumers, the spectrum allocation will improve service by allowing devices to switch between 802.11a and 802.11b, depending on which signal is strongest. It will also mean faster transfer times between devices on the same network, which should prove a boon to home-networked games.
Many companies are now beginning to roll out products that feature the wireless protocols 802.11a and 802.11g, which take advantage of this spectrum.
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The fear was that as more of these products were rolled out, the spectrum would become more crowded, which would lead to dropped signals, cross-signal interference, and generally unhappy customers, according to analysts. The FCC's move was preemptive.
"[Spectrum] is like a highway," says Allen Nogee, an analyst with InStat/MDR. "You may not have the cars on it at the time, but you will soon."
Here's what the road map to the new spectrum will look like: Between now and 2005, we'll see the emergence of more "transitional" wireless access points that offer both the current technology (802.11b) and the next generation. "Any company that's looking to take advantage of this decision will need multiple chipsets to do both frequencies," says Charles Golvin, an analyst at Forrester Research, no doubt warming the cockles of companies such as Intel and Motorola.
These "dual-use" products are available now, and the manufacturers of these transitional products likely will be the first to see sales bumps. According to recent statistics from InStat/MDR, Cisco (CSCO: Research, Estimates) dominates the dual-use wireless-access-point category, commanding a 53.4 percent market share for the first half of 2003. Proxim is second with 16.7 percent of the nascent market, and Cisco-owned Linksys is third with 13.6 percent.
The wireless sector has been an enigma to many investors as they try to discern which companies are making money on the technology. Even though the impact of the FCC's allocation likely won't be felt in the short term, the move should serve as encouragement for wireless investors, especially those who are going long on the industry. The decision, in effect, is a grand Highway Act for the industry, paving the roads that will one day be crowded with consumers.
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