Wireless network provider MobileStar has laid off all its workers.
US wireless network provider MobileStar has shut down operations and laid off its entire staff of 80, after running out of cash and failing to secure an additional source of funding. The company is now looking for a buyer.
MobileStar had planned to install network access points based on the 802.11b wireless LAN standard in public places such as restaurants (including its flagship deal with coffee chain Starbucks), airports and hotels. Earlier this year, the buzz around public 802.11b networks was huge. Merrill Lynch issued a report saying the technology could make 3G services largely redundant. While Datamonitor rejected this assertion, it seemed clear that wireless networking technology had strong potential.
It still does. A wLAN can offer connections at up to 11Mbps, compared with a maximum of 48Kbps for 3G services (and around 1Kbps for GSM mobile Internet). This makes intensive data downloading viable, in those areas covered by public wLANs. Hotels and airports, among others, will be able to differentiate their offerings by offering broadband connectivity to visitors. Mobile operators can sign roaming deals to give their customers fast downloads when in the vicinity of a public wLAN.
All these factors remain in place despite MobileStar’s demise. The company failed because it failed to raise venture capital funding in a market still scared of Internet and telecoms ventures; the effect of September’s atrocities on investor confidence can hardly have been positive either.
But the key now for public wLAN technology is for established companies whose offering it complements to continue to provide services like MobileStar’s. Several companies could benefit from making such moves, but the best-placed are the mobile telecoms operators.
Particularly in the US, where true 3G services may not appear for many years, mobile operators would do well to follow the example of Norway’s Telenor, which has launched a project with Ericsson to integrate 3G and wLAN infrastructure. Perhaps one of the major US mobile operators should consider bidding for MobileStar’s assets.
