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FCC OK Unleashes XtremeSpectrum

By Michael Bruno Washtech.com Wednesday, May 29, 2002; Page E05

It’s been a long wait for Vienna-based XtremeSpectrum Inc.

The company has been developing semiconductor technology for wireless transmission of information since it was first funded in November 1998. But the ultra-wideband technology, caught up in a 3 1/2-year examination by the Federal Communications Commission, was just approved a month ago. The company now plans to ship its ultra-wideband chips to its business partners in the next two months.

The move means that by Christmas 2003, consumers may be able to wirelessly transfer movies, digital photos, MP3 clips and other large multimedia files between their computing devices at speeds 10 times faster than the current leading technology.

It also means that XtremeSpectrum hopes to become a leading provider of consumer-focused UWB technology, a field some analysts believe will burgeon soon.

UWB is the latest technology to take on the personal-area-network market, the mass of cables and electronic devices that pervades many homes and small businesses. For the past few years, users have had the option to go wireless, but the trade-off was that their data transfer speeds were not as fast.

Devices such as digital TVs, personal data assistants and MP3 players all use data formats where the speed of the data flow ranges from thousand of bits per second, such as MP3 at 320 Kbps, to millions of bits per second, such as DVDs at 10 Mbps.

Up to now, users had to choose from three formats — Bluetooth, Wi-Fi (802.11b) or 802.11a — to connect their equipment, and each has a downside. Bluetooth, once promoted by big-name tech companies, requires little power but offers speeds of only around 1 Mbps. Wi-Fi, the most prominent of the three technologies, offers speeds of 11 Mbps but needs more power. And 802.11a offers speeds of 54 Mbps but requires lots of power.

On the other hand, UWB promises speeds up to 100 Mbps and requires low power. A stand-alone device can be powered with a single AA battery, according to XtremeSpectrum.

The difference is in how the technology works. Traditionally, a carrier, such as a radio station, has an assigned frequency. UWB operates across a wide gamut of spectrum — 3.1 to 10.6 gigahertz and 24 GHz — and pulses the information instead of carrying it.

“We believe this will be a serious threat to Bluetooth and 802.11,” said David Hoover, an analyst at the Precursor Group in Washington.

Gemma Paulo, a wireless analyst with Arizona-based market research firm In-Stat/MDR, is less sanguine. She said UWB could complement Bluetooth but that it is “not really” a serious threat because federal regulations say it must limit its effectiveness to within 10 meters — although that limitation could be loosened.

According to In-Stat, the home networking market is expected to reach $3.5 billion in 2004 and $4.9 billion in 2006. The wireless portion of that market should hit $2.5 billion in 2004 and grow to $3.7 billion in 2006.

Neither Precursor nor In-Stat provide consulting or investment banking services, the analysts said. Their respective research groups also do not have financial relationships with the companies they cover.

The UWB concept was first developed in the 1950s but didn’t get anywhere until the late 1970s when the Defense Advanced Research Products Agency, a research and development organization for the U.S. military, became interested. In other forms, UWB can be a radar technology that can “see” through walls, forests and under ground.

“They got very interested in ultra-wideband because of its very low cost,” said Robert J. Fontana, president and founder of Germantown-based Multispectral Solutions Inc.

Multispectral Solutions has completed 64 contracts on UWB systems, such as ground-penetrating radar, with the military since late 2000. The 15-person company has been profitable from the start, and Fontana predicts that annual revenue will grow from almost $3 million to $4.5 million or $5 million as the federal government beefs up homeland defense efforts.

But before UWB could be applied commercially, the FCC had to approve it, and that was a long and controversial process. Since UWB spans a range of frequencies already used by wireless phone carriers and various federal agencies, including the global positioning system community, several established interests saw UWB as competition or merely interference. It took the National Telecommunications and Information Administration from September 1998 to February 2002 to negotiate a compromise. The FCC finalized its approval on April 23.

Because UWB pulses a low-power signal across a swath of radio spectrum, rather than streaming a signal on a specific frequency, it would not interfere with broadcasts on any one band.

“It probably produces less interference than a hair dryer being turned on,” said Rich Doherty, an analyst at the Envisioneering Group of Seaford, N.Y.

Still, the FCC is permitting its use in stages; the radio-frequency noise from a UWB device must be2,000 times lower than that emitted by a personal computer, baby monitor or garage door opener. If that produces no interference with other systems, higher levels of power — and increased range of effectiveness — may be approved.

Likewise, because UWB does not boost a signal on a particular frequency, UWB providers do not have to use equipment needed to carry a signal, which in turn knocks down the cost of UWB products.

XtremeSpectrum invested heavily in winning approval of UWB. Although Martin Rofheart, XtremeSpectrum chief executive and co-founder, declined to discuss how much was spent lobbying the government, the company hired 18 people for the effort.

“It was huge,” said analyst Hoover. “They spent a good portion of their [money] on lobbying.”

It was worth it, Rofheart said. Because XtremeSpectrum — formed a month after the regulatory debate began — was so intimately involved in the regulatory process, its chipsets were ready as soon as the FCC gave the final go-ahead.

“We’re trying to beat everyone to market,” Rofheart said.

“They basically designed their [chipset] around how they thought the FCC was going to rule,” analyst Paulo said.

Rofheart won’t discuss revenue projections for 57-person XtremeSpectrum, but he said the company won’t start counting sales until next year when its manufacturing partners start selling their consumer products during the holidays. He expects profitability in 2004.

Meanwhile, the company will rely on its venture capital. Funders include Cisco Systems Inc., Motorola Inc., Texas Instruments Inc., Alliance Technology Ventures, Granite Ventures and Novak Biddle Venture Partners. XtremeSpectrum officials have declined to discuss how much they have raised but plan to announce more funding, including new investors, within a month.

That’s good news since the competition is growing. Multispectral Solutions is expanding from government sales to the commercial market. Fontana said his company would introduce geolocation services and audio networking, such as audio systems in churches and arenas, over the next six months.

XtremeSpectrum’s leading rival, Time Domain Corp. of Alabama, has said its PulsON chipsets also will be available to its partners this year. Time Domain, which has an office in the District, is focusing on wireless broadband links and precision radar products.

According to analyst Hoover, Time Domain and XtremeSpectrum are sitting pretty: They are the leading companies in a marketplace that looks to take off.

“They definitely have their foothold,” he said. “They’re going to be around.”

Paulo with In-Stat said XtremeSpectrum has the edge.

“Time Domain wants to be in the consumer space, but they don’t seem to have an organized focus,” she said. “XtremeSpectrum is the only company that seems to know how to play in the commercial realm. The other companies seem to be a little bit more disorganized.”

© 2002 The Washington Post Company

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