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IBM, Intel, and three of the nation's largest cellular carriers have begun discussions to form a separate company that would provide nationwide high-speed wireless data services based on the 802.11b, or Wi-Fi, wireless LAN standard, The New York Times reported Tuesday.

All of the companies cited by the newspaper either declined to comment Tuesday morning or did not return calls by deadline. The Times article said the new nationwide Wi-Fi service, code-named Project Rainbow, is being spearheaded by Intel and IBM and its wireless partners, including AT&T Wireless Services and Cingular Wireless.

The new company would offer service in "hot spots" such as at airports and other pubic places--a market already served by both the T-Mobile Broadband division of VoiceStream Wireless and Santa Monica, California-based Boingo Wireless. (Sprint PCS Group, another nationwide cellular carrier, has invested in Boingo.)

Wi-Fi networks provide users with 11 megabits per second of throughput in a local area, while cellular carriers offer between 20 kbps and 80 kbps data rates over a wide area.

Rumors and Rumblings

Chris Kozup, an analyst at Boston-based Meta Group, says he has heard "rumblings" about Project Rainbow within the wireless industry and notes that the cellular carriers are essential to the success of any nationwide Wi-Fi network, "since they own the customers."

Kozup adds that Wi-Fi penetration has started to reach the critical mass needed to support such a network, with many notebooks and laptops featuring built-in Wi-Fi chips and antennas. The Wireless Ethernet Compatibility Alliance, an industry group, estimates that shipments of Wi-Fi cards and access clients combined are running at 1.5 million units per month.

Alan Reiter, an analyst at Wireless Internet & Mobile Computing in Chevy Chase, Maryland, says the blue-chip Project Rainbow partnership makes sense because it will take considerable investment and network know-how "to create a viable business model for a cohesive, nationwide 802.11 network."

Reiter says the cellular carriers would be able to provide customers with easy roaming as they move from one hot spot to another, plus they have established systems in place to handle billing.

More Support?

Intel's long and close relationship with Microsoft indicates that company could also throw its considerable marketing clout behind Project Rainbow, Reiter says. Last week, Microsoft announced plans to introduce its own line of Wi-Fi hardware products targeted at the home user.

Reiter cautions that while Project Rainbow may seem like a good idea, the wireless industry is littered with good ideas that didn't quite make it, including Wireless Application Protocol browsers and Bluetooth short-range communication devices.

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