BUSINESSWEEK ONLINE SCIENCE & TECHNOLOGY Wireless Takes to the High Wire The race is on to perfect new ways of blasting data If radio signals were visible to the human eye, cities might look like this view of Los Angeles: up to their gargoyles in radio waves. You would see transmissions from millions of cell phones and laptops, Palms and pagers, bouncing, bumping and reflecting through the urban canyons. What you might notice, right away, is that radio spectrum is limited and getting more crowded every day. Communication businesses already feel the crunch. If they want to provide a new cell-phone service or wireless Internet access, they either have to license more frequency from the government or get smarter about how they use the airwaves. Fortunately, radio engineers are getting incredibly smart. In a stunning set of breakthroughs, scientists at Lucent Technologies Inc.'s (LU) Bell Labs are figuring out how to stack antennas in arrays that could yield a hundredfold increase in radio capacity. If it works, that will mean huge boosts in wireless voice and data traffic, with no extra spectrum costs. Cisco Systems Inc. (CSCO) is playing the same game, charging into the high-speed wireless arena with flashy signal-processing techniques acquired from Stanford University. ''HOTBED.'' The U.S. government is lending a hand, funneling money for wireless research to universities--where profs are busily filing patents and spinning off wireless businesses. Venture capitalists, sniffing quick returns, are beefing up equity stakes in undercapitalized wireless startups. ''This whole area is a hotbed of activity,'' says James J. Hannan, a technology vice-president at Sprint Corp. (FON) ''The opportunity is now.'' Bell Labs incited much of the current frenzy back in September, 1998, when its researchers unveiled a technology called Bell Labs Layered Space-Time (BLAST). The name evokes Star Trek wizardry--and that may turn out to be justified. In the normal world of radio, the amount of information you can transmit in a slice of spectrum is limited by interference from radio signals bouncing and echoing in the same space--a phenomenon known as multipath. The more channels you cram into that space, the uglier multipath effects become. With BLAST, engineers can turn this problem into an advantage. Instead of restricting the number of transmissions at a single frequency, engineers deliberately stack up transmitters and receivers. That means more multipath effects. But incredibly, it also means better, clearer signals for everyone using the technology. BLAST works by breaking up the message to be transmitted--whether it's a cell-phone call or a compressed music file--and parceling the pieces among two or more antennas clustered close together. The transmission is then beamed to a similar array of receiving antennas. Along the way, the signals bounce around, scatter, and get scrambled. But that doesn't faze the smart signal-processing chips on the receiving side. Here, antennas pluck bits out of the brew, compare them with what neighboring antennas have collected, and then piece the original transmissions back together. ''With 20 antennas, you have the same power and bandwidth [as with one], but you can get 20 times the normal capacity,'' says Gerard Foschini, the Bell Labs researcher who developed the basic principles. ''BLAST is revolutionary,'' says Joseph M. Kahn, a professor of electrical engineering at the University of California at Berkeley. ''When you talk about how to increase capacity, this is the most promising approach.'' BUNDLES. This technology is well-suited to local area networks in offices and homes, where it could replace the tangle of cables that snake behind desks and under floors. Lucent will also test BLAST outdoors, in fixed-wireless environments. But the biggest market could be in mobile communications. Lucent managed to get aspects of BLAST technology incorporated into U.S. standards for next-generation mobile phones. The company also hopes to bundle BLAST with cell phone equipment it ships to overseas service providers. Competitors and skeptics in academic circles question whether BLAST is really suited to the world of mobile phones. Tiny cell phones aren't likely to brandish more than one or two antennas, at the most. And in a fast-moving vehicle, Bell's fancy chips will have to work overtime to extract and interpret the signal data. ''This will require a tremendous amount of signal processing,'' says Babak Daneshrad, a professor of electrical engineering at the University of California at Los Angeles, who has a Defense Dept. grant to develop circuit techniques to address this bottleneck. Lucent must also contend with other players that are rushing products to market. Just one week after Lucent unveiled BLAST, Cisco announced plans to trade $157 million in stock for a tiny spin-off from Stanford University called Clarity Wireless Inc., which was on the brink of commercializing high-speed wireless data technology that bears a close affinity with BLAST. Cisco has since rolled out a line of fixed-wireless products, offering business customers Internet access at a blistering 50 megabits per second--far faster than most cable modems. A second Stanford spin-off with space-time technology, called Gigabit Wireless Inc., has also entered the fixed-wireless fray, founded by Arogyaswami Paulraj, a prominent Stanford electrical engineering professor. Paulraj hopes to have high-speed products on the market early next year. His technology is now being evaluated by Sprint, among others. In the short term, disputes over intellectual-property rights could dampen some of this excitement. Researchers at Stanford, Lucent, and AT&T (T) all claim paternity for key pieces of the space-time processing used in BLAST. Lucent has patented many of the specifics. But Paulraj and Stanford claim patents on the basic idea of multiple antennas transmitting to multiple receivers. Cisco also has patents through Clarity. And AT&T holds the rights to some space-time techniques used to code signals for mobile phones. RADICAL. If history is any guide, staggering sums of money will change hands as these disputes shake out and broadband wireless emerges from infancy. If you doubt it, consider the fresh fortunes amassed in fiber-optic communications. Breakthroughs at university engineering labs and at Bell Labs over the last decade led to radical new techniques for amplifying optical signals and splitting pulses of light to squeeze more capacity out of glass fibers. Then, as now, patent applications flooded into Washington, professors fled universities for optical startups, venture capitalists placed frantic bets, and market values for teensy companies with names such as Optical Networks, Qtera, E-Tek Dynamics (ETEK), and JDS Uniphase (JDSU) rocketed into the multibillions. Wireless promises a repeat performance. But it's too early to say which companies will attract all the new wealth. When it comes to marketing wireless broadband technology, Cisco probably has a leg up. But for all its Internet routing expertise, it has little experience managing wireless complexity. ''The wireless world is a hall of mirrors--full of unexpected events,'' says Richard Howard, Bell Labs' director of wireless research. Even these uncertainties, however, have a strangely familiar feel. ''We may be right where fiber communications were three or four years ago,'' muses Sprint's James Hannan. Ladies and gentlemen, place your bets. By Neil Gross in New York