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LANDLORDS CATCH WEB SURFING'S LATEST WAVE: DANGLE WIRELESS NETWORKS AS DRAWING CARDS

By Anita Jain

Published on June 16, 2003

Across New York City's university campuses, hotels, airports, cafes and parks, laptop users are downloading music, sending e-mails and browsing their favorite Web sites wirelessly, and in many cases, for free.

Now, office buildings are signing up for the unwired revolution. Massive complexes such as the Conde Nast Building, the Time & Life Building and the McGraw-Hill Building will roll out Wi-Fi-or wireless fidelity-over the next few months. The AOL Time Warner Center, under construction at Columbus Circle, will include a wireless network in its final plans.

Wi-Fi technology, like cell phones, allows people to get a high-speed Internet connection without wires. The 3-year-old technology makes sense in an increasingly decentralized workplace, enabling visiting sales executives and out-of-town employees to log on to the Internet without having to find an available office outlet to plug into.

Landlords of Manhattan's top commercial real estate are beginning to believe that providing the service can increase the cachet of a building, much like T-1 lines did nearly a decade ago.

"Wi-Fi is the buzzword of the moment," says Alan Stein, senior vice president of marketing and sales at The Rockefeller Group, which owns and operates the Time & Life and McGraw-Hill buildings. "To the extent that we can provide Wi-Fi nodes to our tenants, we are helping them conduct their business more efficiently and making our assets more valuable."

Last week, the McGraw-Hill Building began offering tenants, visitors and passersby free wireless Internet access in a summer test run. If it goes well, The Rockefeller Group plans to introduce Wi-Fi to four other buildings in the area-the Time & Life Building at 1271 Sixth Ave., 1211 and 1251 Sixth Ave., and 745 Seventh Ave.-by the end of the year.

Free Wi-Fi may benefit McGraw-Hill Building ground-level tenant Cafe Metro. "If they fill those seats and sell those wares, it helps them and indirectly helps us. We wind up having a building that is a better asset," Mr. Stein says. The Rockefeller Group isn't certain yet whether the landlord or the tenant will shoulder the costs, but the trial at the McGraw-Hill Building will help determine the cost structure.

Another prominent Manhattan landlord, The Durst Organization, also plans to offer a wireless network throughout its nine buildings in midtown. It will start with the Conde Nast building at 4 Times Square, which will likely be "lit" by the end of the year, says Jim Migliore, chief operating officer of Durst. "Whatever technology our tenants would want at the right price, we would install," he says.

InnerWireless, the company that is installing the Wi-Fi infrastructure in the Time & Life, McGraw-Hill and Conde Nast buildings, says it is in discussions with many of New York's Class-A office space owners, covering 100 million square feet, to set up wireless networks. Ed Cantwell, president and chief executive of InnerWireless, says his sales have doubled in the city in the last year.

AOL unplugged

The Richardson, Texas-based company is also setting up the Wi-Fi network for the 2.8 million square feet at the AOL Time Warner Center, a spokesperson for the office, retail and shopping complex confirmed. The development is scheduled for completion in the fall.

InnerWireless installs a series of antennas throughout a commercial building that facilitates all wireless communication, not just Internet access. Its system allows people to use mobile phones and Palm Pilots on higher floors, where signals are frequently lost.

The company charges anywhere from 50 cents to $1.40 per square foot to install its Wi-Fi system in a building, which means the costs to the 50-story, 2.5-million-square-foot McGraw-Hill Building could run as high as $3.5 million. Annual operating costs are about 5% of the installation costs.

This is a lot to pay for a service that no one is certain will be widely used. While it's true that some Internet users like to fire up their laptops in airport lobbies or cafes, the model of lit office buildings is untested.

No-shows

"The danger is that we build it and nobody shows up," says Mr. Migliore.

In New York City, there are 160 free and public Wi-Fi nodes at parks, cafes and even stoops, where laptop users with an access card-which costs about $50-can surf the Web without charge. About half of laptops currently being manufactured come equipped with Wi-Fi capability, but only about 13 million Wi-Fi access cards have been sold nationally. Some networks, like the ones in Starbucks coffee shops, charge users a fee, which can range from $6 per hour to $40 per month.

Networks that are free and open to the public are especially vulnerable to hackers who can gain access to sensitive information. This is an issue that commercial landlords will have to contend with when installing Wi-Fi.

Many landlords, particularly large Wall Street firms, will opt for private networks that can be accessed only by employees and other authorized users. "Fortune 1000 companies won't allow you to roam freely," Mr. Cantwell says. "The current craze of offering free Wi-Fi access will play its course."

For now, though, free access for the end-user is the ticket. Emenity, the other major Wi-Fi provider in New York, plans to outfit three commercial or residential buildings in the city for Wi-Fi by the end of the year. Unlike InnerWireless, Emenity scatters various access points within a building that exclusively deliver Wi-Fi. The Manhattan-based company says its prices are competitive with those of InnerWireless.

Emenity, a for-profit entity that grew out of nonprofit NYC Wireless, set up Wi-Fi in Bryant Park, Madison Square Park and, more recently, Union Square Park.

Anthony Townsend, chief operating officer of Emenity, expects Union Square Park's free-access system to be by far the most popular among the city's urban spaces.

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