Intel Corp. (Nasdaq: INTC), IBM Corp. (NYSE: IBM), AT&T Wireless Services Inc. (NYSE: AWE), Cingular Wireless and Verizon Wireless are reportedly planning to form a company to build out a network of 802.11b wireless LAN 'hotspots' across the U.S.

The New York Times quotes sources saying that Intel is heading up "Project Rainbow" [Ed. note: an acronym for "Radio Access Independent Broadband on Wireless"]. If the discussions pay off, the resulting company will build out access points in public places such as airports.

A spokesperson for the chipmaker refused to comment on the report. Intel, he told Unstrung, is talking to many companies about many different ways to commercialize wireless LAN technology (see Intel Preps WLAN Blast).

If Project Rainbow goes ahead, Intel et al will come into direct competition with VoiceStream Wireless Corp., so far the only wireless carrier in the U.S. that is offering a wireless LAN service, through the hotspot network it bought off the now-defunct service provider (WISP) Mobilestar.

It will also come up against smaller but more established hotspot network operators, such as Wayport Inc.. IBM Global Services already has an existing deal with Wayport.

The viability of a national WLAN network in the U.S. is still relatively unproven. The sheer size of the alliance might give it an edge in building a coast-to-coast footprint. But tech giant or not, every WISP still has to deal with issues surrounding reliable coverage, access, security, billing, and roaming.

Of course, some companies, like Boingo Wireless Inc. get around the billing issue by offering a series of flat-rate access plans, so this could be one route for the Rainbow. However, Boingo doesn't have its own national network; instead, its software sniffs out other people's access points. The Rainbow project appears to be on a much grander scale.

AT&T may well be able to apply some of the lessons its partner NTT DoCoMo Inc. (NYSE: DCM) is learning from its own WLAN trials in Japan. The Japanese giant says it's planning to offer subscribers a dualmode card that allows them to use the faster WLAN access where available and 3G WAN access where it is not.

— Dan Jones, Senior Editor, Unstrung
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