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Laser Optics Try To Bridge Last Mile

Omnilux bets free-space optics networks will help users make high-speed connections
A small telecom equipment maker is betting on laser-optic technology it says will give companies the speed and quality of fiber optics at a fraction of the cost.

Omnilux Inc., mostly owned by troubled tech incubator Idealab, will disclose this week that it has licensed patents for building "free-space optics" networks that are more impervious to the effects of bad weather. The company this summer plans to start testing new products, slated for a fall release.

The patents, licensed from the University of California, San Diego, describe a way to transmit data using laser beams shone from roof-mounted equipment over short distances. Omnilux says that could solve the so-called "last mile" problem of hooking smaller companies and homes to the Internet at high speeds. As part of the deal, UCSD and chipmaker Qualcomm Inc. took an undisclosed stake in Omnilux.

"The telecom industry is coming out of a five-year deep freeze," says Anthony Acampora, a professor of electrical and computer engineering at UCSD who invented the technology. "We've got to crack the last mile--that's the last frontier in modern telecom."

Omnilux hopes to convince Internet service providers to resell its equipment to companies that want online connection speeds and quality comparable to that of fiber-optic cable. Last-mile fiber costs $500,000 to $1 million per mile, analysts say, and can take months to install. Omnilux says its equipment costs about $2,500 per building and delivers data-transfer speeds of 100 Mbps, close to that of fiber and far faster than DSL or T1.

But the market for free-space optics is small, say analysts--and endangered. "They're crunched from two different directions," says Don Carros, an analyst at consulting company C3R Group. Verizon Communications Inc. and other phone companies are building new fiber-optic links to homes and offices, while Intel and others are investing in the radio-frequency technology WiMax, which promises higher speeds and longer ranges than the commonly used Wi-Fi for wireless Internet connections over short distances.