Filed at 1:36 p.m. ET

NEW YORK (Reuters) - A technology with a tongue-twisting name may one day turn the wireless industry on its ear, offering the potential of speeds 10 times faster than standards that mobile companies around the world are adopting.

Its name -- Orthogonal Frequency Division Multiplexing (OFDM) -- is not likely to excite anybody. But a service that downloads an MP3 music album in about eight minutes, compared with an hour and a half or more, could be more convincing.

Advertisement

Mobile companies the world over see higher data speeds and fancy applications as the key to attracting new customers and convincing existing phone users to spend more money.

At least in theory, OFDM -- which has never been used commercially on a mobile network -- is superior to standards being adopted by most mobile companies, analysts say. The problem is that impressive speeds may not outweigh mundane concerns such as cost and network compatibility -- and industry heavyweights have already invested billions of dollars in other standards.

``It's not necessarily the best technology that wins,'' Yankee Group analyst Philip Marshall said.

OFDM is already used in digital audio broadcasting and wireless short-range networks. Now Bedminster, New Jersey-based Flarion Technologies Inc. and other start-up companies are adapting the technology for mobile networks.

Nextel Communications Inc. (NXTL.O), the No. 5 U.S. mobile company, has fueled interest in OFDM by allowing Flarion to run a test on a small section of its network in northern Virginia.

Verizon, the No. 1 U.S. wireless company, said it is monitoring OFDM development as a possible way to improve the high-speed services it launched in January.

COMPETING STANDARDS

The wireless world currently is split between supporters of high-speed versions of European-led standard called Global System for Mobile communication (GSM) and a U.S.-led system called Code-Division Multiple Access (CDMA).

Verizon and Sprint PCS Group (PCS.N) are backing high-speed versions of CDMA, while AT&T Wireless Services Inc. (AWE.N) and Cingular Wireless, a joint venture between SBC Communications Inc. (SBC.N) and BellSouth Corp. (BLS.N), are betting on high-speed GSM. Both technologies download data to phones about 10 times faster, at best, than traditional phones.

But Flarion says its FLASH-OFDM can download data to mobile phones 10 times faster than GSM and CDMA's best efforts.

DARING TO BE DIFFERENT

Reston, Virginia-based Nextel, which has hinted at CDMA leanings in the past, has so far declined to establish any definite plans for fast data.

In the meantime it is the only phone company to run a network test of Flarion's gear.

Analysts say the trial is important even if Nextel does not eventually use OFDM commercially.

``The perception was that Nextel was sitting and waiting to be gobbled up by a larger player. (The trial) puts them back in the game, saying we're going to plan in the data space as aggressively as anyone,'' Ovum analyst Michael Doherty said.

Nextel itself would not divulge details of the test and downplayed its importance. ``It is Flarion's trial not ours,'' spokeswoman Audrey Schaefer said. But she noted that Nextel does expect to learn from the trial.

To be sure, Ovum's Doherty warned that being ``the odd man out'' might work against Nextel in the much-anticipated wireless consolidation frenzy.

If nobody else uses OFDM, the task of patching together incompatible networks could drive away prospective suitors.

FLASH BUT NOT CHEAP

Flarion insists that its gear will be cheaper than standard equipment but Yankee Group's Marshall worries that alternatives like OFDM face an uphill battle against mainstream technology, in terms of cost and availability of phones.

If a single service provider supports a technology, fewer customers would need phones based on this technology. Handsets would cost more in the absence of the volume economics that drives down standard phone prices.

The support of Verizon, a joint venture between Verizon Communications (VZ.N) and Vodafone Group Plc (VOD.L), might solve the volume issue, but it is unclear what will come of its interest in the technology.

Verizon, which tested Flarion gear in its labs last year, said it is intrigued by the technology and the potential of running a network trial.

Verizon said the company is also monitoring other OFDM developers including BeamReach Networks, Malibu Networks and Broadstorm Telecom. Flarion came from a venture group of network equipment supplier Lucent Technologies Inc. (LU.N), which happens to be Verizon's main network equipment supplier.

The start-up said it is talking to lots of companies including one South Korean service provider in particular.

``I've seen Flarion's truck outside lots of company doors'' one analyst said.