As previously mentioned I have been engaged in a study of residential gateways.

These are products that combine a DSL modem, a wireless router, and software so ISPs can customize their services and consumers can build home networks.

The early foot in this business went to 2Wire, a relatively small California company that practically defined the space with their HomePortal gateway. (This image of their HomePortal, by the way, comes from GCN. The 2Wire site itself relies heavily on Flash, which makes images hard to link.)

The folks at 2Wire have been fairly quiet lately, although most observers believe they still hold the confidence of SBC, their biggest ISP customer. If SBC stays committed to the company, 2Wire could even become profitable and go public.

But they're not resting on their laurels. In fact they're about to launch the industry's biggest challenge to date.

We learned this in talking with Brian Sugar, now vice president-marketing for 2Wire. He may be better known, however, for Sugar Media, a company he sold to 2Wire in 2003 that was working on Sugar Cube, a content management solution for broadband carriers that eventually made its way into 2Wire's MediaPortal, announced in February. "It’s a set top box solution for the media space," Sugar said.

That's not the headline, however. The headline is that HyperG, the technology in its new gateway, will pump up the power output on its 802.11 network from the 20 milliwatts of most competitors to 400 milliwatts. That is well below the maximum allowed by the FCC, but it's still a huge jump.

As Sugar put it, "802.11 is a radio station. You hear powerful stations from far away. Same with our home portal."

He's absolutely right. Pumping up the power output on the radios used in an 802.11 base station will do more to increase its reach and effective throughput than all the antenna games of rival Netopia, and all the software games of rival Linksys.

Why hasn't it happened before?

That's a very good question, and two answers emerge from our research.

The first answer is interference. The 802.11 frequencies are shared spectrum, used by everything from cordless phones to garage door openers. Bumping up the power on your home network means it might interfere with signals used by your neighbors. As more people get these high-power networks, interference will grow ever-more acute, and could threaten the health of the whole industry.

The second answer, which I think may prove more important, is security. It sucks. Most people turn it off by default. As Kathy Ivens, author of Home Networking for Dummies, told us, "I hooked up wireless here and my Windows XP said I found a network. It found my neighbor’s network."

Her solution, "Insist that you invent a new name for your network. Dig in your heels and say this isn’t working untl you rename the network and name every computer to match it." She adds, "I’m not certain that anyone who sells hardware cares about security. Security is urgent. It’s like seat belts."

Home networking solutions have trouble getting through the walls in your home. But once they reach the outside the run, they race, without interference, to your neighbors. The problems of security and interference must be solved if home networking is going to move forward.

For 2005, I think, 2Wire's innovation could prove the wireless industry's show-stopper.