The company this week will unveil its products, which transmit light signals from building to building using 780-nanometer lasers, the same kind used in CD players. AirFiber (San Diego) chose the lower wavelength, rather than the 1,550 nm more common to fiber optics, because inexpensive lasers are more widely available.

AirFiber also plans to announce a partnership with Nortel Networks (Brampton, Ontario), which invested in the company last August. Nortel Networks will sell AirFiber's systems on an OEM basis.

Sending data traffic across free space saves companies the expense of installing fiber-optic cables between buildings, at $150,000 to $200,000 per building, said AirFiber chief executive Jim Dunn. By contrast, each node of the new setup will cost $20,000 including installation.

AirFiber uses the 780-nm lasers in CD players to create a $20,000 node that's one-tenth the cost of fiber.

Other companies are exploring the same territory. Startup TeraBeam Networks Inc. (Seattle) announced a development deal with Lucent for free-space transmission systems.

Dunn believes his company's plans differ because they focus on connecting groups of buildings at once. To that end, the company will target only dense urban areas. The idea is that each building will connect to multiple neighboring buildings, providing redundant links in case signals are blocked by weather, construction or any number of unforeseen changes. Physical blocking of the light — when something gets in the way — is the problem with free-space optics, although AirFiber and others claim to have perfected systems that can operate in bad weather. Fog is the biggest problem, rain less so because it "is not a serious attenuator of light for the distances we're talking about," Dunn said. Less of a concern, but one that can't be guarded against, is what Dunn jokingly calls the "nightmare" scenario: someone placing a tarp over the apparatus.

The systems are built using mostly off-the-shelf parts, including networking chips from Integrated Device Technology Inc. (Santa Clara, Calif.). The device's plastic lenses are specially fabricated by Polaroid.

Each terminal includes four pairs of lenses, each pair consisting of a transmission lens and a receiver lens. When one pair receives a light signal, the system converts it to an electrical signal for processing. Any parts of the stream intended for that particular building are split off. The rest are converted back into light and beamed to other buildings through one of the three remaining pairs of lenses.

The nodes, roughly 3 feet tall and 12 inches wide, can be mounted several feet off the ground. Each pair of lenses can be positioned anywhere around the node's cylindrical frame, controlled using a set of precision motors.

Trials have begun in six cities including Tokyo and Chicago. AirFiber's first systems operate at OC-12 speeds (622 Mbits/second). Work is under way on OC-48 (2.5-Gbit/s) systems, but AirFiber says the setup will need tweaking.