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Three weeks before it embarked on its blundering attempt to acquire Yahoo, a Google-obsessed Microsoft agreed to pay a juicy $1.23 billion for a Norwegian tech company mired in enough accounting problems, regulatory probes and conflicts of interest that it had become known as the Enron of Norway.

Fast Search and Transfer, which for a while was also known as the Google of Norway, had developed search engine technology that, according to industry experts, surpassed that of Google and could handle truly massive corporate projects. Goldman Sachs estimated last year that the company would grow its revenue 27 percent in 2007. Over the years, Fast appeared to benefit from big contracts with customers such as AT&T, Comcast and Disney.

Enter Microsoft. It has shifted its M&A strategy to an ethos distilled in the words of Microsoft chief executive Steve Ballmer, who reportedly told a defecting executive that he would "f***ing kill Google."

It announced a stunningly expensive $6 billion deal last May for digital advertising company aQuantive, just one month after Google said it would pay $3.1 billion for DoubleClick. And it sought to address a weakness in the crucial enterprise market by acquiring Fast, and ponying up a pricey 8.6 times revenue to do it.

Microsoft's M&A strategy reflects costly hair-trigger reactions to pressure from Google, according to I.T. consultant Stephen Arnold. The Fast deal, and the $6 billion acquisition of aQuantive, are just two examples, he said.

"Microsoft is a world-class knee-jerker in its response to Google. Google has been doing its thing unencumbered since 1998," Arnold said. "Microsoft has a great track record of flopping in online. Google just keeps rubbing it in and edging ever closer to Microsoft's crown jewel — enterprise revenue."

But aside from looking past the accounting woes that led to Fast's delisting from the Oslo exchange, the brain trust in Redmond ignored a host of other problems. The press in Norway said one director, Tomas Fussell, bought an unprofitable company called Hercules Communications and sold it to Fast for a huge profit, creating an apparent conflict of interest. Director Robert Keith reportedly said last year that he should have "shot" fellow director Oystein Spay Spatelan the first time he saw him. The Norwegian conglomerate Orkla ASA, a large Fast shareholder, forced Keith and Fussell from the board late last year.

Fast may have found a savior in Microsoft, which was intent on buying its way into the fast-growing enterprise search market. Its SharePoint product had a beachhead in the middle market but was being threatened by Google, which has quickly racked up $400 million in annual revenue from the business.

Fast, like Google, has its roots in academia. It was launched in 1997 by faculty and students from the computer and information science department at the Norwegian University of Science and Technology in Trondheim, led by chief executive John Markus Lervik, an intense former graduate student with a Ph.D. but not prone to small talk or jokes.

"He's never referred to as John, always, always John Markus," says Susan Feldman, a search expert at researcher Interactive Data Corp. who has known Lervik on a professional basis. Arnold, an industry consultant in the U.S., said Lervik, now 38, sometimes seemed bewildered by the ways of big, unfamiliar clients such as the U.S. government.

Still, Lervik's business appeared to grow steadily until the second quarter of 2007. The company reported revenues of $35 million, $20 million below forecasts, and an operating loss of $38 million. Financial regulators in Norway investigated, and the losses widened the following quarter. When trading in Fast was suspended on December 12, the company said it would review accounting for all of 2006 and 2007. The latest unaudited results show revenue growth of 7 percent for last year, which is far below Goldman's forecast. Steve Papa, CEO of rival search firm Endeca, characterized 2007 as "the frothiest year for enterprise search since 2000." Endeca, he said, grew 70 percent last year.

Goldman Sachs criticized Fast's habit of capitalizing an unusually high level of research and development costs and booking sales based on future licensing revenue, calling it "aggressive."

Consultant Arnold theorized that Fast's problems were related to the nature of large enterprise accounts typically worth $500,000 over a period of about three years. It can take a team of engineers three to six months to install the complex search software, but Fast was short of installation experts, in part because so many joined for Google, Arnold said. That led frustrated clients to delay payments that Fast had already booked as revenue, leading to huge revenue shortfalls and earnings restatements.

Rivals are resentful of Fast's accounting troubles. "It was tedious competing with a company whose success, growth and profitability were built on incorrect accounting. We obviously knew on the ground our technology was crushing them, and now it's clear in the numbers," said Andrew Kanter, chief operating officer of Autonomy Corp., a rival search company based in Cambridge, Britain.

A Microsoft representative said, "Through publicly available information, Microsoft was aware of the review of Fast's historical accounting practices and their efforts to implement improved financial controls. With the closing of the acquisition, we will continue to review the company's financial reporting systems and make any additional changes that are necessary to bring the company's systems into line with Microsoft's high standards for financial reporting and controls."

Fast suffered staff problems too. Former president Ali Riaz left in 2006 after six years and has started his own company, Attivio. "I left because after six years of outperformance, I and many other people did not have an equitable stake in the company. It was heavily weighted toward earlier investors, instead of people who actually built the company. I didn't feel it was right," Riaz says. Many of the employees he brought on board and trained left shortly after he did, some having since joined Attivio.

Controversy notwithstanding, Fussell and Keith made a killing on the sale of Fast, closing out their positions in April. Fussell owned 3.2 percent of the company and Keith owned 3.47 percent of the company, according to the 2006 annual report. That means their direct ownership, minus the value of any options of stakes in funds that might have owned Fast shares, was about $40 million each. Lervik, now vice president of enterprise search at Microsoft, had direct ownership of just over 1 percent as of 2006, worth a little more than $12 million.

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Bangalore, India's outsourcing hub, has been grappling with poor roads, traffic jams, and power cuts. From Friday, the city's outsourcing and other industries in the city have to cope with a new problem -- a new, and distant, airport.

Staff working in the city's outsourcing industry, who travel extensively within the country and abroad, will have to travel about 40 kilometers more on average to the city's new airport, called Bengaluru International Airport (BIA).

As a result of the additional distance, air travellers may have to spend two to four hours on the city's congested roads to get to and from the airport, according to various estimates.

The city's older airport is scheduled to stop receiving commercial air traffic on Friday. This move is in line with an agreement between the government and the investors in the new airport, which has been set up in a remote suburb of the city called Devanahalli.

The city's business leaders and some other citizens are demanding that both airports be allowed to operate, with the older airport on the outskirts of the city at least handling short-distance traffic to and from Bangalore. The Bangalore City Connect Foundation (BCCF), an organization set up by Bangalore's citizens, is demanding that government renegotiate its contract with BIA to allow for the continued operation of the old airport for some traffic.

Industry representatives, including some from outsourcer Infosys Technologies, took to the streets on Saturday to protest the closure of the older airport. Its closure will affect the growth of the city's business as the new airport is not designed to meet new projections of passenger growth, Kiran Mazumdar-Shaw, chairman and managing director of biotechnology company Biocon, told reporters.

Almost 30 per cent of IT industry workers in Bangalore travel outside India at least once a quarter, said T.V. Mohandas Pai, director of human resources and a member of the board at Infosys.

But some analysts say the new airport, though inconveniently located, is not likely to affect Bangalore's outsourcing business.

"The old airport could not handle the growing traffic, and it will be a temporary blip as people adjust to the new reality," said Siddharth Pai, a partner at outsourcing consultancy firm Technology Partners International (TPI).

Customers who travel all the way from the U.S. or Europe to visit outsourcing companies in Bangalore are not going to change their minds because of an extra two or three hour drive, Pai said. Likewise, software engineers travelling abroad will, after some grumbling, leave early to catch their flights, he added.

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Mobile operators may be counting on LTE (Long-Term Evolution) technology to offer high-speed mobile data access in coming years, but WiMax services will arrive first, promising to shake up the wireless data market in the process.

WiMax offers high-speed Internet access over a wide area and comes in two versions, a fixed-wireless version and another for mobile. The technology, often likened to Wi-Fi on steroids, has two advantages over LTE: it's available today and is free from the hefty royalty charges required for 3G (third-generation) mobile devices and equipment. By comparison, LTE has another two to three years to go before it can be deployed and, because the radio uplink uses CDMA (Code Division Multiple Access), device makers will have to pay substantial royalties to Qualcomm.

"They charge a 5 percent royalty on the handset or devices, and that's on the retail side...Behind the door, they're charging anywhere from 15 to 30 percent on the chipsets," said Bill Rojas, director of communications research at IDC Asia-Pacific, adding that WiMax backers have agreed to a much lower royalty for using the technology.

While lower royalties and the earlier rollout of commercial services gives WiMax an edge over LTE, there are still obstacles that must be overcome before the technology can be widely deployed.

The immediate challenge WiMax faces is product interoperability. WiMax Forum, the industry group that oversees the certification process, has only approved the interoperability of a handful of WiMax products designed to operate in the 2.3GHz spectrum. This frequency is used in South Korea while most other markets expect to use the 2.5GHz to 3.5GHz spectrum bands.

In addition, the certified products are based on the Wave 1 version of WiMax, which does not support MIMO (Multiple-In, Multiple-Out) antenna technology, or other advanced features found in the Wave 2 version of WiMax that operators, including those in Korea, plan to deploy. As a result, the certified products announced by WiMax Forum are largely irrelevant to wider adoption of the technology.

WiMax Forum will not certify the interoperability of Wave 2 WiMax products until the second half of this year, at the earliest -- nearly a year behind schedule and after Intel releases the first Centrino 2 products in June. That timing suggests that the number of Centrino 2 laptops that ship with WiMax this year will be relatively low, but nevertheless widespread availability of the technology is not far off.

Intel sees 2008 as the year when WiMax will start to appear in computers, such as a WiMax-equipped Asustek Computer Eee PC that Sriram Viswanathan, vice president of Intel Capital, the chip maker's investment arm, and general manager of the company's WiMax Program Office, showed off in Singapore.

"We have a variety of these devices. Not all of them will be launched on the first day, but the fact is during the second half (of 2008) you will see a plethora of devices," Viswanathan said in a recent interview.

Intel doesn't expect shipments of WiMax-equipped computers to hit high volumes during 2008, largely due to the limited availability of WiMax services. As more networks come online in 2009, shipment volumes will rise but the technology will not become a standard feature on computers for some time, Viswanathan said, predicting that might happen in 2011 -- about the time that LTE rollouts are just getting started.

The current lack of certification for WiMax interoperability has some operators nervous. For example, Taiwan's First International Telecom (Fitel) said a focus for the upcoming launch of its WiMax services is to reassure users their WiMax devices and add-on cards will not only work on Fitel's network but also on other WiMax networks.

"We want people to be able to roam among WiMax networks, not just in Taiwan but also foreign visitors and when Taiwanese go overseas," said Charlie C.Y. Wu, Fitel's president.

Client devices aren't the only products where interoperability is critical. Transmission equipment from different vendors must also work together.

"Operators don't want to buy equipment from a single vendor for many reasons," said Mike Ropicky, a senior director of product, operations and marketing at Motorola. One of the most important is to hedge against the possibility that an equipment vendor's technology will fall behind its competitors, leaving the operator without the ability to roll out future upgrades to its service, he said.

To fill this gap in certification and reassure both users and operators, equipment makers like Motorola and LG-Nortel have embarked on their own certification programs, testing the interoperability of their products with those from other vendors, including client devices. This helped clear the way for initial trials and deployments of WiMax, and should help smooth the way forward for the rollout of more WiMax networks.

Besides the promise of broadband Internet access over large areas, WiMax promises to shake up the competitive landscape and could unseat large mobile operators from the commanding positions they now hold.

Most major mobile operators have said they won't deploy WiMax, choosing to wait for LTE to become available before they overhaul their networks and offer faster data speeds. They have little choice due to the high investments they've already made in 3G and related technologies -- investments that in many cases have yet to be fully recovered.

"Operators that have spent a significant amount of money on 3G will have a hard time justifying it to their shareholders now they're going to put more money in a completely new construction," Intel's Viswanathan said.

Designed as an upgrade for 3G and HSPA networks, LTE will offer greater bandwidth than current mobile technologies. For example, NTT DoCoMo, Japan's largest mobile operator, announced last month that its LTE trials had achieved a 250Mbps download speed. The high-speed technology could start appearing in its networks by 2010, the operator said.

Vodafone, one of the world's biggest operators, is also backing LTE. Trevor Gill, head of networks at Vodafone Group R&D, reportedly told attendees at a U.K. conference the technology was likely to be selected as a future upgrade for the operator's HSPA networks, even as it continues to watch WiMax closely.

Not all cellular operators plan to skip WiMax; smaller players see the technology as a way to gain ground on larger rivals. For example, Sprint in the U.S. and KDDI in Japan both have plans to offer WiMax. These companies and others like them, called "attackers" by industry watchers, see the earlier availability of WiMax as an opportunity to gain a competitive advantage by being the first to roll out a wireless broadband service.

"With WiMax, what you're going to see is a lot of attackers go out there and deliver a service," said Peter MacKinnon, chairman of LG-Nortel. "That's what will define the WiMax market."

WiMax will also find a foothold in emerging markets, where broadband Internet penetration remains low. In these markets, the technology will be used as a fixed-wireless service, providing wireless Internet access to a fixed location, such as a home or office, rather than a service designed for mobile users.

However, operators in these markets will likely use the same version of WiMax, called 802.16e, that was developed for mobile users, because economies of scale will mean these products end up being cheaper than the fixed-wireless version of WiMax, known as 802.16d, said Margaret Rice-Jones, CEO of Aircom International, a company that helps operators plan WiMax networks.

"It also gives them the option in the future of moving to a mobile network," Rice-Jones said.

(Dan Nystedt, in Taipei, contributed to this story.)

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The unlikely story of advanced 3G cellular service in the world's most tightly controlled and secretive country has turned another chapter with the start of network trials.

Cellular carrier Orascom said on Monday that it has completed the first 3G call on a WCDMA (Wideband Code Division Multiple Access) trial network in North Korea, and is working towards a commercial launch there later this year.

Orascom, based in Egypt, said in January that a 25-year exclusive license to offer 3G cellular service in the country had been awarded to CHEO Technology, a joint venture in which Orascom holds a 75 percent stake and Korea Post and Telecommunications holds the remaining 25 percent.

A full commercial service is scheduled to begin in the second half of the year, Orascom said.

In January, Orascom said it intended to provide voice, data and value-added services across the network, which represents a $400 million investment.

North Korea, the world's only Communist dynasty, keeps tight control of its people. Almost all citizens are forbidden from leaving the country and there are controls on internal movement of people into the capital city of Pyongyang. Poor conditions in the country have prompted hundreds of thousands over the last decade to risk their lives and flee to neighboring China.

Almost total government control of the population means phone calls are restricted and subject to routine monitoring, according to humanitarian aid groups that monitor North Korea.

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