Oh, Crystal Ball

Finding it hard to envision new DSL opportunities? The future holds great promise for the next round of broadband connectivity.

If you didnt see the first wave of affordable, high-speed Internet connectivity coming, you have nothing to worry about. Heck, the DSL extravaganza, at least at the consumer level, is three years old, and the market appears to have more losers than winners.

It will take several more months—or years—for the DSL market to shake itself out. In the meantime, selling DSL service is rapidly becoming a commodity. Is there a way to capitalize on whats coming down the pike? You bet. The next wave of transport technology will bring the Internet nearly everywhere on the planet at breakneck speed.

Were talking wireless here. Specifically, fixed wireless and satellite technology solutions that will enable you to deliver new service and connectivity options to your customers as well as partnership opportunities all over the place. So come along as we show you how to cut the cord.

Predicting the Future Getting a handle on fixed wireless options takes some work. Technology-wise, there are the requisite new acronyms that youll have to learn about, along with a little bit of physics. Politics factor in to an extent, because the FCC has a major say on who gets to pump what into and through the air. Economics also will play a big factor. You probably would have a problem bidding for your own personal frequency—the last auction in 1996 raised roughly $4 billion for the U.S. government from prominent players like AT&T, Sprint and WorldCom . Finally, there are several different approaches to delivering the Internet without wires, and each involves the use of a different piece of the spectrum. In some cases, a combination of approaches is used to achieve the objective.

Certainly, market analysts agree that the potential is there. According to a recent study published by Pioneer Consulting, the fixed wireless broadband market is expected to grow from $200 million in 2000 to $4.1 billion in 2003.

Reading Tarot Cards Lets get the acronyms out of the way. While there are myriad fixed wireless solutions in use, they all fall into one of two categories: those that operate below 20GHz and those that operate in the 20GHz to 40GHz range. Note that much of the spectrum is reserved for other purposes. A PDF version of the spectrum allocation can be found at www.ntia.doc.gov/ osmhome/allochrt.html.

Theres a lot of action taking place in the lower end of the spectrum. Thats due to several factors, notably cost, range and licensing. Solutions operating at lower frequencies are relatively inexpensive to implement from components that are in widespread use, have a transmission range of miles, and—in most cases—do not require a license from the FCC. In this arena, theres a lot of attention being focused on a solution called MMDS.

MMDS refers to multichannel multipoint distribution services, a broadband wireless access solution that operates in the 2.5GHz band. Originating as a solution for video broadcast in the 1980s, the technology never caught on commercially. In 1998, the FCC authorized two-way transmission in each of the 6MHz channels (there are 33 such channels). Pilot deployments were conducted last year, and 2001 is when a lot of actual deployment activity will occur, according to Susan Heilman of equipment vendor ADC.

Whos Buying? One of the big factors inhibiting mass-market acceptance is the cost of the customer-premise equipment, or CPE. Currently, MMDS-based CPE is well below $1,000, and Heilman sees it coming down in price to the sub-$500 range within a year. That begins to approach xDSL gear in terms of cost. (Some companies, however, like Cablevision of Long Island, are giving xDSL gear to consumers through special retail offers.)

In addition to cost, MMDS faces other challenges. For one, the FCC doesnt permit a self-install of this type of equipment, making it tough to aim for a consumer market. And finding installation experts with RF and IP skills is a challenge, according to Heilman. Still, the operating range is on the order of 20 to 25 miles with a 2Mbps to 3Mbps uplink and a 10Mbps downlink.

Analysts are bullish about MMDSs promise. Cahners InStat foresees a compound annual growth rate for a particular segment of the wireless market of 218 percent from 1999 through 2004. Not too shabby.

MMDS is not the only low-end game in town, however. Startup service provider Kite Networks (www.kite.net), for one, is beta testing its own fixed wireless service in Phoenix. Kites solution revolves around gear operating at the 5GHz, or Uniband, spectrum. The company has ambitious deployment plans. Solutions in Dallas/Fort Worth, Atlanta and Houston will be rolled out by the end of 2001. Assuming those deployments go well, Kite will push ahead with a "50-market plan," according to company VP Scott Tenney. Kite plans to offer a variety of connection speeds to customers, ranging from 500Kbps to 2Mbps. Each cell of coverage in the Kite network has a three-mile radius, and the company plans to use system integrators and resellers as agents for the service, as new locales are brought online.

Meanwhile, Metricom is pushing ahead with its Ricochet Network. Metricoms MicroCellular Data Network approach uses two Industrial Scientific Medical (ISM) bands of regulated, unlicensed spectrum: the 900MHz band and the 2.4GHz band, in addition to the licensed 2.3GHz Wireless Communications Systems (WCS) spectrum. Granted, Ricochet is designed for mobile computing, but the comparison with Kite highlights major innovation going on at the low end of the spectrum to deliver the Internet everywhere.

"The technology is evolving quickly," says Tenney. For example, just last week, MMDS equipment vendor Speedcom announced a technology licensing agreement with SRI International for PacketHop. The deal involves wireless routing software that overcomes the necessity for line-of-sight placement of transmitter and receiver. "The only barrier to wireless becoming the dominant last-mile solution has been line-of-sight," says Bruce Sanguinetti, president of Speedcom. "PacketHop solves the problem."

The actions not just at the low end of the spectrum, either. Local multipoint distribution services, or LMDS, refer to the access solution that operates in the 20GHz to 40GHz range. While that varies by country, the spectrum allocated to LMDS in the United States is in the 28GHz to 31GHz range. Theres considerable financial interest in this band, as well: In just 26 days during 1998, the FCC raised nearly $580 million by auctioning the spectrum segment in 493 areas in the United States.

While LMDS operates at a much higher frequency than MMDS, solutions based upon this technology are far more susceptible to weather. Rain, in particular, can impede the signal. There are also distance limits; LMDS transmission range is on the order of one to two miles. The higher frequency means more bandwidth, making LMDS ideally suited to deployment in urban areas. LMDS-based systems are more expensive than MMDS systems, but when compared with digging holes and installing fiber in urban areas, they come up as inexpensive alternatives to delivering bandwidth.

The economics can be compelling. Michael Sanderson of Ensemble Communications estimates that putting a fiber loop in San Francisco could cost more than $10 million. By contrast, an LMDS base station capable of 1.5Gbps would cost on the order of $1.5 million. These calculations dont take into account the time it takes to get the connection deployed—a few days for the LMDS system, and potentially weeks to months for the fiber, unless the buildings already hooked up to a metro fiber ring.

Peering Farther and Higher While LMDS, MMDS and the other land-based broadband wireless technologies are hotbeds of activity right now, they dont cover everywhere. To get complete geographic coverage, youve got to go into space—the realm of satellites—where theres a raging battle evolving. There are myriad factors to consider, just from a technology perspective. For example, should you use or recommend a system based upon a low earth orbit (LEO) model? These systems are good choices for highly interactive applications because they have little latency (the time it takes for a signal to travel from the earth to the satellite and back). However, because each satellite covers just a spot on the earth at any given instant, the LEO model requires many satellites to provide necessary coverage. Will it cover the geographic area that you need? Both SkyBridge and Teledesic think it will.

On the other hand, a geostationary earth orbit (GEO) system such as Lorals CyberStar provides near global coverage all the time, but has much higher latency. So it may not be the best way to deliver a chat application to someone. Youll need to match your application to the system that best supports it.

Another factor is bandwidth—again. Do you go with a system running the existing Ku-Band (10GHz to 18GHz) technology or wait for the next-generation Ka-Band (28GHz to 31GHz) devices to hit the sky?

Economically, building a space communications infrastructure is expensive. SkyBridge claims that it will spend $4.2 billion to get the space component running, and another $1.9 billion on the terrestrial infrastructure. Infrastructure providers are taking huge gambles that satellite-based Internet delivery will be economically viable. Make sure you do your due diligence concerning resources and capitalization when selecting a partner.

Will your business model support the cost of a satellite connection? SkyBridge estimates that base terminals at a user location will cost in the neighborhood of $700.

It gets confusing quickly, and the problem is that many of the systems described here wont be online for a few years. Teledesic, for example, indicates that service will begin in 2005.

There are some space-based communication services active right now—such as Tachyon (which were in the process of evaluating) and SpaceData. Both of these services utilize an existing satellite infrastructure. Perhaps that is the safest way to proceed in this new environment.

Whatever you decide is the best way to go, via earth or space, you wont need a crystal ball to see that there is ample opportunity for participation at a variety of levels. Thats because the pipe isnt owned by just one entity. There are a number of providers of both infrastructure and service that will be willing to help you out. Its the perfect partner environment.