Sitting Pretty

Fixed wireless promises broadband access where cable and DSL do not go.

In the digital world, its rare to find a product or service that isnt overhyped the moment it hits the street. Everything arrives with capital letters and exclamation points. XO Communications! Now available! Yahoo!

Holy cow!

But the relatively subdued arrival of fixed wireless broadband to the scene has the proponents of this promising nascent technology scrambling a little to get the word out.

"The most interesting thing to us is that more and more users want a faster and faster network," says Amir Zoufonoun, Western Multiplexs president and chief operating officer. "Applications now require more bandwidth. The demand is there, but awareness is not. Most do not know that this service exists. They have no idea what they can do."

"There has been a lot of buzz inside the access industry," says Dave Kimzey, vice president and general manager of Alcatels Wireless Access Products business unit, "but it has not generally been publicized as an emerging technology."

As the business and personal Internet world has become increasingly frustrated with the availability — or lack thereof — of high-speed connections such as cable and Digital Subscriber Line (DSL), fixed wireless offers another solution to the "last-mile" bottleneck.

The technology is somewhat similar to that which delivers a signal to a mobile phone. Typically, an antenna on the roof of the office building or home receives a signal from a base at a radio tower. The tower, in turn, relays the signals to the Internet backbone. Transmission rates depend on the distance between the receiver and the base station. Up to nine miles from the base station, data moves along at a 100-megabit-per-second clip; speeds drop to about 2 Mbps at 35 miles from the base.

Wireless broadband providers offer competitive rates, reliable service and rapid, relatively easy installation, compared to their cable and DSL competitors. However, the technology usually requires that the user have an unobstructed line of sight to the originating tower.

Fixed wireless also delivers high download speeds, but uploads — at least for residential consumers — can be slower, though technology improvements are lowering this gap.

"Were still in the black-and-white television era of broadband," says Jerry Sullivan, president and chief executive of Kite Networks. "What youre seeing is a new evolution of technology in data access."

Two Flavors

There are essentially two flavors of fixed wireless — point-to-point and point-to-multipoint — each operating in two regulatory environments — regulated and unregulated.

Companies that provide point-to-point service — such as Western Multiplex — are trying to corral the large-business users that want more bandwidth. In this incarnation, a company gets dedicated bandwidth from the tower to its building, in a one-to-one relationship. Zoufonoun says that Western Multiplexs products currently address the needs of businesses that need 10 Mbps or more.

In the point-to-multipoint business — which seems to be the larger play at this stage, involving companies such as Kite, Raze Technologies, Sprint and WorldCom — a radio link is established from a hub to two or more remote sites, and the signal is shared in a starburst pattern. This service targets small to midsized businesses and residential users.

These markets necessarily overlap, of course: Few of the companies that provide point-to-multipoint service will turn down big customers, and point-to-point service provider Western Multiplex is developing a point-to-multipoint product for commercial introduction later this year.

That fixed wireless broadband has seemingly appeared from nowhere has to do with a favorable regulatory climate.

"If you look back at the 1996 Telecommunications Act, the [Federal Communications Commission] allocated the spectrum that were working in — in the 5-gigahertz range — for fixed-wireless data," Sullivan says. "I think a lot of what has really made the wireless space blossom is the FCC giving the ability to access the spectrum. There is no barrier to entry."

Companies that operate in the unlicensed spectrum can simply buy off-the-shelf equipment and begin transmission. The "garbage bands," as the FCC unofficially calls them, are not regulated or monitored. As more users pile on, transmission becomes fuzzy, which is more of a problem in larger cities.

In the suburbs, rural areas and small cities, however, where demand for bandwidth should be more manageable, this unlicensed spectrum will provide the path for wireless. Signals in the unlicensed spectrum are only coherent for about 3.2 miles. In the licensed spectrum, they can travel 35 miles.

Meant for Television

The licensed spectrum was originally auctioned by the FCC for digital television. This idea fizzled, however, and the licenses were resold, mostly to Sprint and WorldCom. Sprint spent about $1 billion for licenses in 90 cities.

So far, Sprint has rolled out wireless broadband services to consumers in 13 markets. "I think it has been a wild success," says Evan Conway, vice president of marketing at Sprint. "With very little marketing, weve proved that this is one leg of the three-legged stool," with the other two legs being cable and DSL.

Sprint would not release its customer count, though in Phoenix, where wireless broadband was originally rolled out and which is one of the most competitive markets for high-speed access, Conway will admit to having subscribers in the "double-digit thousands." The rollout was first done administratively as a separate unit, but it has been successful enough that Sprint is now integrating fixed wireless broadband into its regular corporate offerings and structure.

The potential market for the technology is huge. Forrester Research estimates that 45.8 million households will have broadband connections to the Internet by 2005, up from 2.8 million today. The researchers expect increased availability, greater competition and lower prices to kick broadband adoption into hypergrowth this year.

The FCC is similarly bullish, writing in an August report that analysts envision residential high-speed subscribers to increase to 35 million by the end of 2004, up from 1.9 million in early 2000.

Analysts see revenue potential in the connectivity. The Strategis Group estimates that revenue from broadband fixed wireless will reach $6.4 billion in 2004; others project about $5 billion that year.

Gold Rush

This potential market has companies pursuing a gold rush whose wild enthusiasms will soon punctuate the airwaves and print media because, the fact is, Americans dont much care how their high-speed Internet access is delivered. They wont know Local Multipoint Distribution Service and Multichannel Multipoint Distribution Service from DSL and T1 (1.5 Mbps). And because the annoyance and inconvenience of switching from one service to another can be great, the first technology to arrive at the doorstep is likely to be the one that consumers stick with.

No one expects fixed wireless to replace cable or DSL. As Conway says, it will be only one leg of the stool. But it will almost certainly provide a kick in the pants to those technologies, which have been plagued with technical, service and installation problems.

The companies flocking into this space are all trying to differentiate their products. Kite, which focuses on small and midsized business clients, is zeroing in on the 5-GHz spectrum on the unlicensed band. The company started in 1999, and raised $6 million from institutional investors in the second quarter of 2000. Kite was the first of five companies to enter a wireless agreement with Cisco Systems, and it secured a $50 million debt facility from Cisco Capital. "Weve been the flagship for Cisco in the broadband space," Sullivan says.

Consumers are most familiar with wireless as a portable telephone technology. Richardson, Texas-based Raze is bundling both high-speed Internet access and fixed telephony systems into its wireless technology. Raze expects to begin beta testing its solution this summer.

"The solution we believe were bringing to the table that nobody else is solving is a bundled voice and data solution," says Raze CEO John Festa. Raze is targeting the "primary voice, your lifeline voice system," mostly for residential and home, small and medium office customers.

Festa estimates that 35 percent to 50 percent of U.S. residences dont have access to broadband service. "You can spend millions [of dollars] and in some areas billions of dollars laying cable and fiber to bridge that last mile to every residence," Festa says. "With our solution, only about 15 percent of the total cost is in the infrastructure. As the provider signs on each subscriber, he has to put the box on the house. Our initial price point will be $650 to put the box on the house."

Service providers could expect to charge $70 to $100 per month for the service, which would include two voice lines and broadband data service, Festa says. Capital costs would be recouped within a year. Raze hopes to lower per-building installation costs to less than $500 within the next two years.

Telephone Company Substitute?

So, now wireless broadband becomes a replacement for the local phone company. Kite says that in some regions where telephone access is often limited or of poor quality, voice — not data — may have the primary appeal.

And in the not-too-distant future, wireless broadband could also replace the cable or the rooftop satellite dish to deliver digital images to the TV set. This was, after all, the initial vision of the technology when the FCC first issued the licenses.

Alcatels Kimzey says that when the FCC first started allocating spectrum, it was intended for one-way video distribution. Now it is available for two-way data transmission, but as the technology is refined, the original use remains possible.

Alcatel is providing wireless as one of many broadband access techniques, especially to address the "hole in connectivity" for small and midsized enterprises that are not well served by broadband access now. "They want a megabit [per second] of service, but they cant get DSL," Kimzey says. The company offers 20 different variants of radios, from 20 [GHz] to 40 GHz, and point-to-point products.

Customer satisfaction with these initial services appears to be high. Jerry Livingston, managing partner at InterLink Technologies in Phoenix, has been testing Kites products. InterLink sells business phone systems. Livingston wanted to be sure the technology worked before he offered it to his customers. After testing Kites beta products for a couple of months, "our reaction has been positive," he says.

It can take the local phone company 40 to 60 days to deliver a T1 line, Livingston says, but Kite "can deliver T1-equivalent service in 10 days." For a small to midsized company, Kite charges about $400 for 2 Mbps of service.

Sprints Conway says that his companys network has experienced very few outages, and that customer satisfaction is high. Sprint is making strides in increasing upload speeds, which have been slow, but Conway adds that the technology is probably not right for those looking for a perfectly symmetrical connection.

"This product is meant for the person thats the surfer, and for applications that are downstream intensive. It is not meant for the guy who wants to back up his hard drive every night," Conway says.

Sprint eventually may begin bundling voice and data service "There are some interesting hybrid applications," Conway says, "but theyre not in the short-term, 12-month strategy."

BroadJump, a company that has been providing software for DSL and cable broadband, has recently entered the fixed wireless market. BroadJumps product allows the consumer or technician to set up the computer interface using a CD, just like any other software is installed.

"The real beauty of broadband wireless for Sprint and WorldCom is that it is an effective competitive technology to cable and DSL. By putting a third option on the table, it is going to light a fire under those other technologies" says Boyd Peterson, director of product marketing at BroadJump. "If you were to put on your forecasting goggles, we are going to have cable, DSL, wireless, satellite and passive optical networking to the home. Ultimately, broadband is going to proliferate extremely quickly. All are going to take a chunk of that."