NEW YORK-Point-to-multipoint equipment should be available in quantity by mid-1998, bringing the bandwidth on demand promise of last-mile wireless “fiber” closer to widespread deployment.
“Where the heck did this market come from and why is it here today?” David Graves, chief executive officer of Broadband Networks Inc., asked rhetorically in addressing last week’s UBS Securities L.L.C. Telecom Conference.
The forces of market deregulation, convergence of varied services offered by individual carriers and Internet-driven use of data communications are the key drivers, he said. He cited a projection by Ovum Ltd. that the number of broadband wireless connections will grow to 40 million worldwide by 2005 from 5 million this year.
“Operators want to move services from a switched [wireline] network to the end user, and wireless has become a mechanism to achieve that goal,” Graves said. “Carriers want to make sure they don’t have to buy into a particular protocol or application. They want to do it all without fiber, which has high capacity but limited reach, and without twisted pair, which is everywhere but doesn’t carry much.”
High-frequency digital broadband point-to-multipoint networks will allow transmission from a single location to as many sites as needed, according to Graves.
The business model for fixed wireless communications is excellent from a carrier’s standpoint because it is the polar opposite of cellular, in which all or much of the network must be operational before a single customer starts using the system.
Instead, customers can be hooked up individually and can be offered bandwidth scaled according to their needs, said David Ackerman, executive vice president of WinStar Communications Inc.
As to the equipment cost for this new technology, Ackerman offered this diplomatic assessment: “We have had ample opportunity to negotiate price. The cost is in a range that allows us to price our services at least 10 percent below those of existing carriers and still make substantial margins.”
While building and providing only so much service as there is demand for makes great business sense for carriers, it poses a challenging production problem for equipment manufacturers, said Ed Cantwell, chief executive officer of Bosch Telecom Inc.
“The beauty and the curse of this business is its incremental nature, and we are looking at what will drive volume,” he said.
“The United States is the toughest fixed wireless market in the world, and we believe international customers will drive the market.”
While it may be true that equipment deployment and service offerings can be tailored neatly to customer demand in a fixed wireless environment, the same isn’t true of the billing, customer service and other critical back-office operations that turn a network into a revenue-generating business, Ackerman said. Since the first day of its existence three years ago, the wireless competitive local exchange carrier began assembling those systems.
The potential customers for point-to-multipoint technology include, but are not limited to, cellular and personal communications services providers, wireless and wireline competitive local exchange carriers, cable television companies and network integrators, Cantwell commented.
WinStar is the farthest along in this country with a fixed wireless network.
It commercially deployed 10 markets this year, with another dozen planned for launch next year, and recently received Federal Communications Commission authorization to acquire additional spectrum, Ackerman said.
WinStar is targeting the 75 percent to 80 percent of commercial and industrial buildings in domestic metropolitan areas that are served by twisted-pair wireline, which is limited in its data transmission capabilities, he said.
“It makes sense to focus on small- and medium-size businesses, which represent about 30 percent of the total market,” said Philip Wacker, director of wireless broadband access for Ericsson Inc.
Because these radio-frequency transmissions “don’t go through leaves or glass, residential will be very challenging,” commented Wacker.
