PHOENIX, United States-Some observers have compared the broadband wireless industry to a hockey game: lots of skating around, many dramatic clashes, but not much scoring.
Still, like a hockey game, broadband wireless attracts plenty of fans. Interest is downright rabid among telecom carriers, equipment vendors and investors, all of whom view the technology as the best way to offer high-speed voice and data services without laying new fiber. Yet despite immense fan appeal, many broadband wireless ventures remain stuck in the penalty box, unable to deliver on their promise of providing high-speed service to millions of customers.
Most of broadband wireless’ problems can be attributed to a combination of overly optimistic cost projections and underestimated technological limitations.
On the cost front, many wireless broadband pioneers and their investors initially were bedazzled by the technology’s ability to provide fast and inexpensive access to the local phone service market. While running fiber to metropolitan buildings can cost as much as US$250,000 per mile, equivalent wireless links can be established for less than a tenth of that price, according to statistics compiled by Smart Consulting, a U.S.-based telecommunications research firm.
Yet many ventures still underestimated the amount of time and money needed for deployment. In fact, leading U.S.-based local multipoint distribution service (LMDS) companies, including Teligent and Winstar, continue to derive much of their revenue from reselling services rather than connecting customers via their own broadband wireless facilities.
But Hamid Akhavan, Teligent’s chief technology officer, said broadband wireless growth needs to be viewed realistically. “We had a phenomenal year last year, going from having nothing to hundreds of sites deployed,” Akhavan said. “We’re in 40 markets now. That’s quite an achievement when you think about it.”
Also contributing to deployment delays are the high prices and limited availability of broadband wireless hardware. In some cases, suppliers-particularly Hughes Network-haven’t been able to supply broadband radio equipment in quantities necessary to sustain deployment.
Fortunately, as equipment volumes increase, service providers can expect costs to fall. LMDS base stations, which now cost about US$250,000, should fall by about 15 percent to 30 percent over the next couple of years, forecasts Smart Consulting. Per-port subscriber costs, currently around US$3,000, also should fall at about the same rate.
Wireless broadband’s technological shortcomings, initially downplayed by early market entrants, have come back to haunt the industry. “Service coverage gaps are proving to be a headache,” said Andy Fuertes, a senior analyst with Allied Business Intelligence, a technology research firm. “Even getting service to customers within an existing service area can be a challenge.”
For broadband wireless to work, a clear line of sight must be established between the base station and customers’ antennas, said Robert McCambridge, president of Advanced Radio Telecom, an Internet-focused broadband wireless service provider headquartered in the United States. “Once the link has been set, the only thing that can interrupt service is an intense storm,” he said.
But as many service providers and potential customers have discovered, establishing a clear line of sight isn’t always easy. This is particularly true in congested metropolitan areas, where buildings and other structures can block signals, and some suburbs, where trees and hills often get in the way.
“Unfortunately, it’s not always possible to provide service to every customer who wants it,” said McCambridge.
In the face of financial and technological obstacles, industry players and outside investors worldwide continue to pour money into new ventures. Last year, Lockheed Martin Global Telecommunications Group joined with TRW and Italy’s Telespazio to create Astrolink, a US$3.6 billion global wireless broadband service that’s scheduled to begin operations in 2003. That deal was followed by Cisco and Motorola jointly purchasing broadband wireless vendor Bosch Telecom, renaming it SpectraPoint Wireless. Teligent and Mannesmann recently joined forces to offer fixed wireless services in Germany using licenses held by the two companies. In January, Teligent announced it’s partnering with LD COM, the telecommunications arm of the Louis Dreyfus Group and Artemis, a global investment holding company, to develop a broadband wireless business in France.
“The deals keep coming,” said Allied’s Fuertes.
Still, despite financial turmoil and slow rollouts, wireless broadband’s long-term prospects continue to look good. The Strategis Group, a technology research firm, predicts the wireless broadband revenues will leap from US$11.2 million in 1999 to US$3.4 billion in 2003. By that same year, at least 34 percent of U.S. households and 45 percent of U.S. businesses will have access to broadband wireless service. Expansion in Europe and Asia will also be robust. Globally, there will be 9 million broadband wireless subscribers by 2005, forecasts Allied Business Intelligence.
The LMDS and multichannel multipoint distribution service (MMDS) fields hold the greatest potential, said Fuertes. “LMDS will continue to make inroads into the market for high-value customers, accounting for 60 percent of subscriber revenues in 2005,” he noted. “MMDS is projected to lead the market with a 70-percent share in 2005, largely in the residential and SOHO (small office/home office) sectors.”
Fuertes also sees various niche technologies, mostly using unlicensed industrial scientific medical bands, being used to address coverage area dark spots. “These systems will account to nearly 500,000 subscribers in 2005,” he said. “All in all, broadband wireless’ future looks very bright.”
