When the clocks roll over at midnight on 31 December, the world will usher in not only a new century, but a new paradigm in the way people communicate.
What took decades to build in developed countries-a telecommunications infrastructure-will take a matter of months or years to build with fixed wireless technologies, and a variety of service providers and hardware vendors are positioning themselves to capitalize on what is expected to be a significant industry. Fixed wireless technology is only a few years old, but its champions promise big things from the nascent technology-both in what it will enable customers to do as well as how it will affect entire societies.
Ed Champy, executive vice president of U.S.-based vendor Spike Technologies, said fixed wireless has the potential to leapfrog developing nations into the modern telecommunications age, circumventing the industrial revolution other nations had to go through to get there. In developed nations like the United States, fixed wireless promises to break up the bottleneck in the last mile between high-speed conduits like fiber and the end user.
The impetus pushing the concept toward reality is recent widespread deregulation of telecom markets and an increasing amount of spectrum available for fixed wireless applications.
Experts predict the next 12 months to 18 months will be important for operators and vendors as fixed wireless deployments begin in earnest.
“Next year is going to be a huge year,” said Champy.
Potential
Broadband in general is expected to make significant progress during the next decade, and wireless systems should fit prominently into the mix of solutions, which include fiber, copper lines, satellite and cable.
“The appetite for bandwidth has been incredible, and it will remain incredible for years to come,” said Henry C. Hirsch, chairman and chief executive officer of Advanced Radio Telecom, a broadband wireless access (BWA) provider with 38 GHz licenses in the United States and 26 GHz and 38 GHz licenses in Europe.
“We’re all being driven by the same common variable, and that is the tremendous demand for bandwidth,” said Hirsch. “We see ourselves as being able to enable the applications of the future, which consume an enormous amount of bandwidth, but produce an enormous increase in productivity for people as well.”
The overall market for broadband, including wireless, is expected to reach US$160 billion by 2003, according to research from The Strategis Group. Wireless broadband access systems are expected to generate service revenues of nearly US$10 billion during the next five years and US$28 billion during the next decade, according to Strategis.
Spike’s Champy said the market has developed quickly. In about a year’s time, the market has moved from waiting for licenses to system trials, and companies are beginning to position themselves, he said.
“The bigger integrators are teaming up with companies to make sure they have the right product,” said Champy. “These teams are getting created, and they aren’t getting created to wait.
“They’re getting created because time is of the essence, and the requests from the bigger companies around the world and in the United States exist,” said Champy. “It’s time to respond.”
MMDS
In the United States, the multichannel multipoint distribution services (MMDS) segment has been an example of the frenzy of activity surrounding BWA. A recent Federal Communications Commission decision allows MMDS licensees to provide two-way transmissions using their spectrum rather than the one-way video services originally envisioned. Many of the original licensees languished while waiting for the market to develop, creating a ripe opportunity for the massive consolidation that has marked the MMDS segment this year.
MCI WorldCom, which has been rapidly acquiring MMDS assets during the past several months, recently announced plans to acquire Wireless One, an MMDS licensee that filed for bankruptcy earlier this year. Sprint also has been actively consolidating several MMDS players.
“The real lure of MMDS spectrum may rest in the capabilities the technology delivers to Sprint and MCI WorldCom in the race against AT&T to deploy a consumer communications bundle,” said Meredith Rosenberg, program manager at the Yankee Group, in a recent report. “The ability to offer a package of services that cannot be easily replicated by the incumbent local exchange carrier will allow the interexchange carriers to target higher value customers, control a broader area of the value chain, and most importantly, gain additional revenue streams.”
Rosenberg said MMDS complements Sprint’s digital subscriber line (DSL) strategy, which is part of its Integrated On-Demand Network offering, in addition to allowing it to bypass the local loop controlled by incumbent local providers. MCI WorldCom’s plan for the MMDS assets it is acquiring is less clearly defined.
The niche
BWA is not likely to be a big factor in the U.S. residential market because the costs to deploy BWA systems for single family dwellings are not competitive with the costs to deploy copper. Multidwelling units, such as apartment buildings and condominiums, are more likely to be served by BWA, particularly in Europe.
The sweet spot for BWA in the United States and around the world is the small- to medium-sized business. After several years of building out, fiber still touches only a small percentage of buildings in the United States, and copper solutions are adequate only for very small businesses. Smaller and medium-sized businesses, which need more functionality than copper can provide but can’t afford fiber, create a gap that BWA service providers are aiming to address.
“We largely build our product to (competitive local exchange carriers) or competitive carriers trying to reach this small- to medium-sized market segment that feels like it is overcharged, underserved, generally abused and desperate for bandwidth,” said Cynthia Hillery, vice president of marketing at Netro Corp., a U.S.-based BWA vendor that has more than a dozen systems in various stages of trial throughout the world. “We think broadband wireless is rather unique in its ability to service this access gap because it has a huge range of capacities.
“In the end, the problem is broadband access, and it’s a big problem,” continued Hillery. “The reason wireless is getting all this attention is it is sort of the third leg of the stool. If you’re going to solve broadband access, and you don’t do it with cable and you’re not an incumbent with copper, then wireless is the obvious choice.”
Around the world
“The good news (for BWA) is once you go out of the United States, the wireline infrastructure is even more challenged,” said Rami Hadar, chief executive officer of vendor Ensemble Communications. “On the high end, there is even less fiber, and on the low end there is even less copper, or well-maintained copper, so xDSL becomes even less of an option and there is much less wireline competition.
“On the other hand, there is a need for a pool of end users. It only makes sense to go after markets where there is a need for broadband services. A good indication of that is where there is high penetration of Internet services and a high availability of computers.”
The demand for better telecommunications services, including broadband, in international markets is clear, say industry watchers.
“You can see the cellular penetration in those markets is very, very high amongst the people that can afford it,” said Spike’s Champy. “Statistically, the discretionary income a person in the United States spends on their telephone bill is a much smaller percentage of their income than it is in a developing country. In some countries, getting a phone line takes three years and thousands of dollars.
“I think [BWA] is going to d
o for data what cellular did in a lot of these markets for voice,” continued Champy.
Formus Communications is a U.S
.-based company operating BWA systems in Hungary, France, Poland and Argentina. Ray Nettleton, chief technology officer for the company, said demand is high for BWA.
“We simply can’t get equipment fast enough to keep up with the inquiries that have been coming in for service,” said Nettleton.
Hadar of Ensemble, agreed there is pent-up demand for broadband as well as the equipment needed to provide it.
“Two years ago, there wasn’t a vendor in sight with equipment, and I think at the end of 1999 is when vendors will finally hit the market with the right kind of equipment both from a performance point of view and a cost point of view,” he said.
The newness of broadband also is creating the need for education, said Formus’ Nettleton.
“It takes a lot of effort to educate the governments on what this is-sometimes they haven’t even heard of it-and how much spectrum is really needed to provide the service properly and what kind of procedures are appropriate for licensing,” he said.
“One trend that is very gratifying, I think, is in Europe they have standardized a suitable set of frequencies, and pretty much the whole continent is going to one set of frequencies,” said Nettleton. “That helps a lot.
“This is not true in South America, for example, where the frequencies are all over the map and we have to special order equipment for each country.”
