Reasons for Optimism: Broadband Wireless ISP’s Proving the Business Case

Broadband Wireless Business
By Robert Hoskins
May 2001

When people talk about the wireless broadband marketplace, it seems like the only companies you ever hear about are the big telecom carriers. Everyone seems to judge how the industry is doing based on Sprint’s or WorldCom’s rollout schedules.

Sprint has done a good job rolling out 13 markets in the last year or so, but seems to have retreated from their original ambitious rollout schedule. WorldCom, on the other hand, doesn’t seem to know what they want to do or when they will actually rollout markets on a large scale.

Based on these two perceived leaders’ progress, you might think that the industry is headed for a slow down. However, after doing a little research, it is easy to find a hotbed of activity created by smaller companies that are making significant progress in rolling out broadband wireless services to both business and residential customers, especially in rural areas.

What do people in rural communities know that people in big cities do not? While many city dwellers and suburbanites succumb to the idea that they are powerless to do anything about a broadband connection, it seems that their rural counter parts are becoming a little more proactive.

What “Digital Divide”?

While many are concerned about the digital divide, it seems that your chances of getting a broadband connection in rural setting might be easier than in a big city. Perhaps the smaller towns in America are tired of being placed last on the list when it comes to receiving investment dollars for newer and faster communication infrastructures in their communities.

Looking at the economics from a small local telephone company’s or cable system operator’s perspective, it is understandable that they do not want to risk a huge investment of capital and manpower to dig up the streets and recondition buried wired networks. What surprises me is that they limit themselves by trying to find a solution to this problem with wired technology.

As a result more and more entrepreneurs in smaller communities are taking this issue into their own hands and have found that building broadband wireless networks can be a very economical and quick way to provide high-speed connections for their residents. Many people in rural communities and some in big cities have figured out that building a broadband wireless network is not that hard to do with a small amount of knowledge and the right personnel.

All it takes is one individual with a little initiative to do some research and being lucky enough to come across the right information. Before the Internet was born, the search for information on how to get faster connections might have been a daunting task. That’s all changed now. All you need to do is get online and begin searching. You’ll quickly come across numerous sources for equipment vendors and lists of Wireless Internet Service Providers.

My focal point while researching this article was to uncover information on WISPs that were actually providing service to customers in today’s marketplace. Many are under the impression that Sprint is the only fixed wireless service provider that has more than a couple of hundred customers on a system. However, there are many ISPs with more than a thousand customers and even more systems in the hundreds-of-customers range, all using proven broadband wireless technology to deliver high-speed Internet connections.

To find out what these companies were up to I spent the last several weeks investigating what type of wireless networks these providers were building. I also wanted to know why they decided to jump into the broadband wireless business and what they had learned along the way.

A Few Profiles of WISPs

In many cases, individuals made the decision to get into the wireless access business due to the frustration of paying an exorbitant amount of money each month for a dial-up connection that was extremely slow and still not reliable enough for more than a 10 minute session before being bumped off line. Others simply saw the huge opportunity that building a high-speed network with wireless technology could provide their community as well as their pocketbooks. It turns out that the profit margins for broadband wireless services are much higher and the return on investment is much quicker than that of a wired network investment.

Like many people living in a rural community, John Savage was tired of “getting raped” every month by having to pay for a very expensive ISDN line, the only form of high-speed access available in his neighborhood. However, without having access via the high-speed ISDN line, John had a very long commute to the office every day in order to gain access to his company’s corporate network.

Fortunately for John, working many years for networking leader Nortel and operating a ham radio as a hobby primed him with the right knowledge and skill set to begin investigating possible solutions to his dilemma. John began researching the market and compiled a list of seven possible equipment manufacturers that he thought would fit the bill. After performing a series of tests and proving his business case to investors, he founded GetOnTheAir in Asheboro, N.C., and built the area’s first broadband wireless network. The popularity of the service spread quickly among residents and businesses and the network grew rapidly. After beginning with just one cell site that could service up to 750 customers, the network now includes five cells and can provide high-speed access to thousands of customers.

In Jackson, Miss., while WorldCom procrastinates about what to do with its billion-dollar investment in MMDS licenses, anther local wireless service provider, AIR2LAN is quickly rolling out fixed wireless service to customers. Jai Bhagat, chairman and CEO of AIR2LAN, and a group of ex-SkyTel executives, founded the company in December 1999 and mapped out a plan to roll out service to a number of markets using public spectrum. AIR2LAN’s first system in Jackson is growing rapidly and now consists of 14 cells providing service to approximately 5,000 end-users. Following their successful launch in Jackson, the Company has also launched service in Houston, Texas and New Orleans, La., and officials predict the same positive response from customers as their first system.

In Phoenix, where Sprint’s Broadband Direct service is suffering from its own success, several other WISPs have been launched to meet the area’s need for speed. Renaissance Networks and Kite Networks both serve business customers using the unlicensed bands. Renaissance Networks, which launched its PriorityIP service last November, now has more than 100 customers. Kite Networks has achieved similar results with the launch of their Mach1 wireless service in March of this year and already have close to 50 customers lined up.

Public vs. Licensed Spectrum

Most of the companies that I spoke with were using public spectrum in the 2.4, 3.5 or 5.8 GHz range. The pros and cons of using public spectrum such as the ISM or UNII bands versus licensed spectrum such as MMDS to build out systems vary greatly depending on whom you to talk to. However, the most important and most relevant consideration for what spectrum to utilize is availability. Since many of the large telecommunications firms, such as Sprint and WorldCom, have bought up most of the MMDS licensed spectrum, many smaller companies’ options are limited to using public spectrum.

As Jeff Clark, president of Renaissance Networking, points out, “the complexity and cost of utilizing licensed spectrum represents a barrier to entry for small technology firms. That is a shame because smaller companies like ours are usually where the most innovation takes place. The recent explosion of activity in the ISM/UNII spectrum is evidence of the potential for advances in other licensed bands. If only the smaller, more agile companies had access to more spectrum, we would probably see a lot more innovation in this industry.”

While some may argue that one slice of spectrum is better than another, a growing number of WISPs are demonstrating that it is possible to build out a system using both types of spectrum to get maximum coverage.

For example, eSpeed AZ based out of Prescott, Ariz., is using a hybrid approach to build a pure end-to-end broadband wireless network. eSpeed AZ has access to licensed spectrum, but is limited to 13 out of 33 channels located in the MMDS band. To maximize spectrum, eSpeed AZ’s team engineered their system to use dedicated channels of MMDS to backhaul data traffic to and from the cell sites, then deployed multiple public spectrum cells using ISM bands for cell-to-customer traffic. Backhauling traffic via wireless circuits and combining MMDS with ISM spectrum for maximum customer coverage is a good example of how to combine different band plans to create a very attractive and economical solution.

Quality of Service, Security and Interference

The biggest issues that WISPs face are providing an acceptable quality of service, tight security and minimal interference from unexpected noise or other service providers. Unlike many wired broadband wireless providers, several companies that I spoke with offer Service Level Agreements for their customers as a way to differentiate themselves from the competition. Clark, of Renaissance Networks, says “Our company stands out from the competition by offering our business customers a guaranteed service level agreement.”

“We provide the same reliability as standard T1 service, but cost hundreds of dollar less per month than the local Telco’s offering. For a small business that is a very attractive business proposition.”

Other important issues to customers are security and interference. Most of the companies that I spoke with said they wished more people understood the real issues when dealing with these two concerns. Security is really more of an issue for the service provider than the customer because wireless signals can be encrypted like any network traffic. The real issue on security is making sure no one is gaining access to a broadband wireless provider’s system without paying for it.

Interference from other signals in the same spectrum range is another touchy subject that WISPs don’t like to talk about. While no one claimed that these weren’t real issues, they quickly pointed out that the vendor community has released new modulation techniques and network management software applications that should solve most interference and security issues for at least the near term.

Bob Weineke, vice president of Clearwire Technologies, agreed and said that his firm has engineered a solution they refer to as their Air Protocol, which uses a best-of-breed combination of techniques borrowed from CDMA, TDMA and FDMA modulation schemes, which solves the issues of security and interference efficiently and effectively.

With that said, there are still plenty of WISPs out there that will verify interference can be an issue that needs to be dealt with more effectively by some vendors.

“While many manufacturers will claim that their technology can overcome most sources of interference, make sure that they agree to provide you access to their product’s frequency adjustments before you sign a deal with them.” said David Rodman, president of wireless ISP interLink Hawaii. “We ran into this problem and ended up having to write our own proprietary software that detects interference and changes frequencies dynamically.”

Wireless Franchise

I’m sure that many ISPs have been watching closely to see what kind of success or failure the DSL providers would have. Many saw high-speed access as a boon to business. Others with insufficient capital saw DSL cannibalize their dial-up customer base. Others with antiquated wiring or service areas outside DSL’s reach only became frustrated as their attempts to deploy high-speed access failed.

It would seem that these providers are still seeking to rollout some type of high-speed service and would be great candidates for wireless vendors. Unfortunately, many may be discouraged due to their lack of wireless expertise.

“Don’t have the knowledge or the experience to seek out equipment vendors and/or a systems integrator? No problem,” said Stephen Webber, president of InterLink LC, based in Keokuk, Iowa. “We have built out the better part of five counties, spread across three states, with our @anywhere service and have perfected the process to the point that we have developed a franchise package for anyone who wants a prefabricated WISP solution.”

Webber claims that his company will build a system for anyone that has 100 or more people ready to sign up for broadband wireless connections. Interested? You can reach InterLink LC at 800-734-3819.

Three (or more) Wishes

When asked what challenges service providers would solve if they had three wishes, I got some really interesting responses. The most common thing that all service providers wished they had more of was spectrum. Second to obtaining more spectrum would be the ability to reduce costs, primarily through the introduction of new non-light of site network equipment that would reduce truck rolls. They would also like to see customer premises equipment that would list under the $300-500 price range.

Some suggested more creative ideas such as creating a national association for public spectrum providers that would help them mediate interference issues as well as help establish cooperative programs such as a national program that would allow customers to roam from one city to the next without losing connectivity.

Others cited topics including a better understanding of what fixed wireless is compared to mobile wireless, better financial markets so they could continue to build out their networks and a better variety of wireless products to chose from.

Outlook Remains Positive

Regardless of where you live, the chances of getting high-speed wireless Internet connections are becoming better and better. We have the technology and service providers across the United States, and the world for that matter, are rapidly building out fixed wireless networks. At last count there were nearly 600 broadband WISPs in the U.S. alone.

About the Author: Based in Gilbert, Ariz., Robert Hoskins is the principal of the Broadband Wireless Exchange and a freelance writer. You can reach him at 480-218-4441 or via email at rhoskins@bbwexchange.com.

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