THE SECOND COMING OF FIXED WIRELESS

Remember Teligent and Winstar? Sure you do: They were among those service providers that invested heavily in broadband fixed wireless technology as a viable alternative to traditional wireline services. Five or six years ago, these two companies — along with Sprint, WorldCom and others — gambled that broadband fixed wireless would become a national network phenomenon in the U.S., and a lifeline service enabler in developing countries.

Though the latter vision is being realized to some extent, the dreams of national broadband fixed wireless networks in the U.S. turned out to be too ambitious — too weighted with expectations and lacking in the technology they needed to succeed. As a result, both Teligent and Winstar went bankrupt.

Still, despite these massive corporate failures and the much-maligned reputation of fixed wireless — particularly in the U.S. — the potential of the technology did not die. In fact, it is making a bit of a comeback. “The first wave got too heavy on itself and crashed, but there is always a second wave,” said Carlton O'Neal, vice president of marketing at fixed wireless equipment vendor Alvarion.

The first wave's crash may have sunk the optimism that large carriers had for broadband wireless technologies such as multi-channel multi-point distribution service (MMDS). However, in the fixed wireless market's second wave, the service providers are smaller and more regionally focused. The bulk of the market opportunity in the U.S. is represented by thousands of wireless ISPs (WISPs), localized to such an extent that in many cases they may have only dozens or hundreds of customers. Yet WISPs are quickly evolving and may signify a bright future for broadband fixed wireless in this country.

For a glimpse at that future, one must look no further than California, where three regional WISPs — NextWeb, SkyPipeline and SkyRiver — recently formed the SkyWeb Alliance, a partnership that covers 66% of the businesses in the state.

Though primarily a co-marketing agreement and not a corporate merger, the deal is indicative of maturation in the broadband wireless service provider industry, said Eric Warren, director of marketing and business development at SkyPipeline. “The [WISP] industry has been made up of a lot of small players, some of them with 100 customers or less,” Warren said. “This agreement raises the visibility of broadband wireless as a superior solution, both technically and economically, to what's out there.”

What's out there constitutes a variety of wireline services — fractional T-1, DSL and full T-1, among others — aimed at small and medium-sized business customers by incumbent local exchange carriers (ILECs) and competitive LECs (CLECs). “ILECs' prices often aren't low enough for the small business customer, and even a CLEC has to work with ILEC facilities. That translates to higher prices,” said David Williams, vice president of marketing and business development at SkyWeb partner NextWeb.

In contrast, prices from the SkyWeb partners could run anywhere from $200 per month for fractional T-1 via a wireless link to $400 for full T-1 speed — a price that is 30% to 50% less than average T-1 prices offered by ILECs.

Scott Redman, vice president of sales with the SkyRiver branch of SkyWeb, said that it is more difficult for WISPs to compete head-to-head with telco DSL offerings — but it's a battle the telcos can't fight outside the limited DSL range of their central offices. “They have to ignore the business customers that are in the gaps,” Redman said.

Though a band of small business users outside DSL's reach may sound like a limited revenue-building opportunity that will prevent WISPs from becoming anything more than wispy little service providers nibbling at telco scraps, Redman said the desire of such companies to outfit multiple offices throughout California with broadband wireless was a major driver in SkyWeb's creation.

“Businesses were asking if we had coverage elsewhere in California,” he said. “Some of them want to have wireless [virtual private network] access throughout the state.”

With the alliance, the SkyWeb partners also have established a network belt on California that reaches about 4.5 million residences, according to NextWeb's Williams. Though the price-sensitivity in that market is keeping the SkyWeb Alliance at bay for now, Williams said it is encouraging to know the partner companies have an alternative infrastructure already built and paid for when and if the opportunity arises.

SkyPipeline's Warren added that he has received inquiries from residential users who are unhappy with their current broadband services and want to give SkyPipeline a try. “It's possible in the foreseeable future, though not in the immediate future, that we'll pursue that,” Warren said.

Among other areas of untapped potential, the SkyWeb Alliance also stands to give its members an advantage in future purchases of network gear. Three WISPs buying equipment together certainly would have more leverage than the legions of lone-wolf WISPs to earn volume discounts from vendors.

For now, the partners are being quiet — or at least coy — about that possibility. Williams said NextWeb uses network equipment from Alvarion, Trango Wireless and Axxelera; Warren and Redman acknowledged that they too use the same vendors. “But we're not doing any joint purchases yet,” Williams said.

It is clear, however, that together or separately, WISPs will continue refining their networks with next generation broadband fixed wireless gear as it becomes available. It's also clear that they will be ambitious about continuing their technological evolution. Redman said SkyRiver may launch a Wi-Fi division that will target the residential market, and Williams added, “802.11 technology is a different solution than what we currently have, but we're all looking at it for the future.”

That's a reassuring notion for the broadband fixed wireless vendor community, which seems to be entering yet another stage of its own sometimes painful evolution.

The universe of WISPs, like those in the SkyWeb Alliance, is a burgeoning new market for broadband fixed wireless vendors that have managed to survive the long industry downturn. Although there are fewer than there used to be, those that are left have evolved from one-trick ponies into systems providers that work in multiple frequencies and use all kinds of technology schemes.

Increasingly, these new schemes include 802.11 technology and other unlicensed spectrum solutions, even though some vendors argue that Wi-Fi and other unlicensed solutions rank among their otherwise carrier-grade offerings.

To realize the goal of offering multiple flavors of broadband fixed wireless, many vendors are consolidating through mergers, acquisitions or partnerships. Some of the most recent deals include SR Telecom's acquisition of Netro, Alvarion's purchase of Innowave and Proxim's merger with Western Multiplex.

SR Telecom's deal brings it a system based on orthogonal frequency division multiplexing (OFDM) technology targeted at the 3.5 GHz band, a system originally developed by AT&T as part of the carrier's vaunted — and later vilified — Project Angel MMDS effort. Netro had acquired the system from AT&T in early 2002 and reconfigured it from the 2.5 GHz to 2.7 GHz band licensed for MMDS up to the 3.5 GHz frequency.

With ongoing regulatory and interference issues clouding the use of MMDS spectrum, other frequency bands have become more viable. Alvarion has an OFDM system operating at 3.5 GHz, which the Israel-based vendor primarily sells into international markets outside of the U.S. The company's acquisition of Innowave also will give it lower-frequency solutions around 900 MHz, a step toward making sure Alvarion can address a variety of licensed and unlicensed frequencies, Alvarion's O'Neal said.

Alvarion has solutions targeted from 900 MHz to 2.4 GHz, 3.5 GHz, 5.8 GHz, 10 GHz and 26 GHz. Meanwhile, vendor Ceragon Networks has products ranging from 18 GHz to 38 GHz, and Aperto Networks targets 2.3 GHz, 3.5 GHz, 5.3 GHz and 5.8 GHz.

“A specific country's frequency is what drives your product strategy,” O'Neal said. But applications also have something to do with it. Fixed wireless networks in developing nations in Latin America, Africa and Asia are more likely to carry voice and data, which requires a cleaner, licensed spectrum such as 3.5 GHz or 31 GHz.

Higher-bandwidth data applications can fill unlicensed spectrum. To that end, the spectrum shake-up in the U.S. — combined with the overnight success of 802.11b Wi-Fi access — is raising the visibility of networking in unlicensed spectrum. “The unlicensed bands are an underused national asset,” O'Neal said. “They represent an organic growth opportunity.”

Despite the success of Wi-Fi in the unlicensed band of 2.4 GHz, a stigma traditionally has surrounded the quality, reliability and security of unlicensed spectrum. “We only work on licensed frequencies,” said Greg Caltabiano, senior vice president of worldwide markets at vendor Soma Networks. “We don't want to submit the carrier to something that we can't control.”

Caltabiano added that industry upheaval in perceptions of the value of licensed spectrum is beginning to refute the argument that unlicensed fields are less costly for network deployment. “Licensed spectrum is getting a lot cheaper, and the advantages of unlicensed spectrum are not as great over a wide area,” he said.

Still, Caltabiano agrees with the prevailing WISP opinion that Wi-Fi has a place in broadband fixed wireless networks. “802.11 is great for smaller coverage, in-building stuff. There is definitely an advantage to deploying it in a smaller area and using it to connect to a fixed point-to-multipoint system with broader coverage,” he said.

Proxim, which was one of the pioneering vendors in 802.11b for indoor wireless LAN deployments, is trying to take the technology to another level by challenging the notion that it can only be used indoors. Using the Wireless Outdoor Reach Protocol, Proxim is extending 802.11b to cover the outdoor portions of corporate parks and large enterprises.

As the SkyWeb Alliance partners suggested, more WISPs and other small broadband fixed wireless service providers may be looking at Wi-Fi hot spot deployment to augment their network coverage.

Other unlicensed bands besides 2.4 GHz are beginning to get some notice. At 5.8 GHz, the industry will find 802.11a, which is one of the higher-bandwidth follow-ups to 802.11b. However, Aperto also recently recommitted itself to this frequency band when the FCC ruled early this year that it would allow non-spread spectrum technologies to operate in the unlicensed 5.8 GHz band. That means Aperto can deploy its non-spread spectrum time division duplexing system in this band at its full 16- to 20-channel strength, rather than in lesser capacities, said Alan Menezes, vice president of marketing at Aperto.

Regardless of the viability of different technologies and frequencies, vendors are spending much less time than they used to debating the advantage of one solution or frequency over another, and more time ensuring that they offer a wide array of solutions at the lowest deployment cost possible. They know that carriers are more concerned with cost than specific technology or spectrum arguments.

“Carriers used to look at new technology investments in a different way. It used to be that they looked at the cost of deploying over a large subscriber base,” Caltabiano said. “Now they just want to know what's the minimum capital requirement that will get them into the business.”

Broadband wireless is now controlled and influenced primarily by service providers like the local WISPs that do not require large network footprints. But after the past failures of would-be broadband wireless giants to fulfill the promise of the industry, smaller opportunities may prove to be a more realistic place for the industry to restart its growth.

“When you sweep away the dust, you see that there are fixed wireless deployments happening,” Alvarion's O'Neal said. “They are smaller deals, but they could get bigger with [the emergence of] consortiums. The dream hasn't died.”