Comptel: Rooftop collocation may be next

ORLANDO--If broadband wireless technology proves more successful in this generation than in earlier versions, the next great frontier for collocation could be building rooftops.

That would be good news for Nextlink Wireless, an XO Holdings company and major holder of wireless spectrum, which this week announced a new reseller program that will open up its wireless links to other service providers. Sister company XO Communications has been using the Nextlink wireless offering in nine markets.

“We basically beta-tested with XO,” said John Grady, director of marketing for Nextlink, in a Comptel interview. “Now we are expanding into three more markets, including our first non-XO market, Kansas City.”

The other two new markets are Boston and Phoenix, he said. Most of the buildout is success-based, as Nextlink moves into markets where it has anchor tenants, but the company also faces an impending deadline on the 10-year licenses it holds on LMDS spectrum and needs to have 20% of the business trading area covered to retain each license.

That is one reason the company is focused on being a wholesale provider or carrier’s carrier for broadband wireless, in order to make the best use possible of its spectrum, Grady said.

“Resellers will be our prime anchor tenants, and we will work with them to help them extend their high-speed offerings to customers they could never reach before,” he said. Those customers are in buildings not served by fiber or unreachable by other broadband connections that are not available or simply too expensive, Grady said.

“About 30% of the services we deliver are 10 Meg [Megabit per second] services but a surprising number are 100 Meg,” he said. “To reach those customers a [CLEC] would need to lease 2 DS-3 lines, which is really cost-prohibitive. This gives them another arrow in their quiver in terms of alternative access.”

The prospect of multiple carriers using LMDS for last mile leads to the discussion of rooftop colos, something Grady believes is probable in the future.

“The rules today date back to the Teligent and WinStar days,” he said. “They vary on a state-by-state basis, and they aren’t very clear. There’s no real precedent for this.”

He believes broadband wireless is more viable this time around for multiple reasons, not the least of which is that the technology is in wide use throughout Europe, where cities are denser and fiber less available, and has gotten much more reliable and much less expensive. But also, consolidation is reducing the options for last mile access and the Federal Communications Commission decision last March to allow Verizon’s petition for forbearance from pricing and fairness regulations for its broadband service has some CLECs concerned that last mile options are gradually disappearing.

“The environment that is emerging does not foster a lot of competition,” Grady said. “Comptel members may be hard-pressed to continue to serve their customers.”

But last mile access is not Nextlink’s only play. The company also is eyeing what it terms “middle mile access” or transport from aggregation hubs back to a Carrier Hotel or Central Office, or between COs. And Nextlink sees LMDS spectrum as a natural middle mile solution for WiMAX access links as they become a last mile solution.

“Today, we go up to OC-3 [155 Megabits per second] but the technology exists to go much higher,” he said.

There is still market hangover from the failure of earlier broadband wireless, requiring some market education, Grady concedes.

“The memories are still around,” he said. “The demise of [Teligent and WinStar] was pretty spectacular. But we are starting to see customers come around and grudging acceptance from the industry.”