We don't need no stinkin' license

On the heels of license winners spending big bucks during the recent U.S. 39 GHz spectrum auction, one company plans to offer similar, but cheaper, services.

Air2Lan introduced itself last week as a broadband wireless service provider that uses unlicensed frequencies. The company has been conducting a trial in Jackson, Miss., and launched there commercially last week. Unlike some other unlicensed frequency users, Air2Lan aspires to roll out service nationwide.

"In a simple way, we have wireless DSL without the limitations of DSL," said Air2Lan Chairman and CEO Jai Bhagat, who assembled a team of some former colleagues from SkyTel, a company he helped found.

In addition to avoiding license payments, Air2Lan believes there are other advantages to using unlicensed frequencies. The operator is free to target portions of a market rather than offer services throughout an entire market covered by a license. "We can be very selective in building out pockets, instead of building out an entire city," Bhagat said.

Air2Lan focuses primarily on offering service to small and medium-sized businesses, about 84% of which rely on dial-up for Internet connections, Bhagat said. Air2Lan also will market to residential users, especially those living in apartment buildings.

The operator's strategy will team it with local ISPs whose existing users can upgrade to Air2Lan service for higher-speed access.

In Jackson and other initial markets, Air2Lan plans to use spectrum in the industrial scientific medical bands. It also hopes touse the unlicensed national information infrastructure (U-NII) band when more equipment is available. If another operator in a targeted market is using the unlicensed spectrum, Air2Lan has several options. It can lease wireless communications service or local multipoint distribution service spectrum from license holders or, "if nothing works, and we are totally luckless, the last resort is to use telephone lines or T-1s," Bhagat said.

In the unlicensed bands it's first come, first served, so there is a chance the spectrum will be used in a given market. But the U-NII band is about 300 MHz wide, so it's unlikely that it will be used to capacity soon, he said.

During the next four to six months, Air2Lan hopes to roll out service in Dallas and Harrisburg, Miss., which is near Jackson.

"The near-term goal is not how many markets but getting perfection for our applications," he said. "The longer-term goal would be going to every major market."

That strategy is unlike many other unlicensed spectrum players that typically use the spectrum to extend the reach of licensed spectrum, said James Mendelson, an analyst with The Strategis Group. New ISPs or service providers often use unlicensed spectrum to enter a market.

"It's definitely a great way to get in and offer service, but as a sustainable model, I'm not sure," Mendelson said.

While the reasoning behind targeting rural or small markets with unlicensed services is sound, Mendelson said many unlicensed-frequency users such as Air2Lan have also targeted the big cities.

"Even in the urban areas, they're not going head-to-head with competition," he said. Instead, unlicensed spectrum operators often serve users in "dead" zones, where other options aren't available.

Despite technological advancements that allow unlicensed spectrum equipment to compensate for possible interference risks, there continues to be a stigma around using the frequencies. "With unlicensed, there will always be that issue," Mendelson said.