Insurgent Intentions: Its launch target met, Teligent enters price and service battle

Competitive pricing is just one component of the challenge broadband wireless operator Teligent faces as it takes its multiservice offering public, but you wouldn't know it from the early reaction.

The promotional splash that accompanied Teligent's long-anticipated 10-market launch of integrated local, long-distance and data services last week promised discounts of 30% to customers that put their faith in the newcomer for at least a year.

Incumbent providers were mum on Teligent's presence, but WinStar Communications, a fellow broadband wireless devotee and soon-to-be competitor in many markets, marked it with an offer to provide customers in 13 markets with free local service until 2000 in exchange for a three-year contract.

New carriers such as Teligent and WinStar have engaged in much more than a price duel, however. With their sights set on small to medium-sized businesses, their most immediate challenge could be to convince customers not only to turn over voice, but data transport as well.

"We all know the lion's share of the business is voice, but we also know that the growth and the future is a data business," said Alex Mandl, chairman and CEO of Teligent. "Three years out, it's going to be a much larger part of the business."

Most of Teligent's customers at launch are using the system for voice, but the carrier's point-to-multipoint technology is designed as the optimal pipe for transporting any media.

"It's [asynchronous transfer mode] over the air, so we're able to transport that information regardless of what the content is," said Keith Kaczmarek, senior vice president for engineering and operations at Teligent. "Bits are bits."

Still, one industry analyst was surprised that Teligent wasn't able to make a bigger data splash at launch.

"It's interesting that the first customers are voice because they're not selling it as a voice solution," said Bob Egan, networking research director at The Gartner Group. "I thought it would be data customers that came up first."

Teligent's focus on a customer group that is somewhat less techno-savvy than the larger corporate sector begs the question of whether perceptions about the reliability of wireless come into play. The company is confident that the fixed nature of its wireless network will moot that issue.

"A high percentage really doesn't care as long as we can demonstrate that it really does work-they don't focus on how it gets there exactly," Mandl said. "For a small percentage of customers, it will take some education to make sure they understand this has nothing to do with mobile."One of the ongoing issues Teligent and other broadband wireless providers face is finding the ideal places to mount hubs and antennas. Building access-inside and out-is an ongoing challenge for Teligent. "Early on we were worried a lot about roof rights, but it's an issue we have under control," Kaczmarek said. "It's an opportunity to demonstrate to the building managers that we bring value."

Part of the concern lies inside the walls, where Teligent must connect its broadband radios with existing wiring or rewire the building.

"Depending on our customers' needs, we use house pairs or put in our own coax or copper," said Mitch Wywiorski, vice president of operations for Teligent's Chicago market.

Egan predicted that the customer base expansion opportunities for Teligent will come when the company works with its networking vendors to upgrade the in-building network. "You're going to see companies like Teligent well-positioned to be a high-quality, last-mile provider and see them working with Nortel/Bay to solve the micro-mile problem using technologies like [digital subscriber line]," he said. "That's when it becomes attractive to a range of businesses that scale well beyond the small to medium-sized businesses."