Mission: Applications

Competitive carriers using broadband fixed wireless for access begin to move away from network technology definitions and toward an ASP model.

There is no such thing as a broadband wireless carrier. That's what the service provider outfits using broadband fixed wireless access would like the industry to believe.

It's clear that the practice of tagging service providers with labels that correspond with the technologies they employ has become somewhat limiting, and this particular service provider category provides a vivid example.

Broadband wireless is usually just one of many access network techniques these kinds of carriers use. Most of them also are pursuing some level of fiber build and using several other access methods to reach customers. Some of them already have divisions that create packages of business-specific applications or work with applications developers to do so.

Still, broadband wireless is generally the network component in which these carriers have invested the most, the one they are spending the most time constructing, and the one that most distinguishes them from their peers.

So what are they? Are they competitive service providers that should be lumped together with data competitive local exchange carriers (CLECs), in some cases tacking on an applications-related addendum? Do they fit the almost certainly ephemeral "integrated communications provider" subset so many of them use to define themselves? Or do their actions warrant the application service provider (ASP) tag that is so liberally applied lately?

The best answer is probably a combination of all those factors. That answer, in fact, is based on a broad recognition that traditional - and even more recent - service provider categories are incomplete, even bordering on obsolete.

But rather than dismiss distinction based on the general assumption that service providers are converging toward a common end, we should examine the elements of certain types of carriers to determine what makes them prone to a certain evolutionary path. For the category formerly known as broadband wireless carriers, those elements include inexpensive pipes, hosting capabilities and intimacy with the small business sector.

Business savvy

Ask an executive at one of the small handful of service provider companies currently pegged as broadband wireless operators to forecast the next big thing for the service provider category and the answer likely will involve references to businesses and business applications.

"I think it's probably the application layer and e-commerce on top of the network," says Buddy Pickle, president and chief operating officer of Teligent. "We're going to look to provide extra applications to the business customer so that we're a value-add."

Indeed, the sharpened focus these companies have had on small and medium-sized business customers - coupled with the use of a network access method that connects their networks quickly to buildings where many potential customers reside - results in a potentially powerful formula for winning business. And in the scheme of things, the network transmission method hardly has to come into play at all.

"We are not a technology company per se, but we believe broadband wireless provides us with the most economical way to provide broadband services," says Rick Calder, chief marketing officer for Winstar Communications. "It provides the opportunity to offer the most complete set of services to customers in commercial office buildings.

"Ultimately, we're in the business of helping customers become more productive," Calder adds. "We see ourselves becoming the IT back office for most small and medium-sized businesses in America that have a difficult time finding talent for things that take away from their core business."

That strategy represents at least the partial definition of ASP - at least as far as the industry overall has been able to define the carrier category in any real way. Essentially, an ASP hosts the applications of a business - in theory, any kind of business and any kind of applications - on its facilities and ports them directly to customers, either over its own networks or the leased facilities of another carrier. The customer is thereby relieved from the organizational burden of maintaining the applications on its own system.

For some competitive carriers, the ASP portion of the strategy still is separate from overall network operations - and especially separate from the technology-defined transmission formats.

Nextlink Communications, for example, holds more broadband wireless spectrum than any other provider, but its applications business still is housed in a separate subsidiary called Nextlink Interactive.

"Today we are classified as an application service provider," says Dennis Kyle, vice president of marketing for Nextlink Interactive. "But most ASPs operate on the Internet channel only and are less full-service than we are. We provide retailers with a complete solution."

Vertical power

The current ASP approaches of Nextlink and Winstar are similar in the sense that they are both oriented toward specific vertical business niches and aren't too strongly linked yet to the carriers' access and transport methods.

Winstar's Office.com outfit is primarily content-driven now, but the model demonstrates how the company could expand into more elaborate vertical applications efforts as its business progresses. Office.com provides original and aggregated news and informational content, a commerce area that provides purchasing guidance, and a community section for making contacts across industries. The site focuses on 16 industries and 120 "sub-industries."

"It's an organizing principle. We have specific industry content in 150 vertical industries," Calder says. "It gives us a way to provide industry-specific content. That is really the way businesses will make sense out of the applications and accessing them in a way that's appropriate to them."

The next logical step for Winstar would be to extend that information about business applications into links that would allow businesses to buy hosted applications from Winstar. That scenario likely will play out as Winstar's network footprint becomes more pervasive.

Meanwhile, Nextlink Interactive's ASP strategy involves a three-pronged approach to retail applications management - voice, Web and in-store. The approach offers a clue as to how the carrier could evolve its hosted applications offerings to non-retail business, especially when combined with the broadband wireless platforms Nextlink is putting in place.

Nextlink Interactive started as a developer of interactive voice response systems for marketing and customer service and was acquired by Nextlink in 1995 and has since grown to embrace other interactive applications.

But those voice roots - especially in combination with other interactive channels - have the potential to keep Nextlink connected to an important component of retail e-business that is in danger of being overlooked.

"When there's a problem, most of us pick up the phone," Kyle says. "With integrated response channels, a customer can slip seamlessly across and have access to the same information."

Where apps meet the network

Does all the applications-oriented activity from service providers that are simultaneously building broadband wireless access networks mean that their focus is more on the apps than on the transmission? Not by a long shot.

On the contrary, the point of confluence for provided or hosted applications and the access network connections to businesses is precisely where the broadband wireless/ASP strategy begins to make sense. Nextlink, for example, hosts its ASP business in data centers operated by Concentric Network, which Nextlink is acquiring. Nextlink operates the network pipes that connect the customer to the Concentric data center. The apps, therefore, represent revenue flowing over Nextlink's network.

"Every time a customer purchases a prescription online, it's traffic," Kyle says. "Should a customer want to zoom in on apparel, it's fat traffic. This is the reason why this all makes sense."

That's also where the broadband wireless aspects of a network such as Nextlink's become important again, because traffic for retail customers potentially could be expanded even further when the flexibility of broadband wireless access is applied.

"This is going beyond a Web site to a full multimedia sales kiosk," Kyle says. "The [local multipoint distribution service] spectrum would provide a high-bandwidth conduit for these types of applications. Our ASP-like offering draws more and more of Nextlink's pipes into play over time."

Regardless of their varying strategies, most competitive service providers pursuing a combination of broadband wireless networking and applications hosting are avoiding the applications development realm. Rather, they are forging partnerships withsoftware companies and working jointly to tailor applications to the right business niches.

"I doubt we'll ever own and develop the content; we'll be a provider of other people's applications on our network," Pickle says. "There are so many great applications being developed for B2B."

One service provider that fits the description of a broadband wireless carrier is taking a different tack on the ASP business. Advanced Radio Telecom is devoting its networks and spectrum to acting as a conduit rather than trying to pursue an applications-hosting strategy on its own.

Using broadband wireless radios and IP routing technology, ART is building metropolitan rings that other service providers can tap into to connect their networks and data centers (Figure 1). In that sense, ART is pursuing ASPs as customers rather than trying to be an ASP.

"We're not going after retail; we're going after the service providers themselves," says Jay Stark, executive director of marketing for ART. "If you can enable an ASP to deliver applications at the same native LAN speed the company was using before, the company sees no difference."

Just as it may be becoming outdated to categorize a service provider based on the type of technology it uses, it also may become inaccurate to assign a label to a company that is based on the fact that it delivers applications to business customers.

Regardless of those distinctions, it's clear that service providers using broadband wireless access technology are leveraging the characteristics of their technology of choice to determine the most appropriate and profitable service and strategic direction.