A voice in the wilderness

These days, CLECs are crashing and burning primarily because they misunderstood the value of bundling voice services with high-speed data.

Fixed broadband wireless vendor Raze Technologies is preaching that lesson as a way to prevent its customers from committing high-speed suicide. “The industry has seen a lot of science projects over the last four or five years, a lot of starts and stops,” says John Festa, Raze's president and CEO. “We have an absolute solution.”

That solution is to control the dial tone, whether to a small business or a residence. Raze does it by guaranteeing quality of service (QOS) as part of a bundled package with high-speed data.

The technology is aimed at what Festa calls an MLEC (or money LEC), otherwise known as “a guy with a good solid business… a businessman [who] understands the value of new technology and when to come in,” he says. “This is the right time to come in.”

The combination of cutting-edge equipment and reasonable prices makes a value proposition that's bound to succeed. “If you own that dial tone at a reasonable price, you own the customer. If you own the customer, you can make money. You make money, you stay in business,” he says.

Paul Struhsaker, Raze's chief technology officer and engineering senior vice president, agrees: “Bundled voice and data is a requirement to ensure profitability. Data's already eroding at 10% per year for revenue; voice is very stable. Without bundling voice and data, everybody else is putting their service providers in a going-out-of-business-sale mode.”

That's not where Mark Kelley, president of North Texas Web Services, wants to put his customers. NTWS, a Tier 2 service provider that's a CLEC and an ISP — and, more importantly to Festa's way of thinking, an MLEC — views broadband fixed wireless as a way to move into delivering bundled services in the no-man's land of northern Texas where competition is as sparse as people, which makes it tough to run wires.

“The only real [high-speed] competition we have now is limited cable buildout. None of us lives within 18,000 feet of the cable headend or the central offices,” says Kelley, whose company in 1998 deployed DSL to an understandably limited audience “with some success.”

Now he's ready to try fixed broadband wireless, as long as voice is part of the package. “I see it as a way to save the business,” he says. “The dial-up ISP will eventually evaporate. It's the next logical step for our customers. We can increase the quality of service and change the destiny of our company.”

And bridge the digital divide — to coin a clichè.

“You can either do satellite, which is rare out where we are… or you dial us up,” he says of the pre-wireless choices. “Depending on what part of the county you're in, you can get anywhere from 2400 baud to 33.6 — sometimes higher. We have some pretty desperate customers.”

Customers are not desperate enough to give up their phone service on the whim of a supplier that may not be reliable. That's part of the Raze proposition. “Our voice is carrier-class. It isn't [voice over IP],” insists Festa. “We have battery back-up. And we're doing it at a price point that makes economic sense for a provider like Mark's company to actually go after the residential play.”

The Raze price point is $650 for all the equipment needed to get a bundled service sub up and running. “That one box brings two carrier-class voice lines and broadband data,” Festa says. “You can easily charge $70 to $100 depending on your area and your payback period is less than a year.”

It's in the lifeblood of Raze's personnel, says Struhsaker.

“Some of us come from a service provider background and bundled voice and data is a requirement to ensure profitability, not just today but throughout the price erosion that's going to happen,” he says. “You have to have things like 911 cut-through, emergency phone service. You have to have the battery back-up, redundancy. Our system will only suffer five minutes of outage in a year.”

What needn't be in the bundle, all parties agreed, is video. It used to be part of the fixed broadband wireless proposition — when it was called wireless cable — and it's still part of wireline cable and, to a lesser extent, DSL. But it's not part of what Rave and NWTS are planning. “All of those [DSL, cable, fixed broadband wireless] will bring streaming media,” says Struhsaker.

But that's in the future when those types of Internet-driven services become viable. For now there is a stopgap measure. “Terrestrial broadcast and video is a failing business because the satellite business is far too compelling,” he points out. “Our systems can be in a bundled resell with DSS dish sellers. We'll install this unit and a dish, and now you have the entire house covered for all media.”

Kelley, too, dismisses video. Voice, he says, is the key to controlling the consumer.

“The biggest problem, especially for a dial-up ISP or somebody providing DSL or ISDN, is they're not in control of that circuit and have no control over the quality of service,” says Kelley. “The right technology gives us the ability to have complete control over the quality of service.”

QOS, along with guaranteed bandwidth speeds for commercial customers, comes as part of a tradeoff — cell size and distance vs. speed. “I can lower the speeds and reach farther,” says Struhsaker. “It takes so much energy per bit. If I lower the number of bits I deliver I can reach farther.”

It depends on the terrain and the market. For example, Raze will use a different technological paradigm for a suburb like Plano or Richardson, Texas, where it can reach up to 400 subscribers per sector with two voice lines at 384 kb/s downstream and 128 kb/s upstream data. It forecasts 10-to-1 oversubscription rates for some of the more remote North Texas locales.

“Most people would be shocked at the oversubscription rates that go on in cable and on DSL,” Struhsaker says, noting they can reach 16-to-1 or even 20-to-1. If the subscription rates start to squeeze the speeds, he says, “we can sub-sectorize.”

The technology is just getting started, says Struhsaker, who has been active in the International Electrical and Electronic Engineers 802.16 wireless standardization efforts, which are not as fragmented as they once were, he says.

“A proposal was raised and selected as the draft standard for 802.16, and we're editing right now. We fully expect to be in detailed voting on the standard by the end of the third quarter,” he predicts. “Essentially, everybody who's in the business is in 802.16.”

That's short-term. Longer term, Raze has some big plans. “In 2003 we'll be rolling out adaptive beam forming antennas to be able to increase the capacity of a cell without doing any major change-out of equipment,” he says. “This will be about the fourth generation wireless system our team's built, so it's not anything new. I'm looking forward to Mark having so many subscribers I have to put advanced antennas on.”

That may be a way out. NTWS right now has a mixed bag of 2500 dial-up and dedicated circuit customers. It's beta-testing Raze's technology with 25 selected players with hopes of going to a full rollout.

As an MLEC, NTWS has the ability to pay when it rolls out. But Raze is not counting those bucks before they're printed.

Raze is “active in looking for another round of funding coming up pretty quick,” Festa admits. “Our present investors are behind us 100%. We have an absolute solution.”

And a pretty big target audience that's being ignored by most other players, adds Struhsaker.

“Tier 2, Tier 3, Tier 4 represent about 50% of the [points of presence] in the United States, residential and SOHO,” he says. “That's 50 million subscribers. You have three or four types of overbuild going on in tier one [wireless, cable, DSL] and almost nothing going on in Tier 2, 3 and 4. That's what Raze is about.”