Look! Up in the sky!

When I was about 10 years old, we got our first TV set. My favorite show was Superman. Every episode began with Superman zooming overhead, while people in the streets pointed upwards and exclaimed…”Look! Up in the sky! It’s a bird! It’s a plane! No, it’s Superman!”

Superman had super powers. He could “leap tall buildings with a single bound”. He was “faster than a speeding bullet”. He was “more powerful than a locomotive”. He had super hearing, and he could see through walls.

Superman’s real name was Clark Kent. He was a reporter for the local newspaper. He went around in a baggy brown suit and was described as “mild-mannered”.

Superman was a workaholic. He always wore his cape under his suit. So, all he had to do was get undressed, ditch the horn rimmed glasses, jump out the nearest window and fly off to save the day.

Years later, I heard that Clark grew up in a little town called Smallville. Smallville is served by an independent telephone company, SmallTel. Clark worked for SmallTel in the summers when he was home from journalism school. That’s where he took to changing clothes in a phone booth. His boss, SmallTel’s Plant Superintendent, always said: “That Kent boy can climb a pole faster than anybody I’ve ever seen!”

Fast forward to 2008. SmallTel’s in trouble. After decades of continuous growth, it began losing access lines in 2001, and the losses are accelerating. SmallTel isn’t alone. Almost all U.S. small telcos are losing lines, revenues and profits. With no cellular revenues to make up the losses, SmallTel is in for a bad time.

Other small telcos are in for it, too. OPASTCO, a small telco trade association, just released a report forecasting that small telcos, on average, will lose 17% more access lines and 13% of their revenues between now and 2010.

SmallTel’s Board of Directors called an emergency meeting of stockholders to review its options. The situation looked grim and pretty hopeless. SmallTel is going to need some super powers to get out of this mess. Then a mild-mannered man in a baggy brown suit stood up in the back of the room and asked…”Why don’t we deploy WiMAX?”

SmallTel was a winning bidder in the FCC’s auction of 700MHz spectrum which will be freed-up by the conversion of broadcast TV to digital format in 2009. Licenses in the big cities went for billions, but SmallTel acquired a license for its territory, as well as several surrounding counties, for just a few hundred thousand dollars. SmallTel isn’t the only small telco with licensed spectrum. Over 60 IOCs spent over $275 million for spectrum in the FCC’s 2007 AWS auction and in this year’s 700MHz auction. Other IOCs already own spectrum in the 2.3GHz, 2.5GHz or the lower 700MHz bands.

Wireless equipment manufacturers are bringing out a new breed of wireless access equipment based on a new set of international standards called “WiMAX”. Unlike early “wireless local loop” systems, WiMAX equipment is based on IP technology. It uses advanced signal processing, OFMDA, and enhanced antenna technologies like MIMO.

WiMAX has super powers, compared to the copper and TDM technologies that are the staples of SmallTel’s wired network. WiMAX will allow SmallTel to break the bonds of geography, to “leap tall buildings with a single bound”, without any new cable or DSLAMs. WiMAX is “faster than a speeding bullet”, and faster than a conventional DSL. And, WiMAX is a “powerful locomotive” for new IP services to win back customers in SmallTel’s territory and to win new customers in surrounding areas.

SmallTel plans to roll out WiMAX, along with a rich selection of new IP services, as soon as its spectrum is released to it in early 2009. It will soon mount its first WiMAX antenna on the water tower in the center of town. Then, people will stop on the streets of Smallville, point to the sky, and…

Look! Up in the sky! It’s a bird. It’s a plane. No, it’s WiMAX!

Kermit Ross is the founder and principal consultant for Millennium Marketing.