COOL LINKS

Some Canadian carriers find the wireless-broadband climate brisk and invigorating, although for others it's downright chilly.

The Canadian government thinks big when it comes to broadband services. Last fall, then Industry Minister John Manley announced a goal of providing high-speed broadband access to all Canadian communities by 2004.

Manley said a National Broadband Task Force would help determine how this would be done, and, in January, he named its members including representatives of telecommunications companies and some major infrastructure vendors. The plan, however, has no announced funding attached to it now, though the costs are certain to be hefty.

"There has always been a push to get broadband into the consumer's hands," said Laurent Brigdan, Harris Western Canada territorial manager. "A lot of communities are off the main fiber routes, and they're trying to keep people in these communities. Bringing broadband and Internet access will help."

Broadband connectivity will be technology-neutral, according to the plan, and Peter Barnes, Canadian Wireless Telecommunications Association (CWTA) president & CEO, said he has confirmed that wireless will be a big part of the picture.

However some are skeptical that this ambitious plan ever will be realized.

"A slew of ministers are convinced by the `wow-wow' of broadband possibilities, but someone will have to pay for them outside the municipalities," said Eamon Hoey, a Canadian telecommunications consultant. The ministers are thinking "they can wave their wands and private enterprise will come rushing to invest in projects that don't make sense."

One province, at least, has moved ahead on its own, according to Brigdan. In November, Alberta awarded a $3 million (all dollar amounts in this article are Canadian) project to a consortium of companies led by Bell Intrigna, Bell Nexxia and Axia NetMedia aimed at getting broadband to its rural communities. The project will link 420 Alberta communities with populations of 400 or less, connecting learning institutions, hospitals and libraries.

"It's mainly a fiber build," Brigdan said, but he is going in with a proposal to use towers to complement the fiber and avoid tearing up the streets.

"I'm trying to get their heads wrapped around the 3.5GHz frequency," he said.

The move toward wireless broadband got a strong start in Canada, especially in regards to LMDS (known as LMCS in Canada). In 1997 the government awarded licenses covering the country at 28GHz to three licensees in a beauty-contest-type of process. The three became one in 1999 when MaxLink purchased the licenses from the other two holders, thus owning the rights to serve 207 Canadian markets. Although it had launched services in several cities, this past December MaxLink filed for bankruptcy.

In the wake of the filing is speculation about the fate of the MaxLink licenses: Can the government reclaim the licenses, which constitute a major asset for MaxLink, or do they remain with the company?

Andy Fuertes, Allied Business Intelligence senior analyst, said there have been problems with LMDS in building a profitable business case. Companies aggressively sought spectrum, a nationwide footprint and building rights, and subsequently acquired a high level of debt.

"Meanwhile actual implementations were relatively small," he said.

Fuertes said LMDS was positioned as a high-level business service, and he believes there's still a market for it.

"What I think will happen is that a lot of these larger LMDS providers will have to reassess their business plans and maybe be more conservative in terms of their footprints," he said.

Canada's First Auction

Canada's first-ever spectrum auction involved the awarding of broadband wireless licenses at 24GHz and 38GHz.

CWTA's Barnes said it was a successful effort, with the government generating $171 million in license fees.

The government's approach is to look at auction proceeds as income rather than putting the funds into the budget, "contrary to other countries," Barnes noted.

Awarding licenses by the auction process vs. the beauty-contest process is a subject of debate in Canada.

"There was a large concern that the auction would allow those with the deepest pockets to control the marketplace," Barnes said. "The outcome debunked that consideration, because the players were a mix of new companies and one or two established companies. Not an `old boys club' being repeated."

However consultant Hoey believes the auction system is "just another bad system" because of the financial burden it ultimately places on the providers, chasing the investors away.

Remi Chayer, Harris manager of technical marketing and member of the Radio Advisory Board of Canada, suggested a combination of beauty contest and auction might be best, where companies first can be selected to bid and then participate in an auction.

Enter Stream & Wispra

Two newcomers resulting from that first auction were Stream Intelligent Networks and Wispra.

Stream was formed in 1999 and is using a mix of fiber and wireless to serve its customer, which include large enterprises, ASPs, Web-hosting firms, Internet data centers, co-location sites and storage solution providers.

"We don't offer wireless as a service; it is an enabling technology," said Steve Spooner, Stream CEO.

The fact that 90% of the buildings in North America are not served by fiber is widely known, but Spooner has heard a statistic he finds even more interesting.

"Seventy-six percent of buildings in North America are within one mile of fiber," Spooner said. "That's just best for a wireless solution. You obviously need fiber at one end of your wireless connects for highly reliable service. We've got customers that are using fiber for primary circuits, and we've got customers that are using it for diversity."

Spooner noted that other carriers are waiting to launch when point-to-multipoint technology becomes more robust. Stream, which operates at 38GHz, has launched with a point-to-point solution because it, too, hasn't found what it needs in point-to-multipoint technology yet.

"Our offerings are carrier class," Spooner said. "We can't afford to put a bleeding-edge technology into our networks."

Stream began by securing a fiber infrastructure in downtown Toronto. Although it has licenses in every service region in the country, its focus now is to prove the business model in the Toronto area, Spooner said.

"The financial markets are pretty tough right now," he said. "We're going to focus on leveraging the critical mass when the markets are friendlier."

Wispra, C1 Merge

A similar fiber/wireless strategy is in the cards for the new company, XO Communications Canada, formed from the merger of Wispra and C1 Communications. Speaking in January, several weeks before the deal was to be final, Tony Cassetta, who was moving from C1 president & COO to CEO of the new company, discussed the fit between the two.

"C1 started with the goal of becoming a dominant CLEC in the Canadian market space," Cassetta said.

The focus was on building data-access services using DSL as the technology. Then C1 "bumped into" Wispra and Nextlink (now XO Communications), which held an interest in Wispra. Wispra had wireless licenses at 24GHz and was looking for a management team and company, according to Cassetta.

"You had each company very focused on data, very interested in local services and with a high degree of interest in fiber," he said.

At the time C1 had 300 people, so XO and Wispra got a turnkey operation, and C1 got some "terrific assets and a fantastic partner," Cassetta said.

Following the completion of the merger, plans call for launching service in Canada's six NHL cities: Calgary, Edmonton, Montreal, Ottawa, Toronto and Vancouver. March 1 is the launch date for Toronto and Vancouver, Cassetta said.

Not surprisingly, XO Communications Canada will reflect its counterpart in the United States. This includes XOptions, a flat-rate price on one bill for all the services a company purchases including local and long-distance calling and Internet access.

Cassetta also echoes the strategy of his counterpart at the U.S. XO headquarters, CEO Dan Akerson, who speaks of "taking on the likes of an AT&T."

Cassetta put it this way: "We have in Canada some financially strong companies, the ILECs, and they will be challenged by a company like ours with the strong financial resources to go after their business."

Cassetta admits that the last three or four months have been challenging for telecom companies as far as the financial markets are concerned, and he looks for further consolidations in the industry.

"The financial markets were a little bit of a relief and some anxiety," he said. On one hand you don't know what the final positions are going to be and may have to change plans accordingly, Cassetta said.

"There's also relief in the sense that if you can come out of this, what doesn't kill you will make you better," he said.

Inukshuk

One company clearly feeling the strain of the financial markets is Look Communications, which offers high-speed wireless and DSL services to small and medium-size businesses.

Unable to secure needed financing, Look announced in December that it was restructuring its operations and eliminating more than a third of its jobs. This was followed by a January announcement that it was selling its 50% share in Inukshuk Internet to a subsidiary of Microcell Telecommunications for $150 million. That makes Microcell, a provider of PCS services throughout Canada, the sole owner of Inukshuk, a company with plans to serve the residential market with high-speed data.

In March 2000, Industry Canada awarded 13 licenses at 2.5GHz covering all of Canada. Inukshuk was granted 12 with the potential of serving 29 million Canadians in all provinces, except Saskat-chewan and Manitoba, with multipoint communications services (MCS, similar to MMDS in the United States).

Alain Rheaume, Microcell executive vice president & CFO, said those plans have not changed.

"After completing the acquisition and getting full control, we plan to complete our choice of technology and choice of partners, and deploy the first 50% of the network quite rapidly," he said. This should be completed by the end of this year or shortly into 2002.

"We will be able to leverage our PCS network and infrastructure," he said, in order to get into the markets rapidly.

Initially the company plans to provide residential and SOHO high-speed Internet services over IP networks.

As the technology evolves, other products that are IP driven will be added - local and long distance and eventually video products. Ultimately the network will be extended to cover about 70% of its POPs, he said.

Rheaume noted that there have been tests with several vendors, but it's too early to comment on the results.

"We have seen some very promising technology for customer-premises equipment and also non-line-of-sight technologies," he noted.

Rheaume also said Microcell "will not exclude the possibility of our welcoming one or several partners into the business."

Inukshuk will retain its two regional partners. Nuanet, a 100% Inuit-owned company offers Internet, telecommunications, networking and general computer services in Iqaluit, Nunavut, and Image Wireless Communications offers wireless digital television and data services in Saskatchewan.

Inukshuk's name comes from the stone markers used in Canada's northern reaches. Built to resemble the human form, the markers show the way through an often-forbidding environment. Not a bad name for a fledgling wireless venture.

Fixed-Wireless Presence

Canadian carriers in the fixed-wireless realm now have a voice at the Canadian Wireless Telecommunications Association (CWTA), a group dominated by mobile wireless carriers.

The CWTA's Fixed-Wireless Council had its first meeting in October. Headed by Steve Spooner, Stream Intelligent Networks CEO, the group's first effort was a letter to the Canadian prime minister offering to provide input on how fixed wireless can be part of the national broadband strategy.

Another mandate of the council is to provide positive awareness of fixed wireless.

"When people think of fixed wireless, they think of mobile wireless and their call dropping," Spooner said. "Fixed-wireless networks are engineered for higher reliability."

Others on the council are Joe Church, Wispra president; Larry Hudson, AT&T Canada president, operations; Paul Lamontagne, Inukshuk senior advisor to the president; and Bryan Boyd, TeraGo (formerly Dolphon Wireless) president & CEO.