THE NEXT SMALL THING IN WIRELESS

NextWeb, a wireless ISP with a network that covers a large portion of California, is among several service providers that are members of the WiMAX Forum, the industry consortium pursuing interoperability certification for WiMAX products. Maybe you haven't heard much about NextWeb, but you most certainly would recognize the names of other service provider members — companies such as AT&T and BT, legendary international giants of the telecom industry that also have influential representation of the WiMAX Forum's advisory board.

The rest of the forum and the industry may be looking to those carriers for inspiration and guidance about the evolution of the 802.16 standard, as well as when, how and where WiMAX equipment will be deployed in large volumes. NextWeb, meanwhile, represents a group of service providers that occupy less of a power position but likely will be among the first segments of the industry to actually deploy WiMAX equipment.

At the end of 2004, there were 8400 wireless ISPs (WISPs) in the U.S., according to the Part15.org trade group. They are beginning to transcend the initial novelty of their service to get a seat at the table with the rest of the broadband telecom industry.

“We didn't join the WiMAX Forum because we wanted to influence the standard in some way,” said Graham Barnes, president and CEO of NextWeb, which is based in Fremont, Calif., and joined the forum about four months ago. “We think the forum did a very good job working with the standard. We joined because we just want to have a better relationship with the vendors and the other service providers that are working with the technology.”

For the once-unknown WISPs of the world, being considered part of the in-crowd has never been much of a concern — but through a mix of their own moxie, positive recognition from regulators and the grand schemes of well-funded cousins such as Craig McCaw's Clearwire, they have landed right smack in the middle of it. The WISP industry, in fact, is in a state of growth and innovation with an intensity that rivals that of any other segment of the telecom industry.

Just a few years ago, NextWeb was a blip on the radar screen of its competitors — the telcos, cable TV companies and larger ISPs. Barnes — who has 25 years experience in the industry, including stints at Western Multiplex (which since has been acquired by Proxim) and Harris — ran an operation chasing accounts at small and medium-sized businesses in the San Francisco Bay Area, using unlicensed wireless spectrum then deemed by other telecom players to be unreliable and nearly useless, partially because every manner of gadget from baby monitors to garage door openers used portions of unlicensed frequencies. But by selling customers on the utility and cost of broadband wireless, and planning network coverage as precisely as possible to avoid interference, NextWeb succeeded and set its sights on greater opportunity.

In March 2003, the company joined with fellow California WISPs Skypipeline and Sky River Communications in a state-spanning interconnection agreement called the SkyWeb Alliance, which allowed all three companies to extend greater coverage and usage efficiencies to their own customers.

Barnes also directed NextWeb on a parallel acquisition spree, during which the company acquired three other small WISPs that brought NextWeb exposure to new markets throughout California. That buying spree climaxed in February 2004, when NextWeb merged with SkyWeb partner Skypipeline to create one entity with strong network coverage in both northern and southern California. The deal brought Skypipeline founder Eric Warren into the NextWeb fold as director of marketing. He now holds down the fort for the southern portion of NextWeb's Golden State empire from an office in Los Angeles.

“We've spent a lot of time pursuing a growth strategy through M&A, but we're also starting to grow more organically,” Warren said.

To that end, NextWeb has begun to expand into markets outside California, preparing to launch service in Las Vegas as of this writing. Barnes said the company doesn't plan to follow Clearwire by having any national network aspirations.

“Strategically, we'll prefer to focus on the western region of the U.S., but we're open to opportunities in other markets, and even specific markets in the eastern U.S.,” Barnes said.

The company hasn't ruled out further acquisition, but help from regulators, such as the FCC's move last year to set aside spectrum at 5 GHz for unlicensed usage, is making it easier for companies like NextWeb to plan new, organic network growth. Finding unused spectrum is an increasingly difficult challenge for wireless ISPs as new WISPs continue to launch, including extremely small ventures that may cover only portions of communities or even neighborhoods. However, NextWeb is one member of the innovative Bay Area Network Consortium, a group of local WISPs that have agreed to cooperate by sharing information about where their networks lie and what frequencies they are using so that interference can be kept at a minimum. BANC members are now trying to promote that concept to network users of unlicensed spectrum countrywide.

“That's one of the things we think we can bring to other service provider members of the WiMAX Forum,” Barnes said. “If they decide to use unlicensed spectrum, they can benefit from our BANC experience. We can be a resource because we know what works and what doesn't.”

Even if other service providers refuse to recognize WISPs as a voice of experience, they still will increasingly be forced to deal with them on a competitive level. Among its other organic growth moves, NextWeb also is launching voice-over-IP (VoIP) service, among the first WISPs in the country to do so — at roughly the same time as TowerStream, one of the largest WISPs in the eastern half of the U.S.

Barnes hopes to extend this aggressiveness to the company's strategy for WiMAX. He said that talking with WiMAX chipset and equipment vendors during the technology's pre-commercial stage will help his company chart its own deployment course. But Next-Web already has a little more strategic planning time on its hands than it might have initially thought. A delay in the WiMAX Forum's testing process is pushing the product certification schedule out until late summer, and it could still be several months more beyond that before there is a wide assortment of commercially available WiMAX gear. Industry analysts tend to believe commercial deployment will begin in earnest sometime in 2006, something that companies affiliated with the WiMAX Forum, for the most part, do not dispute. However, Next-Web doesn't plan to wait that long to put its own WiMAX strategy into action.

“We want WiMAX to work, and we're willing to wait a few months for them to do this testing, but we're not planning to slow our own activities down to wait for certified products if there's a further delay,” Barnes said. “We'd like to be at the forefront of carriers adopting WiMAX.”

Barnes said NextWeb might put together a request-for-proposals for WiMAX equipment as early as this summer, or it may team with other regional WISPs to assemble an RFP that has the weight of high-volume purchase plans the larger carriers would issue.

“There's nothing formal yet, but this is something we've discussed,” NextWeb's Warren said. “An RFP could signal ahead of time to vendors what we're really looking for with WiMAX.”

Carlton O'Neal, vice president of marketing at broadband wireless vendor Alvarion, a current NextWeb supplier, said he wouldn't be surprised to see NextWeb and other WISPs began to issue RFPs and generally heighten their demand for WiMAX equipment.

“WiMAX will be an important product generation upgrade over what's currently on the market,” he said. “NextWeb is in the front group of companies that probably will be deploying this equipment first.”

Jeff Orr, senior product market manager at Proxim, said his company actually has been receiving requests for information and RFPs from many carriers for about a year.

“Some are just gathering information, and some are more serious,” he said.

Orr said WISPs, for the most part, may not issue RFPs if the size and dimension of their organizations doesn't dictate. However, NextWeb is different.

“Historically, Graham has issued RFPs,” Orr said. “He's been on both sides of the fence as a manufacturer and service provider, so he knows what's needed.”

However, it's less clear to O'Neal what the early adopters of WiMAX will specify in their RFPs. Service providers looking for early adoption of WiMAX equipment likely would be looking for gear to deploy in the licensed 2.5 GHz or unlicensed 5 GHz spectrum. However, because the 5 GHz swath became available so recently, there is no 5 GHz equipment available from vendors today, and there probably won't be until the end of the year.

“My guess is that there will be some service providers deploying WiMAX-certified equipment, but some won't wait,” Barnes said.

When the WiMAX pieces fall into place, Warren said deploying it will not be difficult for NextWeb.

“Putting WiMAX on the end point will not be that big of a deal. It will be like replacing a Wi-Fi access point with a WiMAX access point,” he said.

Ultimately, Barnes believes that new services and technologies such as WiMAX give NextWeb a competitive strength that also will help it protect its own customer base from larger competitors. Just as wireless has allowed companies like NextWeb to invade the turf of telecom giants, WiMAX may give those larger firms another competitive weapon to better battle the WISPs.

“WiMAX will give larger carriers a way to enter our markets, but that happens as a market matures and grows,” he said. “We have to stay to our core argument that it's more bandwidth for less money, plus the benefit of flexibility and timing of service provisioning.”

WiMAX may be suffering some backlash lately, as the delay in the WiMAX Forum's certification testing process compounds with growing criticism from analysts and other factions of the industry that WiMAX will not shake up the broadband market as promised. For example, Greg Raleigh, founder and CEO of multiple-input/multiple-output (MIMO) chip developer Airgo Networks, has been vocal in his disdain for WiMAX, saying it “won't register competitively with DSL, cable cellular and Wi-Fi providing all these broadband choices.” However, Barnes said this is only typical of the often extreme reactions to new technologies.

“With a lot of technologies, you get overreactions on both sides,” he said. “WiMAX had a lot of hype and then backlash, but if you steer a course between the two, you'll probably be about right.”

Last July, then-FCC Chairman Michael Powell came out to San Francisco to visit with NextWeb and other members of the BANC consortium. He lauded the BANC concept as a model for managing the usage of unlicensed spectrum and congratulated WISPs on showing the rest of the industry to what extent a valuable broadband service could be created in this spectrum. Regardless of when and how extensively WiMAX is deployed, that kind of validation gives companies like NextWeb all the reason they need to compete fiercely and continue to lend their voice to a growing broadband market.