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Monday, September 12, 2005

WiMax Provides Cheap Broadband



As businesses outgrow DSL lines, they often find that T1 lines are too expensive. WiMAX provides a low-cost option.

The term "tween" is often used to describe youngsters of a certain age, but as wireless broadband operators have learned, it also refers to a certain type of business that needs a new type of access. (continued...)

"There's a huge collection of companies that are falling halfway between DSL, which is not really enough for them, and a T1," said Caroline Gabriel, research director at Rethink Research. "It's a stretch for them to lease a T1, which is overkill. Broadband wireless fits right in the middle."

WiMAX wireless broadband has been available in pre-standard form for more than a year and standardized WiMAX could start being available before the end of the year. In addition, other wireless broadband technologies, such as Flarion Technologies' FLASH-OFDM, also are available in some areas.

Besides being a good fit for many small and medium-sized organizations, it turns out this emerging technology looks to have one other big benefit: It will bring fast access to many businesses, particularly in smaller markets, that don't have a lot of connectivity options. That means WiMAX and other types of wireless broadband, could become a true small town hero.

Much-Needed Competition
In Owensboro, Kentucky, for example, the local car dealer was nearly forced to relocate because broadband prices were too high, said Carlton O'Neal, vice president of marketing for Alvarion, a supplier of pre-WiMAX wireless broadband equipment.

Some car manufacturers have stopped sending repair manuals to dealers, instead requiring the dealers to download the manuals online. In small towns like Owensboro, where there is no competition for broadband services, the local telco often charges as much as $1,000 a month for a T1 line. But that monthly fee, especially since the dealership required more than one T1, was just too much.

Rather than loose the car dealership, the municipal cooperative electric company in Owensboro decided to build a broadband wireless network that could serve the dealership as well as anyone else in town interested in a more reasonably-priced broadband connections.

"There was no alternative," said O'Neal. Within six months, the co-op had signed up 700 customers. The business customers are paying a fraction of what it would cost for a T1 line.

In other markets, even in larger cities, broadband wireless is also proving ideal for meeting the needs of small and medium sized businesses. AirBand is a broadband wireless operator serving tier one and tier two markets. When the operator launched in 2000, airBand's key advantage against the wireline competitors was price. While the cost of a T1 has dropped dramatically since then, airBand still says that it has an edge that is attractive to businesses of any size.

One benefit airBand can offer that is particularly valuable often to small or medium sized businesses is the ability to quickly increase bandwidth for customers. "We offer other benefits like scalability," Lisa Kolczun, vice president of marketing for airBand.

In addition, many broadband wireless operators say they offer valuable customer attention.

"The large telcos were established to go after residential and large enterprises, so the small to medium businesses were left out in the cold," said Kolczun.

Often, small businesses must dial into a general customer support line when they have problems or to buy new services. While that may work for commodity types of services, it's often less satisfying for more complicated offerings such as voice over IP or an integrated electronic fax solution, Kolczun said.

"These are businesses that may not have an IT or telecom expert on site," she noted. "They need more touch then the big guys can provide." Often, the smaller competitive broadband wireless operators are willing to offer that service.

Customer service, scalability and price aren't the only factors attracting businesses to broadband wireless. While most broadband wireless operators offer fixed services, some are beginning to add a capability unique to wireless: portability. Neoreach Wireless, for instance, is expanding its network in Tempe, Arizona to offer portable services.

"If you're a small business and you're paying $300 to $400 for a T1-like product, you can get that from a variety of sources in Tempe," said Bruce Sanguinetti, president and CEO of Neoreach Wireless. "But consider that same product, maybe the same price, then add onto that five or ten roaming accounts that let you go call on customers."

This isn't true mobility as will be the case with WiMAX when the 802.16e standard is adopted in the next year or so. Still, such services might be attractive to a whole slew of businesses, such as real estate and insurance agents who could carry laptops or PDAs to access documents or email while out of the office. He believes the portability feature, which the telcos don't have, will draw customers to Neoreach. Neoreach currently serves 30,000 customers with a fixed offering in 25 to 30 municipal areas. It has only recently begun offering the portable service and the number of portable users isn't available.

Neoreach's strategy is to build networks in cooperation with municipalities, like it is doing in Tempe. Its plan is to reach agreements with municipalities where the municipality allows access to assets such as light poles and city buildings so that Neoreach can build the network. In exchange, Neoreach acts as a wholesale operator, selling access to ISPs that provide service to end users.

Neoreach's future strategy may be particularly good news for businesses that are located in outlying suburban areas with little or no options for broadband services. Once Neoreach builds the municipal networks, it plans to add WiMAX capabilities to the access points at the perimeter of town. The WiMAX antennas would point outward, covering areas outside of the city center. The network will extend coverage into outlying areas and also allow residents or businesses in those areas to roam onto the city center network when they visit downtown.

While the business of targeting small to medium sized businesses may look rosy now, the future may not necessarily be so bright.

"Small to medium businesses a few years ago didn't buy that much but now small businesses have quite sophisticated broadband needs so they offer more revenue opportunities," said Gabriel. That means the bigger telcos are beginning to take notice and they may also employ wireless technologies as a low cost way to reach new regions and customers. "It's partly to get into regions they don't cover but also a different service so they can provide something a bit lower level and a bit cheaper." BellSouth and AT&T have both publicly announced broadband wireless trials.

AirBand's Kolczun doesn't expect the telcos to start rolling out broadband wireless networks any time soon. They've all been testing broadband wireless for years.

"Some may deploy it, some may not. It may be one of those things where they'll just take a company over to get the expertise," she said.

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