2000 likely the beginning of something big for broadband

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As pocket telephone companies cater to the mobile society and make tiny inroads into the monopolized residential sector, a new breed of wireless carriers are emerging to challenge Baby Bells for the highly lucrative high-speed business communications market.

2000 could be their year. If not then, it is still likely the beginning of something big for broadband wireless.

The wireless upstarts are nimble, feisty and spectrum thick (in the 20-40 gigahertz range), and they plan to be everywhere. They are perfect fits for the Internet. In other words, broadband wireless firms are many things the Bells are not.

These firms have names like Winstar Communications Inc., Teligent Inc., Nextlink Communications Inc. and Advanced Radio Telecom. They all claim to have competitive advantages-be it a better technology or more experience or a smarter business plan-over other carriers.

For sure, broadband wireless has some advantages over landline service . It is cheaper, faster and less of a bureaucratic headache to install radio communications facilities on rooftops than to lay fiber.

Local officials and residents are not keen on having their roads dug up. Securing rights-of-way for fiber can be difficult, too.

But most of all, broadband wireless firms can provide high-speed business communications 15 percent to 30 percent cheaper than landline telcos.

Unfortunately for broadband wireless startups, name recognition and market-building access share are not their strong suits. The Baby Bells and GTE Corp. have powerful built-in advantages in a market that numbers 750,000 commercial buildings in the United States.

A typical broadband wireless startup gets its name out and foot in the door by hosting coffees in lobbies of buildings in which they need access or new customers, or both.

Broadband wireless firms use a mix of technologies, but wireless is the technology of choice of each for the last mile. The firms are rolling out fixed wireless systems aggressively even as they perfect their technologies and form business and financial strategic alliances with high-tech juggernauts like Lucent Technologies Inc. and CBS (Winstar), AT&T/Liberty Media Group and Microsoft Corp. (Teligent), Forstmann Little & Co. (Nextlink) and Qwest Communications and Cisco Systems and Qwest Communications (ART).

As a group, Winstar, Teligent, Nextlink and ART only have a fraction of the business communications market today and will not be cash-flow positive in the near future.

But there are positive indicators that day will come. These wireless wonders are growing by leaps and bounds, wowing Wall Street and keeping landline telco executives up late at night.

As such, if history is any indicator, local landline giants may try to swallow up the smaller upstarts.

But for now, at least for small and medium-sized businesses, the broadband wireless revolution is here.

Voice is a given for Winstar, Teligent and Nextlink. They are rolling out a panoply of high-speed voice and data applications in systems across the country.

ART, of Bellevue, Wash., is concentrating on high-speed data at the moment. However, its technology platform will have the capability to provide packet data voice service in the future as the technology advances.

Nathan Kantor, president and chief operating officer of New York-based Winstar, said it is only the beginning for broadband wireless. The model for business communications is about to change dramatically, he predicts.

“We may not even offer services and charge people by the minute like we’re all used to. We may charge by application. Change the whole world,” said Kantor, a former MCI Communications Corp. official.

It turns out some of the best business minds from MCI (now MCI WorldCom Inc.), AT&T Corp. and other high-tech firms are now steering broadband wireless firms into the big time.

Nextlink is in the good hands of cellular pioneer-turned-wireless-investor extraordinaire, Craig McCaw.

While Baby Bells are in court and on Capitol Hill trying to finesse their way into new markets and protect the local bottleneck monopoly at the same time, broadband wireless firms are building out at break-neck speed.

Teligent, headquartered in Vienna, Va., and led by former AT&T president Alex Mandl, has built out 40 markets in 14 months. As such, Teligent’s biggest challenge has been keeping up with itself.

“One of the challenges we have has been growth,” said Hamid Akhavan, chief technology officer for Teligent. Human resources are in short supply, he noted. “We’re always playing catch-up.”

But it is more than just growing pains that confront Teligent, Winstar, Nextlink and ART. Each needs a foot in the door-literally-before it can compete with the Baby Bells and GTE for business.

Building access is not a given. It takes weeks-sometimes months-of negotiations with building landlords. And sometimes that isn’t good enough, which is why legislation is pending in Congress that would mandate equal access to buildings.

“You just can’t go in and start punching a hole in the roof,” said Doug Carter, chief technology officer for Nextlink. “Building access is going to be a tough block and tackle issue in wireless.”

Winstar’s Kantor agrees, but plays down the challenge. “I don’t call it an obstacle. It’s the only thing that slows us up.”

Bob McCambridge, president and chief operating officer of ART, agrees that competitive pricing, having a strong spectrum position and offering coverage in major markets provide a solid foundation for success. But he insists there is more to it.

“The companies that provide most shareholder value will be those that execute well,” said McCambridge.

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