NEW YORK-In an interesting twist of fate, the country with the best landline telephone system in the world looks like the best market opportunity for fixed wireless services.
By the end of 2004, The Strategis Group projects worldwide service revenues in all wireless broadband access frequencies will total about $16.3 billion, said James Mendelson, its senior analyst, at the recent Shorecliff Communications Inc. “Broadband Wireless Technology Investment Symposium.” Of this, the United States will account for nearly $6 billion. The next largest market opportunity is in Japan, which will total about $1.5 billion. Canada, the smallest of the eight projected leaders, will produce about $750 million.
By the end of 2003, Strategis estimates that 34 percent of all American households and 45 percent of all American businesses will be served by broadband wireless networks.
Today in each major American city, about 15-20 facilities-based wireline and wireless competitive local exchange carriers are challenging the turf of incumbent local exchange carriers, which have dominant market share, said Jim Friedland, senior telecommunications services analyst for Robertson Stephenson, San Francisco.
“The broadband wireless access service providers are undercutting the higher, monopolistic pricing practices of ILECs and exploiting BWA’s ability to provide efficient services in the T-1 to T-3 range. Much of the current business of the major U.S. BWA providers serves larger customers lacking fiber access using point-to-point technology,” said a report released this month by CSP Associates Inc., Cambridge, Mass.
“Over time, however, these customers are likely to be cherry-picked by (wireline) CLECs seeking to load traffic onto the fiber Metropolitan Area Networks … The small and medium-size enterprise market is often the sweet spot for BWA carriers as their locations are less likely to be wired for fiber. In addition, this customer segment has traditionally been unwilling or unable to pay for expensive T-1 service and has been forced to settle for the local data bottleneck of the [public switched telephone network].”
There are no commercial deployments yet of point-to-multipoint wireless, which can be shared across buildings, unlike digital subscriber line, said Suresh Arora, vice president and general manager of broadband wireless access products for Hughes Network Systems, Germantown, Md. However, there have been many trials during the past three years, and high-capacity radios now are coming into service.
“The equipment is ready,” said Arora. “It can reduce capital expenditures through optimization of range and capacity.”
Arora said rain has been proven not to be an interference issue. Point-to-multipoint networks, he said, can deliver 0.999 percent reliability for Internet access and .99999 percent carrier-class voice even in Taipei, Taiwan, during the four-month rainy season.
“It’s the low-tech problems that will get in the way. Roof rights will become more problematic, and back-office provisioning will become an issue as deployment picks up.”
During the next 10 years, Deutsche Bank Alex. Brown projects that CLECs could take as much as 50 percent market share from ILECs, said Bo Fifer, senior wireless analyst for the New York investment bank.
“Stealing market share is a pretty good game to be in, but you can also create new sets of services, as fixed wireless is doing,” he said.
“The two reasons I really like fixed wireless are (for) private networks and (as) application service providers.”
Of private networks, Fifer said fixed wireless, using a few strategically located hubs, can provide inexpensive and ubiquitous high-speed, high-frequency communications for core urban applications.
As application service providers, fixed wireless carriers can provide outsourced and remotely delivered information technology services to corporations.
Farther down the road, wireless broadband access providers also may find business opportunities delivering standard voice, multimedia and voice over Internet Protocol, he said.
Ultimately, Fifer added, these carriers have a variety of potential suitors that might provide a profitable exit strategy.
