It may seem unbelievable now, but there was a time, not too long ago, when having spectrum that cost millions of dollars was looked upon as a good thing when offering wireless broadband service.
The promise of interference-free transmissions and the freedom of owning a personal chunk of precious spectrum prompted Advanced Radio Telecom Corp., Winstar Communications Inc., Teligent Inc., WorldCom Inc. and Sprint Corp., among others, to unload billions in cash to purchase local multipoint distribution service and multichannel multipoint distribution service spectrum in Federal Communications Commission auctions. But now, it seems, they are paying the ultimate price.
ART filed for bankruptcy March 30, Winstar did the same April 18, and Teligent is under immediate threat to get its act together before it runs out of money in June. WorldCom and Sprint still have the wherewithal to operate an MMDS network, but their service rollouts are lagging far behind expectations.
“Everything in life comes down to the business model,” said Stephanie Day, vice president of corporate communications and investor relations at Adaptive Broadband Corp.
“The issue is the same across the board, which is getting financing. Emerging carriers need money … The advantages of the UNII band is you don’t have to put up money for the spectrum,” Day said.
Bounding to the front of the wireless broadband carrier line is a group of companies that have discovered and conquered the UNII and ISM bands, or unlicensed frequencies. This spectrum in the 900 MHz, 2.4 GHz and 5.8 GHz frequency bands is free for anyone to use, eliminating a huge financial burden for those wishing to use it, but inviting some tricky problems when it comes to interference. These problems, however, are seemingly few and far between.
“We had as many as five operators in the same area working together with no problems,” Day said.
Engineers have overcome the technical issues, and now the struggles of the industry’s major carriers have opened the doors for unlicensed carriers to acquire customers.
According to a report from The Strategis Group titled “U.S Fixed Wireless: Unlicensed Spectrum,” unlicensed broadband wireless revenues are expected to total around $777 million by 2005, with five-year revenues totaling more than $2.2 billion. The market is set for a compound annual growth rate of 50.5 percent.
The report identifies at least 250 active unlicensed broadband wireless operators, with approximately 500 to 1,000 more providing services on a one-off or trial basis.
“Many of these guys are small. They are nowhere near household names. That said, we’re seeing strong month-over-month growth and the emergence of a new set of unlicensed ISPs who all have aggressive national deployment plans for the next 18 months,” said Peter Jarich, director of North American broadband research for The Strategis Group.
The wide availability of equipment for unlicensed systems also has contributed to its growing popularity. Today, license-free equipment is more broadly deployed than MMDS and LMDS combined. Unlike LMDS or MMDS networks, unlicensed systems have been designed to be virtually plug-and-play, with much of the equipment derived from wireless local area network applications, the report said.
These plug-and-play systems are becoming quick and easy alternatives to wireline broadband systems, many of which are now defunct since several digital subscriber line and cable modem carriers also went out of business in recent months.
Tita Thompson, spokeswoman for Teligent, said a lot of disconnects with now-bankrupt DSL provider NorthPoint Communications were in Teligent buildings, so there is hope that these customers will switch to a wireless solution, whether it’s licensed or unlicensed.
Looking ahead, the growth of unlicensed services will continue, but The Strategis Group notes the mass interest in this free spectrum will inevitably overcrowd the market and begin to cause real problems with signal interference. If there are too many players, there won’t be enough business to go around. Also, although many DSL, cable and licensed service providers are struggling, those companies that survive are going to continue to compete for potential subscribers.
