Business

Build, Buy or Borrow

You don't have to build a WiPOP to build your WISP business. When you first start exploring your wireless opportunities, consider buying or borrowing, too.

by Gerry Blackwell [June 21, 2001]

As most ISPs know already, there's a strong argument to be made for using fixed wireless to offer customers affordable broadband access. It means you don't have to sell your soul to the ILEC or bang your head against the closed door of the de facto cable monopoly.

But once you decide to go the wireless route, your next major decision concerns how to go wire-free. Do you build it yourself from scratch? Buy it? Or maybe partner to get it? Most ISPs have opted to build their WISP portfolio themselves, because it appeared to be the only viable option available. These fixed wireless pioneers learned WiFi access by doing it—from the ground, upward.

Few, if any, system integrators are capable of providing a turnkey wireless solution for ISPs—although we heard last week from one small outfit in North Carolina, GetOnTheAir, that offers turnkey services. But this type of 802.11b service set remains a rareity at ths time.

Secret hand shake
Partnering remains an attractive option, but while a few wireless network operators have said they were interested in partnering with ISPs, not many have come to the fore—or stood up to hard scrutiny.

There is an interesting opportunity, or potential opportunity, on the horizon, though—partnering with Tier-2 or Tier-3 PCS service providers who decide to become high-speed data specialists using M/ERGY from Com Dev International.

M/ERGY is a beyond-3G wireless data technology that will work initially in the licensed 1.9 GHz PCS band but can be made to work in any spectrum from 450 MHz to 6 GHz. Com Dev is developing an end-to-end system, including central office gear, network management and back office software, base stations and antennas and end user equipment.

M/ERGY uses Qualcomm's HDR technology which is the basis for the beyond-3G CDMA2000 and 1xEVDO standards from the International Telecommunication Union (ITU). CDMA2000 is part of the evolutionary path for service providers using CDMA (Code Division Multiple Access), one of three main PCS standards.

1xEVDO (first EVolution, Data Only) is in effect the successor to the ITU's 3xRTT, which is in turn a successor to today's 2.5G 1xRTT CDMA systems, which are just beginning to be deployed.

But unlike other 2.5 and 3G systems which are primarily engineered for mobile voice and data applications involving small screens and wireless application protocol (WAP) or similar technology, M/ERGY, Com Dev says, is designed to provide full-screen, full-access Internet functionality.

In the 1.9 GHz implementation Com Dev is currently field testing in Paso Robles near San Luis Obispo in California, M/ERGY reaches access speeds of 2.45 Mbps in stationery mode and between 500 Kbps and 1.9 Mbps in a speeding automobile. It's doing this over distances of two to five kilometers from the base station.

The technology will be user-installable, does not require line of sight and offers inbuilding penetration comparable with fixed wireless spectrum. The initial end user equipment delivered by Com Dev will be a PCMCIA card for laptops and a PDA-size USB modem for desktop systems.

But the company does not really want to be in the terminal equipment business. It's hoping other manufacturers will flood the market with 1xEVDO modems. Compaq has already announced a 1xEVDO product that fits in a slot in the screens of its laptops.

Roam if you want to
Once installed, an M/ERGY user could wander around his house with a laptop and get 2 Mbps-plus throughput everywhere. It would also work at the office if the office was in the coverage area and anywhere in between, including in a vehicle in motion.

Com Dev is really pushing the nomadic capability rather than positioning M/ERGY as a mobile Internet solution. And in the first generation, it can't do voice reliably anyway.

The company demonstrated the technology at the Cellular Telecommunications & Internet Association's Wireless 2001 show in Las Vegas in March. The first products will begin shipping in 1Q 2002, the company says. This is well before 3G systems are expected to appear.

Spectrum mates
Com Dev, a Canadian-based company that reported revenues last year of about $135 million (U.S.), made its name providing satellite-based communications for the space industry.

It has already spent a reported $30 million developing M/ERGY, a figure the company does not dispute. But it expects sales to reach into the hundreds of millions of dollars within a couple of years.

Com Dev will initially focus its marketing on PCS companies that were fifth, sixth or even seventh in their markets to be licensed. Many of these companies are either failing at competing with established national and regional service providers for voice and narrowband data business or have not deployed a network at all.

"Prices for PCS services have been cut so close to the bone that there is no room for these local providers to undercut the national players," explains Ron Holdway, Com Dev's vice president of corporate communications and government relations. "So in some cases the spectrum is just sitting out there unused."

While M/ERGY can be used for other data applications, it was engineered first and foremost to provide Internet access and will be marketed that way. Therein lies a problem.

"The companies that really know the Internet service provision business are not the ones that have the spectrum," Holdway points out. "And the ones that do have the spectrum don't know much about providing Internet services."

But therein lies an opportunity. Local ISPs could pair off with Tier-2 and -3 PCS providers to offer wireless Internet access services using M/ERGY, Com Dev says. They could compete easily with fixed wireless, cable and DSL providers.

"Every week ISPs are losing subscribers to either DSL or cable," notes Com Dev chief operating officer John Keating. "But if you put those ISPs together with people who have the [PCS] spectrum, I think you've got a winning business case for everybody."

Maybe. But first Com Dev has to actually deliver the products. Then it has to convince PCS licensees this is a good idea. Then the PCS providers have to realize it would make sense to partner with an ISP.

Know any struggling PCS providers in your region? Maybe you should mention M/ERGY to them.

—End