Fixed Wireless Broadband Competition In Your Backyard—continued

Sprint has been leasing spectrum from the Instructional Television Fixed Service (ITFS) and MMDS license holders since the '80s. As a result, it remains untouched by spectrum caps other wireless communication companies are working around. Sprint's current spectrum portfolio consists of 1,100 channels in 90 U.S. markets.

More than 40 percent of the ITFS/MMDS band allocations in Sprint's respective service areas have been converted from a video-only platform to a broadband data model. It simply would not be wise for Sprint to charge full steam ahead with nationwide broadband deployment until it knows for certain that the FCC will keep its hands off Sprints spectrum band.

Sprint currently offers two types of fixed wireless broadband access in select markets. Its residential product has a burst rate up to 5 Mbps, while downstream speeds average 1 or 2 Mbps and upstream averages 256 Kbps for about $40 a month. Its business offering is $90 a month. This plan offers the same transport speeds, but includes support for five IP addresses.

One-time equipment charges vary with the term of service. Customers who sign a two-year agreement receive equipment for $99, while a one-year agreement means that CPE costs run $199. Month-to-month customers pay $299 for the same gear. In addition to equipment fees, there is a $299 professional installation charge in most markets.

Friend or foe?
On the surface, it appears the former merger mates, WorldCom and Sprint, are going head-to-head with their product offerings. Of course, that's not the case. The two communications firms' service areas would still compliment each other, should they attempt to put another merger plan together anytime soon.

The second barrier that Sprint must overcome to deploy fixed wireless broadband access on a massive scale is the same issue that has WorldCom hesitating—CPE costs must be reduced and truck rolls need to be eliminated—while LOS barriers are obliterated. If and when this happens, the two companies' marketing plans diverge—keeping the dynamic duo from going head-to-head with similar services.

WorldCom's Brooks pointed out that it is going after different geographical and demographical markets than Sprint.

"We're looking to deploy fixed wireless broadband services to SMBs in second and third tier markets as part of a total broadband offering," Brooks said. "We won't go for the consumer service segment until CPE is below $400. Our ideal clients are branch offices for Fortune 500 firms that can justify spending $200 per truck roll for installation and setup."

Cameron Rejali, Sprint vice president of wireless products and operations, said Sprints fixed wireless offering is designed to take on DSL and cable services for residential and business users alike.

"Second phone line users, those consumers that pay $30 a month on top of their DSL access fees, have been quick to figure out that Sprint Broadband Direct provides a better offering for about $40 a month," Rejali said. "Only we can provide better coverage than DSL or cable, and burstable speeds that blow coax or DSL away."

ROI, CPE, LOS
So the only thing really stopping massive deployment of fixed wireless broadband access to residential users is startup costs—very costly expenses to Sprint and WorldCom in terms of return on investment. But Sprint won't talk about ROI. Instead, it determines which markets it will enter based on customer lifetime—how long a single user must stick with Sprint's service in order to justify expenditures to acquire the customer in the first place.

"Truck rolls and line-of-sight hinder scalability. In terms of customer lifetime, it takes about three years to justify customer expenses today," Rejali said. "All this changes when we drive CPE costs down from $500 to $200 and eliminate truck rolls with self-installation methods. Then, we're talking about a one year customer lifetime to justify expenses."

And we will talk more about removing line of sight barriers in our final installment from the WCA International Convention in Boston as BreezeCOM and WaveRider blaze the trail.

—End

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Related articles:
	[June 28, 2001]	WCA International Visionaries Roundtable: The State of Broadband Wireless Access
	[June 27, 2001]	Boston's Wireless Internet Party
	[June 26, 2001]	WCA International—Broadband Now!