Market Advantages Go To Small WISP Operators

Even though Wall Street and bankers are devoid of financing dollars for firms deploying fixed wireless delivery systems, WaveRider and BreezeCOM executives make a strong financial case for small independent WISPs.

by Patricia Fusco ISP-Planet Managing Editor [July 2, 2001]

WaveRider is one of many equipment makers betting on the fixed wireless broadband boon. From its base of operations in Toronto, WaveRider has managed to become one of the top nine public companies supplying the world with Point-to-Multipoint (PtMP) gear. (See chart below.)

Like most industry leaders, Charles Brown, WaveRider vice president of sales and marketing, knows that connecting costs involved with installing customer premise equipment (CPE) is one of the key factors keeping the technology from going mainstream.

"Right now WISPs resell CPE to businesses and consumers for around $600," Brown said. "Add to that average install costs of $500, and you don't have a good business proposition for fixed wireless broadband access. But eliminate the $500 install fees with self-installed CPE and WISPs have something they can sell to both businesses and residential users today." And sell, they have WaveRider first introduced its non-line-of-sight (NLOS) dependent wireless system in March. The LMS3000, a 900MHz wireless Internet network designed to provide Internet connectivity to the residential and small office, home office (SOHO) markets. Brown said the system is simple to set up, which allows WISPs to eliminate costly installation expenses that are challenging to recoup from residential end users. "The LMS3000 connects to an Ethernet or USB port on a computer," Brown explained. "You stick the antenna out the window and you’re ready to connect to the Internet." WaveRider completed its first Last Mile System (LMS) installation and setup for Platinum Communications of Canada in November last year. Next, it connected ILLICOM Telecommunications of Illinois in December. Then the City of Roseville, Minn., in April, which is using WaveRider's LMS3100 to establish IP connections to residences throughout the area and to manage municipal services. Also in April, Global Networks of Tampa, Fla. purchased WaveRider's LMS gear to deliver broadband services to commercial users.

Return on investment
Even though Wall Street is devoid of financing dollars for firms deploying fixed wireless delivery systems, WaveRider's Brown makes a strong financial case for WISPs. According to Brown, a wireless ISP starting up today with a WaveRider NLOS system should expect to get a return on its investment in about a year.

"ISPs should anticipate laying out about $25,000 to start a small broadband operation capable of providing fixed wireless access for 3,000 users," Brown said. "As a WISP, the operation should break even in about 12 months, based on $50 a month service fees for subscribers."

But until CPE costs are reduced, Brown said that consumer access would ride on the success of businesses connecting with fixed wireless broadband access.

"ISPs resell our LMS equipment to end users for about $600. We only sell direct to carriers, ISPs and municipalities," Brown explained. "Businesses will shell out the money, but residential users won't—unless there is no other broadband option available. Until residential CPE costs drop to $200 or $300, consumer access will ride on the back of business services."

Making self-install a breeze BreezeCOM demonstrated its first plug-and-play fixed wireless product in March. Dubbed BreezeACCESS, the Residential Subscriber Unit (SU-R Series) allows ISPs or enterprises to connect computers without sending an install crew onsite. The provisioning process is completed by the user—who simply powers up a PC and configures it with proprietary software. Made specifically for residential use, the BreezeACCESS SU-R incorporates a dual antenna design that overcome typical signal propagation in an urban setting. But BreezeCOM isn't betting its frequency hopping spread spectrum (FHSS) technology on unlicensed operators alone—the BreezeACCESS XL and MMDS lines operating in the 3.5 GHz and 2.5 GHz bands are et to be released later this year to licensed operators.

Chris Rangel, BreezeCOM assistant vice president of marketing, said its extended licensed and unlicensed family fixed wireless equipment is the result of its merger with Floware Wireless Systems, which is scheduled to be completed in this month.

"BreezeCOM and Floware complement each other well in terms of product offerings," Rangel said. "Both companies supply PtMP broadband solutions and both are based in Israel with substantial global distribution capabilities—BreezeCOM in Asia, Eastern Europe and the U.S., and Floware in Europe, Asia and Latin America."

With WaveRider and BreezeCOM-Floware capable of eliminating WISP truck rolls and placing installation in the hands of the end user, one questions whether the financial community is paying attention to the technological advancements allowed by NLOS equipment. But BreezeCOM's Rangel said that is not the case.

"The financial market is gripped by analysis paralysis," Rangel said. "Venture capitalists need to see proof that the technology works, but they're looking in the wrong direction. Analysts are watching major carriers that require massive financing to deploy large scale fixed wireless service programs."

"If financiers want to find success stories, they need to go out into the field and learn the business from the ground, up—like we learned our early lessons from small ISPs deploying fixed wireless access to a thousand customers or less," Rangel continued. "Small wireless ISPs are a success story every day—making the technology work in the real world—around birds and dogs, as well as trees and tractors."

VC misdirection
BreezeCOM's Rangel concurs with WaveRider's Brown, when it comes to return on investment for small WISPs, stating that operators should show a profit in less than a year when they connect users with NLOS gear.

But financial analysts insist on observing larger carriers offering MMDS access, like WorldCom and Sprint, building fixed wireless programs on first generation LOS dependent gear and based on business plans that become profitable two and three years, respectively. Meanwhile, small WISPs have a leg-up on fixed wireless broadband access rivals in the U.S. market right now. That is—until Wall Street says otherwise.

—End