Fixed Wireless Market Research

Third Pipe Growing Fast

The coverage area of fixed wireless, often called the "third pipe" of broadband Internet services, doubled in 2001, according to a survey released Monday by the Broadband Wireless Exchange (BWE).

by Jim Wagner of internetnews.com [January 16, 2002]

The results of a survey released Monday by the Broadband Wireless Exchange (BWE), gathered from wireless Internet service providers (WISPs) around the country, point to the growing clout of fixed wireless technology in rural and underserved areas.

According to the broadband wireless census report, 1,966 markets have one form of fixed wireless Internet or another available—that's more than twice as many markets as reported the previous year, 723.

Robert Hoskins, BWE managing director and author of the survey, said you can attribute the growing popularity of the broadband medium to the inexpensive roll out costs, when compared to dealing with incumbent and independent local exchange carriers (ILECs and CLECs, respectively).

"Hundreds of entrepreneurs at small ISPs are realizing that it only costs around $25,000 to build out a system that can serve 3,000 customers," Hoskins said. "And by charging a minimum of $50 per month, a broadband wireless system can deliver $1.8 million in annual revenue, which is a gold mine to most ISPs."

The high cost of doing business with traditional carriers (in some places, $25,000 will get you peering and bandwidth agreements, but not much else), and the continuing troubles with DSL and cable service, have more and more of these local and regional ISPs looking for an alternative to offer their customers.

A look at the top 10 states carrying fixed wireless services, according to the BWE, shows that the technology has made headway mainly in rural and underserved areas. But what's more interesting than the cities themselves is the location of these cities when compared with the ILECs in the U.S.

The top ten fixed wireless markets, by ranking, are as follows: California, Illinois, Texas, Minnesota, Iowa, Florida, Indiana, Colorado, Utah, and Arizona.

Of those 10, only one can be found outside the jurisdiction of either Qwest Communications or SBC Communications (Florida, a state under BellSouth's coverage area), which is interesting when one considers that both have essentially given up on developing DSL in their service areas.

Qwest has actually given up on DSL entirely, selling off its high-speed business to the Microsoft Network, a move that made both sides happy; MSN got a high-speed network to compete with AOL Time Warner and Qwest abandoned a technology that it viewed as getting in the way of its profitable T-1 contracts.

SBC has just about abandoned Project Pronto, their ambitious plan to put remote terminals to serve 80 percent of it customers with DSL. Rather, the firm sought redress through the wildly-unpopular Tauzin-Dingell Broadband Bill.

On the other hand you have the cable companies, which are busy upgrading their networks and buying each other out—they don't have the time, inclination, or revenues to roll out services to extremely remote areas.

In either case, fixed wireless can only thank the two ILECs and cable companies for their withdrawal that opened an opportunity for WISPs to push their wireless option into areas that won't see broadband service in any other shape for some time to come.

Keith Fenske, general manager of WISP DOTNET Internet Services, said the success of fixed wireless will only grow as the companies with faulty business plans get weeded out the system.

"There's a lot of companies that just give away the bandwidth, driving the price throughout the market down," Fenske said. "Once other ISPs and investors see the revenues the service can really bring, you'll see a lot more people getting interested in the service.

"Just because fixed wireless isn't DSL or cable, and that the bandwidth comes over license-free spectrum, doesn't mean it's cheap," he continued. "It costs real money to deliver a quality service and more and more businesses in our coverage area are seeing that—that's why we can charge higher for our service."

—End