Wi-Fi News Briefs

• The Hurt Is On
• Mixed Signals?
• What Reports Are Reporting

by Gerry Blackwell [July 26, 2001]

The Hurt Is On
The downturn in the fixed wireless market is starting to impact suppliers of unlicensed network gear that have until recently appeared less vulnerable than some other equipment segments.

BreezeCOM Ltd. and Floware Wireless Systems Ltd., which are about to complete their merger, announced they were implementing a series of steps to reduce expenses, including a reduction in the two workforces totaling about 15 percent, each.

Wi-LAN Inc. of Calgary, Canada, another supplier of 2.4 and 5.8 GHz unlicensed wireless network equipment and a key developer of orthogonal frequency division multiplexing (OFDM) technology, announced a restructuring plan in response to "slower than expected growth of the fixed wireless access market."

The plan includes reducing the company's 280-person work force by 30 percent.

At BreezeCOM, the workforce reduction will be made across all staffing areas. The total number of employees remaining after the reduction will be approximately 670, but the company did not say how many people would lose their jobs.

Continued weakness in the telecom market produced a revenue decline for wireless equipment companies in the second quarter of 2001, compared to the first quarter of 2001, making it necessary to "better align expenses with revenues," a BreezeCOM press agent says.

"Workforce reductions and other measures are necessary to achieve this goal." Meanwhile, the companies will issue press releases with their reduced second quarter 2001 results on July 26, 2001.

The restructuring at Wi-LAN intends to improve cash flow used in operations by about $1.5 million a month, the company says.

"We have three challenges—to live within our cash resources, to maintain the growth of our revenue and market share and to maintain the market leadership of our broadband wireless access products and the potential of our W-OFDM technology," said Wi-LAN chairman and CEO Dr. Hatim Zaghloul.

"We believe that these changes will allow us to overcome these three challenges."

Other measures include reducing operating expenditures and a one-third reduction in overall cash compensation for executive officers. The immediate cash cost of the restructuring plan will be in the range of $1 million.

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Mixed Signals?
Meanwhile, over on the licensed side, Hybrid Networks Inc., a San Jose California-based provider of fixed wireless systems for Multi-channel Multi-point Distribution System-based (MMDS) Internet access providers, announced, somewhat surprisingly, that its financials were on the upswing.

The company did report a loss of $3.1 million (14 cents per share diluted) for its second quarter, ending June 30. But this represents a 71 percent improvement over the $10.7 million loss reported for the same quarter a year ago.

And revenues for the current quarter were $5.5 million, a 99 percent increase from $2.7 million in Q2 2000.

"Our performance for the second quarter is highlighted by a return to positive gross margins and a substantial decrease in our net loss," notes Hybrid president and CEO Michael Greenbaum.

"We believe our relationship with Sprint, ongoing progress with potential new customers, both domestically and internationally, and the availability of our ThruWAVE Wireless Broadband Router will provide us with a strong platform for growth for the second half of our fiscal year."

Indeed, the company also recently announced a $9.3 million contract to provide routers and base-station equipment to Sprint Corp.

Hybrid expects to complete shipping of the routers and base-station equipment by November. Sprint will use the equipment in the markets where it offers its Sprint Broadband Direct fixed-broadband-wireless service, for which Hybrid has previously provided headend and CPE equipment.

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What Reports Are Reporting
A spate of disparate market reports published recently paints a distinctly more hopeful picture for the long-term future of broadband—specifically wireless broadband.

According to Multimedia Research Group Inc., a Sunnyvale, California-based provider of market intelligence and strategy consulting, broadband-Internet subscribers will total more than 15 million worldwide in 2001, and that number will double by by 2004.

An additional 24 million Internet users have broadband access through office LANs, the MRG report notes.

The report, titled IP Video & Streaming Media 2001: Worldwide Server, Services, Content & ROI Analysis with Market Forecast-2001-2005, says revenues for streaming-media servers and storage total $3.2 billion worldwide, and are expected to increase to $5 billion by 2004.

The growth in streaming media is driven mostly by demand for broadband Internet, by high expectations of broadband users and by big advances in corporate use of streaming media technology, the company says.

"The Internet is real and will not go away," MRG analyst Krista Christian says in a release. "Streaming also is a real outgrowth of the high broadband demand and of well-run media companies and departments with business models far more robust than the dot-coms."

Meanwhile, the Burton Group, a network infrastructure research and consulting firm in Salt Lake City, recently published its annual prediction of networking trends—among them that Wireless IP networks will be used more frequently to complement wired networks.

In a few years, Burton believes fixed broadband access will compete with or substitute for DSL and cable. And new mobile wireless networks based on 2.5G, 3G, and 4G technologies will emerge to provide nearly ubiquitous IP network access.

Sounds good to us.

Finally, an intriguing report from D.C.-based Criterion Economics LLC, which suggests consumers and "producers" could benefit by as much as $500 billion annually if everybody had broadband access.

Hmmm.

The study, titled The $500 Billion Opportunity: The Potential Economic Benefit of Widespread Diffusion of Broadband Internet Access, was produced by economist Robert W. Crandall of the D.C.-based Brookings Institution and engineering consultant Charles L. Jackson, with funding from Verizon Communications.

Their report identifies five areas that are likely to benefit customers—home shopping, reduced commuting, entertainment services, conventional telephone services and health care.

"Clearly, the impact of broadband by any measure—in terms of GDP, jobs, U.S. productivity and efficiency—will be profound," Jackson said in the release. "We're looking at a transformative technology, one that doesn't just create change at the margins of an economic system, but at its core."

We don't profess to fully understand the abstruse calculations by which the authors arrive at their startling conclusions, or exactly what they hope to achieve by making such predictions.

After all, the predicted positive economic impacts come only when broadband access in homes is as common as telephones—that is, about 94 percent penetration. We haven't heard anyone predicting yet when that will occur, and the authors admit it will take "many years."

Still, nice to look forward to.

—End