Wireless Access News Briefs

• Play Spot The Trend
• Spot The Trend Redux
• Now Spin The Other Way

by Gerry Blackwell [November 6, 2001]

Play Spot The Trend
It's a topsy-turvy world in the broadband fixed wireless biz these days. While AT&T pulled the plug on its fixed wireless business earlier this month, little guys keep stepping up to the plate—like W.A.T.C.H. TV of Lima OH.

Earlier this month W.A.T.C.H. began offering high-speed Internet services using its Multipoint Multichannel Distribution System (MMDS), spectrum and SkyPath equipment from Orland Park Illinois-based Andrew Corp.'s Broadband Wireless Systems Group.

W.A.T.C.H., a subsidiary of regional telco Benton Ridge Telephone Company, started life in the early 90s as an MMDS wireless cable TV provider. It still provides cable TV services in northwest Ohio.

W.A.T.C.H. Vice President and General Manager Tom Knippen, had high praise for Andrew.

"We chose Andrew's SkyPath solution because of its economical means of market entry and their commitment to providing turnkey services," Kippen said.

"Our expectations were exceeded when we were able to access the Internet from our first installation, eighteen miles from the base station antenna, less than twelve hours from the start of the SkyPath installation."

Will W.A.T.C.H. succeed? Heck, we don't know. But it's sure interesting that a company like this would even try at the same time mighty AT&T was admitting defeat.

AT&T's fixed wireless Digital Broadband service originally used Personal Communications Service (PCS) spectrum but later switched to licensed Wireless Communications Services (WCS) at 2.3GHz. It was available in at least four markets, including Dallas, Angchorage, Los Angeles and Houston.

The company claimed to have thousands of users receiving better-than-DSL-grade high-speed Internet access and two-line phone service over the wireless network.

AT&T started working on its broadband wireless business way back in 1996 when it secured additional PCS spectrum for the purpose. The company even developed and manufactured its own fixed wireless equipment which it planned at one point to license.

AT&T said it was dumping the service because it failed to meet revenue targets and would require significant capital to grow further. At the same time, it was oddly at pains to point out that the experience proved fixed wireless worked.

Well, that's all right then.

(Back to top)

Spot The Trend Redux
Meanwhile, the red ink continues to gush in the manufacturing sector, although the suffering is by no means equal and the trend not quite uniformly downward. Ceragon Networks Ltd. of Israel, a maker of fixed broadband equipment for 10MHz-plus spectrum bands, announced a wopping $52-million quarterly net loss recently.

San Jose Clifornia-based fixed wireless equipment manufacturer Netro Corp. announced a net loss of $7 million for its most recent quarter—on revenues of $6 million.

But Hybrid Networks Inc., a San Jose provider of MMDS access systems, reported that in its most recent quarter it reduced its net loss to below $1 million from $12.94 million in the same quarter last year.

Crowed Hybrid President and CEO Michael Greenbaum: "Our strong third-quarter performance reflects our management team's ability to expand our business while controlling our expenses in a period of significant volatility and limited visibility."

In today's environment, Hybrid passes for a good news story.

Ceragon's startling bottom line may not be quite as bad as it looks, or so the company would have you believe. It actually reported a pro-forma gross profit of $300,000 or 10.1 per cent of revenues. Pro-forma basically means leaving out the bad stuff.

Not quite as startling as Ceragon's bottom line was the drop in revenues—to $3.1 from $5.9 million quarter over quarter.

Netro, which makes the AirStar system for licensed service providers using the 3.5, 10, 26, 28 and 39 GHz frequency bands, actually saw revenues rise quarter over quarter—to $6 million from $2.1 million in the second quarter of 2001. However, revenues are way down from the same quarter last year when Netro reported $20.5 million.

On the other hand, the company announced gross profit for the third quarter of $1.0 million or 16 per cent of revenues. Isn't accounting wonderful?

Hybrid's third quarter is certainly good news, but there was a sting in the tail. Quarterly net sales also improved—up to $9.74 million from $5.48 million for the same period last year.

The sting? For the fourth quarter, the company expects revenue to be down to about $5 million. With the expected decrease in revenue, the company anticipates a greater net loss in the fourth quarter.

That's more like it.

(Back to top)

Now Spin The Other Way
If the foregoing doesn't have your head revolving at a high enough velocity, consider the recent report from New York-based market analyst Jupiter Media Metrix. It predicts that over 40 percent of U.S. online households will be connected via broadband by 2006.

That's up from nine per cent in 2000. So it's pretty good news for the broadband fixed wireless biz, right?

Yes, but. First of all, it's 41 percent of online households, not of all households.

And second, Jupiter, which was recently acquired by NetRatings Inc., isn't saying how much of the broadband pie fixed wireless will get. It only says the number of households connected via broadband will rise from 5.2 million in 2000 to 35.1 million in 2006.

Indeed, Jupiter believes the trend will be driven primarily by cable modems. Of course, cable modems are used in some wireless systems.

"Despite the recent failures of several broadband pioneers, and slower growth of the overall online population, broadband will find the masses in the US shortly," says Joe Laszlo, Jupiter senior analyst and one of the report's authors.

The report goes on to say it's up to cable and DSL providers to market harder and better to overcome resistance to the cost of broadband subscriptions. Note: no mention of fixed wireless providers.

The real point of the report? "It is absolutely critical for companies with relevant content, products and services to time their business initiatives to reach the anticipated broadband audience," Laszlo says.

Right. And just completely ignore all the other signs and signals in the broadband sector.

—End
   

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