It's About Time
Somebody Said Wi-Fi Rocks

Researchers finally discover what independent wireless Internet service providers have know for years—802.11 technology beats other systems by building both home networks and local networks.

by ISP-Planet Staff [May 23, 2002]

According to In-Stat/MDR the "recent migration" of 802.11 as an operating standard into the license-exempt fixed wireless broadband market in the U.S. will result in a much needed growth spurt for the broadband fixed wireless market.

The high-tech market research firm expects that, as fixed wireless ISPs continue to flood the licensed-exempt band, fixed wireless will eventually become a significant player in the broadband access technology space. In 2002 alone, the licensed-exempt service for fixed wireless in the U.S. will grow three fold, and by 2006 over two thirds of all wireless broadband subscriptions will be on a licensed-exempt system.

Ernie Bergstrom, In-Stat/MDR senior analyst, said that until very recently, the fixed wireless industry, especially in the U.S., had taken a real beating.

"Multi-point Multi-channel Distribution Service (MMDS) is on hold for Sprint, as the company waits for a more economical solution to be brought forth by the wireless manufacturing industry, and WorldCom, while also doing some watchful waiting, is still offering service, but only in established markets," Bergstrom said.

"The Local Multi-point Distribution Service (LMDS) has faced growth challenges, as well, stemming from the high cost of providing the service to the business community," he added.

Unfortunately, In-Stat considers the prevalence of 802.11-based systems an "unexpected" development in the "stagnant" fixed wireless broadband arena. The report, The Momentum of 802.11 Accelerates the Fixed Wireless Market, also finds that Wireless Local Area Networks (WLANs) setup to operate over license-exempt has enabled service providers to deliver reliable broadband connectivity that can be deployed quickly and be priced competitively with DSL and cable, without having to buy expensive licenses.

Other pertinent findings include:

• Licensed-exempt will over take MMDS in the U.S. However, MMDS will make a comeback in late 2003, as second generation equipment comes on the market.
• Residential subscriptions to fixed wireless broadband in the U.S. will grow from approximately 338K in the end of 2001 to 3.1 million by the end of 2006. Over this time period, licensed-exempt services will have the greatest growth with residential subscribers growing from 123K in 2001 to almost 2.5 million by 2006.
• The international market is doing very well with LMDS, with its backhaul offerings to cellular service providers and access service to the business community for high-speed Internet service. LMDS service will continue to pick up steam. MMDS is projected to grow well in Latin American and other undeveloped countries.

Now on to WLANs …
In related news, the Scottsdale, Arizona-based research firm also reports that WLAN equipment makers are off to a promising start in 2002. In-Stat analysis indicates that the WLAN equipment industry is roaring ahead, notching up 10 percent growth in total unit shipments between the end of last year and the first quarter of 2002. WLAN equipment revenues also managed to squeak out a slight growth over the quarter, even in the midst of plummeting prices for Wi-Fi equipment.

Gemma Paulo, an analyst with the high-tech market research firm, said even though the economy was stagnant and business budgets were relatively tight in the first quarter, the WLAN market grew for two main reasons.

"First, end users in the home and in the business are increasingly attracted to the mobility that WLANs offer," Paulo said. "Second, the cost of implementing Wi-Fi networks continues to fall, as an increasing number of vendors enter the market, and a wider variety of equipment is released into the market."

In-Stat/MDR also found that:

• Cisco continued to dominate the market in terms of overall revenue, although Linksys, Buffalo, Agere, and D-Link showed considerable strength in overall unit shipments.
• For the first quarter, non-trivial shipments of 802.11a Network Interface Cards (NICs) and Access Points (APs) were recorded, from the likes of Intel, SMC, Netgear, Proxim, D-Link, and Actiontec. Although many of these 802.11a pioneers had announced that they were shipping in fourth quarter of 2002, most did not have product ready to ship until the first quarter of 2002, needing additional time to refine products.
• The home market continued to drive overall WLAN market growth, with total home shipments growing almost 20 percent, spurred on by the popularity of low-cost wireless broadband gateway products—a combination of an AP and a router that often includes multiple Ethernet ports and optional print servers.
• The business market was helped along by Agere's noticeable recovery in the first quarter, emerging from a lackluster second half of 2001, namely with its ORiNOCO-branded products. However, low-cost equipment makers that also have a strong presence in the home market, including Buffalo, Linksys, D-Link and Netgear, primarily drove the growth in business WLAN shipments.
• Europe and Asia Pacific remained extremely significant markets for WLAN growth. Hot markets outside North America included Japan, South Korea, Germany, Belgium, the U.K., and the Nordic countries.

The report, 1Q 2002 WLAN Market Analysis contains market shares and forecasts for NICs and access points, by technology, which includes 802.11b, 802.11a, and others, by business and consumer markets.

— End