Fixed Wireless Business

But How Much Does It Cost? [Part 3]

Now it's time to populate your wireless points-of-presence with radios and related gear so you can actually provide service and start to earn revenues to pay back your investment.

by Gerry Blackwell [April 16, 2002]

In the first two parts of this series on start-up costs for wireless Internet service providers (WISPs), we looked at upfront surveying, design and testing, and then the cost of establishing wireless POP sites—leasing tower or roof rights or building your own tower.

Now it's time to populate your POPs with radios and related gear so you can actually provide service and start to earn revenues to pay back your investment.

The per-POP cost of this equipment will depend on the number of sectors into which you divide your coverage. This in turn is determined by the number of customers within range of the POP that you expect to sign up and where exactly they are.

"Ideally, you will have more than one sector," says WISP consultant Jack Unger, president of Los Angeles-based Wireless InfoNet Inc. "Three is fairly typical. If customers aren't in a complete circle around the [tower site], you could have two."

Our other expert, James Portaro, chief technology officer and co-founder of Akron OH-based WLAN systems integrator NeTeam Corp., bases his cost estimates on a four-sector POP.

What equipment do you need? Radios and antennas for each sector, an Ethernet switch to aggregate the traffic from the different sectors onto the backbone link, cables to link antennas, radios and switch, lightning arresters, power—and some kind of backbone network link.

The 2.4GHz radios for each sector will run about $1,000 apiece, Portaro says. Unger's estimate is lower: from $200 to $1,000.

Antennas for each sector will cost another $1,000 apiece, according to Portaro, but are again less in Unger's estimate—he allows $300 to $400 each. Portaro estimates the cost of the Ethernet switch at about $300.

Cabling costs will vary according to the number of sectors, the grade of cable required and the distance between antennas and radios.

Portaro notes that cable choices range from LMR400 cable that sells for about $3 a foot, through to outdoor Heliax cable—a metal-shielded coaxial cable that is about 1.25 inches thick and sells for more like $18 a foot.

The greater the distance between antenna and radio and the more severe the climate, the higher the grade of cable required. Portaro allows $200 per cable run for each sector, so assume about 50 feet per run and a mid-priced grade of cable.

Lightning arresters range in cost from $150 to $200, according to Portaro. You need one for each antenna. Unger's estimate is again considerably lower—$35 to $40 per antenna for lightning protection.

Both our experts quoted prices for UNII-band backbone links. Unger estimates the cost for 20-Mbps bridges at $3,000 to $10,000—but you need two: one at the wireless POP and one at the network operations center (NOC) or a relay point. Portaro's estimate: $10,000 to $20,000 for the pair.

If you need more bandwidth, prices go up, Portaro adds. Expect to pay $25,000 to $45,000 per pair for DS3 (45 Mbps), $60,000 to $70,000 per pair for 100 Mbps and up to $200,000 per pair for 1 gigabit per second.

You'll also need to think about how to protect this equipment against the elements and against tampering, Unger points out. An equipment vault—the high-end solution—will cost "thousands," he says. But a weatherproof enclosure will keep costs in the hundreds.

Portaro notes that companies buying a turnkey system will also be looking at paying for installation—from $6,000 to $20,000 per POP.

The final tally
Clearly it will depend on how much of the work you intend to do yourself. But the range per three-sector wireless POP, assuming you build your own tower, is $10,000 to $250,000 in round numbers.

That's the difference between a best-case scenario when doing it yourself using low-priced equipment in a rural setting, and hiring a systems integrator to implement a state-of-the-art network in a city. We're guessing most of our readers will end up spending something closer to the lower number.

We have not yet talked about customer premises equipment (CPE), of course, which can be a major upfront capital outlay. If you're targeting residential customers, you'll need some inventory.

Some WISPs sell or lease equipment to customers, some build leasing costs into subscription fees—so it's not really a capital cost like some others we've discussed.

Still, Portaro estimates CPE costs at $600 to $1,200 per customer. Clearly this can be a major factor in determining time to return on investment.

NeTeam and others are working on CPE configurations that allow them to use low-cost, consumer Wi-Fi products for CPE. The object, Portaro says, is to drive CPE costs down to less than $400. At that point, the ROI proposition looks more reasonable.

Count on spending another $300 per customer for installation. Many WISPs, again, recoup that with install fees, and installation is not in the usual sense a start-up cost. One hopes it's an onoing cost.

But installation costs can surprise start-up WISPs, Unger warns. For this reason, it's vital they develop efficient install procedures and train personnel adequately to keep a lid on these costs.

Other costs we haven't included: standard ISP infrastructure—servers, switches, routers, plus network and business management software for authentication, billing, and the like. Dialup ISPs already have most if not all of this. Costs for WISP start-ups will be similar to wireline ISP start-ups when it comes to building an average ISP infrastructure.

It's worth noting, however, that there is now some wireless-specific software. You will need to consider each element when you are building your WISP business plan.

Campus networks
Estimating the costs of building a campus-style 802.11b fixed wireless network is a different proposition. (Unger, who is primarily focused on serving WISPs and has little or no experience in this type of project, bows out at this point.)

Portaro notes that institutions and enterprises installing campus- or factory-wide wireless access networks typically eliminate entirely the cost of securing wireless cell sites. They'll use their own buildings and structures.

On the other hand, network security becomes a much bigger concern in this type of network, adding to the cost of infrastructure hardware and software.

Campus networks can include four distinct types of cell sites:

• Macro cells, much like WISP wireless POPs, are primarily outdoors, cover a large area, assume low utilization and a low number of users, and use sectored antennas.
• Microcells are fairly large in-building cells—covering up to 25,000 square feet—with bandwidth of 1 to 11 Mbps.
• Nanocells are smaller, covering 6,000 to 10,000 square feet, and handle a higher number of users with more bandwidth per user.
• Picocells may cover an area as small as 15 square feet, typically provide more bandwidth per user, and are often deployed for security reasons to constrain radio signals so they don't leak outside the facility.

Each type of cell site requires a different kind of antenna, but the antennas all come in under $200. The radios are the same regardless of cell type and are also the same products used in WISP wireless POPs, which according to Portaro's earlier estimates go for about $1,000 each.

Portaro's estimate for installation—exclusive of access point hardware, but inclusive of antenna, cables, etc.—is about $750 per cell site on average. Assume a minimum of 10 access points, Portaro says—though of course it could be many, many more, depending on the size of your campus and the number of buildings you need to cover.

There you have it. How much does it cost to become an 802.11b access network operator? More than you might have thought, but certainly less than it would cost if you used licensed spectrum. And less, in the long term, than leasing wireline last-mile access from the phone company.

—End