Fixed Wireless Business

Of 3G, Netro, and iWISPs

Is good news for 3G carriers automatically bad news for independent wireless ISPs? Not if it comes in the form of a wireless backhaul solution from Netro. But Netro's solution is about a lot more than backhaul.

by Patricia Fusco ISP-Planet Managing Editor [April 25, 2002]

The recent buzz surrounding wireless Internet service providers, like the birth of Boingo and the return of Ricochet, has been tempered by guarded optimism. Particularly since the promise of third generation (3G) wireless broadband service remains unfulfilled in the U.S. After all, carriers like Sprint and AT&T Wireless don't want to be synonymous with failure and more than they would like to be associated with high-profile financial wireless failures at Winstar and Teligent.

The fact that 3G technologies are associated more often with business disaster than commercial triumph in North America remains good news to the 1,100-plus independent wireless Internet service providers (iWISPs) that dot the nation.

These iWISPs are serving up fixed wireless Internet access as an alternative for would-be broadband users—especially those without digital subscriber line (DSL) or cable modem access options. With startup costs decreasing, at least for customer premise equipment (CPE), WISPs are not eager to contend with mobile broadband service providers, too. But the allure of 3G lingers in the air and the viability of technological advancements looms on the horizon.

According to one company that has played a role in facilitating Europe's realization of 3G wireless communications, the future of U.S. 3G deployments rests on the question of whether or not service providers will be able to secure reliable and cost efficient backhauls—be they based on local multipoint distribution systems (LMDS) and multi-channel multipoint distribution services (MMDS), or orthogonal frequency-division multiplexing (OFDM) and 802.11-based wireless technologies—to connect to the Internet.

When it comes to transferring data to and from the Internet without wires, Netro Corp. has earned its stripes doing fieldwork in Europe and Latin America. While Netro has no immediate plans for the U.S. market, when the time comes it hopes to fulfill the promise of 3G wireless in North America.

The company might already sound familiar to you—Netro recently acquired the product assets of AT&T Wireless' former Fixed Wireless Division, known as "Project Angel." AT&T Wireless developed one of the industry's first OFDM-based fixed wireless solutions. Since OFDM splits signals into several narrowband channels at different frequencies, this method of digital modulation is a favorite with voice service providers since it promises more bandwidth space.

Allan Evans, Netro chief scientist, said the cost of acquiring customer is one reason why 3G wireless services remain illusive in the U.S.

"If you look at the MMDS deployment by Sprint and AT&T, their LOS [line-of-sight] gear suffered from having poor probability of coverage," Evans explained. "When a potential customer called up for service, the companies would have to send out a crew, install the gear, connect the system and absorb all these setup costs, only to find out they couldn't cover the client."

If the probability of coverage is only 30 percent with MMDS (i.e., about one in three), customer acquisition costs essentially triple. This is where Netro's acquisition of AT&T's technology is applied to its AirStar fixed wireless product lineup. AirStar Release 3 debuted in March, featuring hardware and software enhancements designed to enable Netro's customers to better provide access to businesses and service providers.

In order for Netro to put this Angel-meets-AirStar breakthrough to work in its fixed wireless solutions, the company had to redesign its voice and packet data services from scratch. As a result, Netro offers both wired and wireless service providers a viable solution because its backhaul system leapfrogs phone companies bottlenecks at the local loop or central office.

AirStar is like a mini-CO. The product aggregates wireless connections and supports oversubscription. As a backhaul, it connects to the CO through fiber (OC-3/STM-1, i.e. 155 Mbps). Although ISPs still pay a recurring fee for the OC-3 line, they save money for the connections to the AirStar—the monthly price of all of those T-1 lines that would be required in a wired solution.

Angel, the system's CPE, distributes 3.1 Mbps of LAN bandwidth to clients over Home PNA 2.0 and Ethernet networks.

Evans explained that Netro's fixed wireless solutions also avoid costly delays associated with the phone company-controlled wired infrastructure and almost entirely overcomes related coverage issues.

"Our acquisition of Project Angel enables us provide 95 percent probability of coverage since LOS issues are resolved, as long as an adequate RF signal is obtained," Evans said. "As a result, customer acquisitions costs are decreased by 70 percent. Angel gives us an entry into addressing the residential markets needs in low frequency, 1.9 GHz, 2.3 GHz, and 3.5 GHz bands, at least."

Now, the same last-mile/back-mile system could be applied to the MMDS market in North America, but service providers have pulled back from further deployment. The 3.5 GHz band is widely licensed internationally. There is a potential market in the U.S. since several large cellular phone companies hold 1.9 GHZ and 2.9 GHz spectrum licenses for their mobile voice systems.

Evans said that several smaller operators are testing systems right now in tier-3 and tier-4 markets. Since Netro's fixed wireless solutions work over licensed point-to-multipoint frequencies operating anywhere in the 1.9 GHz to 39 GHz spectrum bands, the only other issue holding back 3G wireless deployment in North America besides capital expenditures, is available spectrum.

This is a pretty bold statement, considering the business models deployed by Winstar and Teligent simply didn't work. But Evans said there is an additional problem for 3G in the U.S. market because unlike Europe, there are other inexpensive broadband technologies available to users, like DSL and cable. So it's even more difficult to deploy 3G services in today's competitive broadband marketplace.

"In Europe everyone has already spent a horrendous amount of money on their 3G licenses," Evans said. "In many markets, build outs will be complete by the end of next year. There will be a 3G wireless infrastructure deployed by 2003 that reaches 25 percent of potential European users. Point-to-point fixed wireless broadband technology, like the type AirStar provides, is connecting many of these backhauled services."

According to Haven Bourque, Netro director of communications, 3G in the U.S. has several big issues to overcome and fixed wireless backhauls will not necessarily be the savior of 3G in America, but Netro technology would at least enable economical coverage for voice and data wireless deployment.

"We're doing it in Europe," Bourque said, "and we will have done it by the time the market is ready in the U.S. We will be as close to a turnkey, plug-n-play solution as possible."

So if U.S. carriers license open spectrum and if these same carriers have the capital available to fund field tests and eventual full-scale deployment of 3G voice and data services, Netro has a fixed wireless solution that creates a powerful competitive advantage for these carriers.

Until then, independents iWISPs will keep eating other wireless carriers' lunch. While the incumbents are delivering 2.5G broadband wireless services using essentially 2G wireless technologies, 802.11 is pure generation 3 or even 4.

—End