Third Pipe Dream Ain't Smokin'

Sprint is taking its own sweet time deploying a fixed wireless high-speed solution to select markets. Will Sprint's wire-free vision ever rival copper-based first-pipe and coax-fed second-pipe broadband access options?

by Jim Wagner
of internetnews.com
[December 4, 2000]

Sprint Broadband is acting more like the Tortoise than the Hare as it slowly and methodically deploys fixed wireless broadband services in select U.S. markets.

While cable and DSL providers unleash their high-speed services as if it's a game of "first to market—wins," Sprint is taking the slow road to building the so-called "third pipe" of high-speed data transport.

Advantage wireless
Company executives figure that copper- and coax-based broadband access have technical issues detrimental to connectivity—DSL service has a slow provisioning process and distance barriers, while cable access suppliers have to overcome shared network issues. Sprint could leverage wire-based drawbacks to its advantage and leap past the rival technologies. Instead, Sprint figures slow and steady deployment wins the market—in the long run.

Although Sprint has FCC approval to deploy fixed wireless services in 45 U.S. markets, it doesn't plan to buildout a wireless backbone beyond the 13 markets already scheduled for deployment through 2002.

Of the 13 slated markets, Sprint will have deployed services to ten areas by the end of the month. In addition to its mid-November debut in Denver, Sprint has already established fixed wireless services in Phoenix and Tucson, AZ, Colorado Springs and Boulder, CO, Houston, San Jose and Oakland, CA, while Wichita, KS, and Salt Lake City services are scheduled for deployment by the end of the year.

Workin' the slopes
Dave Beckmann, Sprint Broadband general manager in Denver, said the Denver area is a perfect fit for a fixed wireless network.

"Denver is a tech-savvy and broadband-hungry city," Beckmann said. "With our new Sprint Broadband Direct service, Sprint now offers area residents another attractive broadband service."

It's those other broadband services that makes Beckmann think Sprint is going to do very well with its fixed wireless solution.

AT&T Broadband with its cable and Qwest with its copper compete in the high-speed Internet access market in Denver, Beckmann said. Cable with its shared network causes congestion and Qwest's problems deploying DSL service has increased the city's demand for dependable, consistent and fast Internet access, Beckmann said.

Given the current market for DSL access, perhaps Sprint is wise to stay on a slow and steady pace of deployment. After all, DSL providers have had to make dramatic price reductions for consumer access as carriers compete tooth and nail with cable providers. With thinning margins and investors demanding near-term profits, data carriers are in a bind to stay afloat.

Curious things
Sprint's deployment schedule for fixed wireless services may be more than a mere oddity. Certainly the company has a revolutionary service, sure to grab the attention of early adopters. But its slow deployment schedule indicates that Sprint might have a few bugs to work out of the system.

Either that, or the FON firm had to adjust its deployment schedule after the WorldCom merger broke down and Sprint's stock tumbled from $65 to $25 a share since July. Sprint PCS, a holding company financially engineered to track its domestic wireless division, has suffered a similar fate.

Frank Ybarra, Sprint broadband wireless spokesperson, concedes there are financial issues for Sprint. Ybarra also said that fast-breaking advances in technology—namely multi-point multi-channel distribution equipment operating in the 2150-2162MHz and 2500-2690MHz spectrum bands—played a big part in the company's decision to slow down its fixed wireless deployment schedule.

"There are three reasons for this strategy. The first is Sprint wants to know how high demand for MMDS is before committing to a larger deployment. Secondly, Sprint wants to reduce capital costs," Ybarra said. "Lastly, with new MMDS technology that requires no line-of-sight between end-user dish and an MMDS tower is scheduled to appear in the second half of 2001," Ybarra said. "Sprint doesn't want to spend a lot of time and money upgrading MMDS sites from current line-of-sight system to the new technology."

The price is right
As a result of Sprint Broadband Direct's investment in EarthLink, it has also promised to wed its wireless services with the national ISP as soon as possible. Both offerings should run about $45 a month for residential service and $150 a month for business connectivity, which is competitive with cable and DSL services.

While residential installations are free of charge, customer premise equipment for business services averages $299, for the time being. Equipment costs are directly dependent on the terms of the contract. If A customer signs up for two years service, then equipment fees are $99, while a one-year contract incurs a $199 fee, and customers wanting short-term service pay a premium fee of $299 a month.

Past mistakes
The scalable fee is a lesson Sprint learned from its other wireless venture, mobile wireless services. While the wireless mobile Internet phone division had one of the highest customer sign-up rates in the nation last year, it also had the highest churn rate in the industry.

According to Cahner's In-Stat, an independent research firm, Sprint endured a 3.5 percent churn annual rate in 1999 when customers grabbed free phones and switched services a month later.

Ignoble experiments
Sprint's fixed wireless solution got its start in the best possible environment for line-of-sight equipment—the desert valley. Phoenix lies flat on a bed of sand and clay, surrounded by a ring of hills, so it was the perfect place to toss up a tower and reach a wide base of customers.

The testing formed the foundation of the subsequent fixed wireless deployment movement. And the launch sites have pretty much followed in the footsteps of Phoenix geography, generally flat metropolitan areas ringed with hills.

Officials claim the fixed wireless service averages 256Kbps upstream speeds and 512Kbps to 1.5Mbps, with bursts of up to 5Mbps on the downstream. Of course the report cites network performance under the most favorable possible conditions.

Under less unfavorable conditions, fixed wireless deficiencies come to light. Signal loss in rain and snow is common for customers at outskirts of a tower's range. Another drawback to the fixed wireless solution is its shared-network platform, similar to cable Internet services. The more customers go online sharing the same frequency, the less bandwidth is available to each.

Beckmann said his Denver office is working on the overcrowding issue now, before it becomes a problem, like it's beginning to be for cable providers.

"Right now Denver is divided into five sectors using one super cell," Beckmann said. "In the next year or so we want to put more cells in the surrounding mountain ranges, so we can change the network configurations adjusting for our customer use pattern. Customers located at the fringe of the network now will be able to move their dish to a nearby cell, improving their signal strength."

Pledging vows
Sprint executives contend that fixed wireless access promises to fulfill the "third pipe" dreams of many small-business and residential high-speed Internet users, while cable and DSL become less attractive wire-dependent solutions.

The firm is landing its fixed wireless broadband service in a great position to leverage consumers wire-free ambitions. Sprint has the the national clout and deep pockets available to eventually deploy a nationwide wireless backbone. And as long as it can keep providing a valuable service to new customers, Sprint's much-maligned FON division will soon find itself on solid ground once again.

— End    

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