Fixed Wireless Market Research

Executive Summary: Fixed Wireless Carriers Report

A new study from the New Paradigm Resources Group explains how fixed wireless ISPs are ready to embrace new opportunities.

by New Paradigm Resources Group [January 9, 2007]

Fixed wireless telecommunications is the transmission of voice, video, or data wirelessly to and from fixed locations. This differentiates it from portable (or nomadic) and mobile wireless telecommunications. Portable wireless allows users to send and receive voice, video, or data from various locations (as Wi-Fi users do when connecting to the Internet from an airport or a coffee shop). Mobile wireless allows users to communicate while moving (as cellular phones and onboard vehicle navigation systems do).

The fixed wireless carriers rely on licensed microwave or millimeter wave spectrum in the frequencies above 10 GHz. Although fixed wireless service can and is being provided in unlicensed and/or sub-10 GHz spectrum, the strongest business model for fixed wireless carriers is in the licensed spectrum above 10 GHz; accordingly, that is the focus of the Fixed Wireless Carriers Report™.

Though the entire spectrum is capable of supporting each of these types of wireless communications services, mobile wireless service is provided primarily in the 800 MHz-1.9 GHz range, portable wireless primarily in the 2.4 to 5.8 GHz range, and fixed wireless primarily in the 10 to 90 GHz range. The spectrum above 10 GHz provides fixed wireless carriers with two key advantages over sub-6 GHz spectrum:

• sub-6 GHz spectrum will become increasingly congested as portable and mobile devices proliferate; and

  the larger spectrum channels available in the higher frequencies offer the opportunity to provide carrier-grade bandwidth capacity.

... [skipping a section called "Fixed wireless carriers: the past"]

Fixed wireless carriers: the present
The fixed wireless sector is now reemerging as a viable competitive alternative. Rather than simply competing with the wireline CLECs for business and enterprise customers, today's fixed wireless carriers take advantage of the technology's backhaul advantages, as well. Today's fixed wireless carriers operate in a greater variety of market segments than their predecessors and are being propelled by a different set of market drivers.

Though some of today's fixed wireless carriers still serve the data and telephony needs of large enterprise customers, that is just one of the market segments pursued by today's fixed wireless carriers. In fact, pursuit of the end user market, at least initially, takes a back seat in most fixed wireless carriers' business plans to the carriers' carrier business—backhauling cellular traffic or carrying competitive carriers' traffic from cell sites or corporate office buildings to connection points at nearby fiber rings.

Today's fixed wireless carriers provide some or all of the following services:

• Cellular backhaul
• Competitive carrier backhaul
• Wireless Internet Service Provider (WISP)/broadband wireless backhaul, including market growth driven by the deployment of systems using the Worldwide Interoperability for Microwave Access (WiMAX) standards
• Fiber extension—typically to connect an enterprise customer to a network
• Physical network diversity

Market drivers include:

• Increased bandwidth demand resulting from new cellular features (advanced data and video)
• WiMAX deployment
• Lack of or cost of existing copper infrastructure to required locations
• Limited connection of office buildings to fiber networks
• Demand for physical network diversity, partly driven by a new federal government requirement for government offices to have physically diverse networks
• Cost reductions and technology improvements during the last five years that allow fixed wireless carriers to compete economically with wireline carriers

Customers include:

• Cellular carriers
• Competitive carriers
• WISPs/broadband wireless (including WiMAX) service providers
• Enterprise customers
• Federal government customers (and office buildings with federal government tenants)

Though some of the market drivers and services are established, many are new, and the increased demand for high bandwidth services—at locations unavailable or at prices unpalatable via existing fiber or copper—has changed the nature of the existing drivers, as well.

At the same time, fixed wireless equipment costs have decreased, reliability has improved, and the public has become more comfortable with wireless as an acceptable telecommunications infrastructure alternative.

Fixed wireless carriers: the future
These market drivers have converged to place the fixed wireless carriers—a $16.8 million market segment in 2005—on the verge of significant market growth. Growing relatively slowly at first, the fixed wireless carriers will see their market growth accelerate toward the end of the decade, reaching more than $1 billion by 2009.

Clearly, we are at the beginning of fixed wireless' second attempt to secure a seat at the table of major players in the telecom access and transport markets. The fixed wireless carriers' business plans, technology, and marketing savvy will determine the extent to which this second foray into the telecom mix—with more realistic expectations and a more conservative approach—is more successful than the first.

With a plethora of market opportunities opening before them, those fixed wireless carriers that approach their target markets aggressively, yet sensibly, stand a good chance of success in their rejuvenated market sector.

— End