Business 2.0:: Don’t dismiss fixed wireless quite yet. True, early fixed-wireless startups like Telegint and Winstar racked up billion-dollar losses and died early deaths. But the technology, which supplies broadband connections via radio waves, has a lot of life left in it.
Fixed Wireless Has Its Day
After a false start, the broadband technology is finally starting to develop into a real business.
By Om Malik, August 12, 2003
Don’t dismiss fixed wireless quite yet. True, early fixed-wireless startups like Telegint and Winstar racked up billion-dollar losses and died early deaths. But the technology, which supplies broadband connections via radio waves, has a lot of life left in it. The evidence is everywhere. Just last month, Fujitsu and Intel (INTC) announced that they would each begin developing chips to support the standard. And also in July, cellular and telecom pioneer Craig McCaw made a multimillion-dollar investment in Minneapolis-based fixed-wireless equipment maker NextNet Wireless.
Fixed wireless is undergoing a Renaissance. We can even expect a boomlet, says John Yunker, an analyst with Boston-based Pyramid Research. He expects the recent ratification of the WiMax standard — the trade name for 802.16a technology, which allows fixed-wireless providers to sell their Internet connections — to speed the growth of fixed-wireless adoption in North America. WiMax offers several advantages over earlier technologies. The transmitting radio antenna and the receiving radio antenna, for instance, do not need a line of sight, so carriers don’t have to worry about buildings and trees interfering with the data transmissions. More important, before WiMax existed, fixed-wireless technology was proprietary and was predicated on licensed spectrum, which made the equipment expensive and the service unaffordable. That’s what drove companies like Teligent and WinStar out of business. The WiMax standard erases the expensive differences, making the hardware cheaper and thus the service more affordable. As a result, the number of fixed-wireless subscribers in North America will grow from about 300,000 at the end of 2003 to about 3.6 million by 2008, according to Intex Management Services (IMS). And fixed-wireless equipment sales will rise from $192 million in 2003 to $760 million by the end of 2008, IMS predicts.
Additionally, fixed wireless can bring broadband to isolated locations. Yunker points to the potential of rural areas, which are currently beyond the reach of most DSL and cable networks. Two startups have already jumped into this market: Always-On Networks of Chiloquin, Ore., and Prairie I-Net of Des Moines, Iowa. But think about areas beyond the U.S. borders. In most emerging markets, such as Mexico, the Caribbean, Eastern Europe, India, and China, the wired infrastructure is woefully inadequate — and that’s where the real growth opportunity lies. InStat/MDR estimates that the total number of global broadband wireless access subscribers will jump from 1.1 million in 2002 to 6.3 million in 2006. Aperto Networks of Milpitas, Calif., is one beneficiary of the trend. “Across the world there is big broadband wireless use, and we are being used to challenge the incumbents,” says Alan Menezes, vice president for marketing at Aperto, which has 60 customers worldwide.
All this comes as cold comfort to that first generation of fixed-wireless companies. But as with so much in technology, timing and standardization can make all the difference.