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Prognosis Positive

Mon, 03/31/2003 - 7:00pm
David Iler, Contributing Editor

Healthy doses of technology upgrades and expanded service areas
have given cable’s broadband competition a shot in the arm

A strong DSL market is combining with recovering fixed wireless and satellite broadband services to pose healthy competition to cable-based broadband, the residential market leader in the U.S.

At the same time, the proliferation of 802.11b (Wi-Fi) wireless networks is adding to an expanding slew of choices for broadband consumers, and presents new opportunities for cable operators to tap into those networks.

In a market drained by memories of "irrational exuberance," technological advances and good old cash investments are helping to breathe new life into some platforms many left for dead.

DSL: THE ROLLOUTS CONTINUE

Smoother provisioning, expanding service footprints and aggressive marketing are boosting DSL, far and away cable's strongest competitor. The domestic DSL sector has grown at a steady pace recently, reaching about 6.45 million subs, the DSL Forum recently disclosed, citing figures from London-based analyst firm Point Topic Ltd. The top two DSL providers in the U.S. are, not coincidentally, the two largest incumbent local exchange carriers: SBC Communications Inc. and Verizon Communications Inc.

In the fourth quarter of 2002, SBC added 245,000 DSL subscribers, bringing its total subscriber base to 2.2 million, up 65 percent from 2001 levels. For its part, Verizon added 148,000 net new DSL lines in the same period to bring its tally of DSL subs to 1.8 million lines, a year-over-year increase of 50 percent.

Each one of the ILECs, including BellSouth Corp. and Qwest Communications International Inc., continued to add to their DSL service areas through 2002 and into the first few months of 2003.

CONTENT, PROMOTIONS, SPARK DSL

Base station, modem and PCMCIA modem from IPWireless
SBC spokesman Joe Izbrand cites several factors for SBC's success in attracting DSL subs, including the telco's content relationship with content heavyweight Yahoo! SBC has also seen success with its service bundles. The company's Total Connect package, for example, includes wireline telephone service, DSL (where available), wireless phone service through Cingular Wireless, and long distance service (in areas where SBC has won approval to sell it). When offered as a package, DSL can be had for as low as $29.95 per month, says Izbrand.

SBC also has introduced a variety of "personalized speeds" or tiered data rate packages. And dramatically easing the cost of acquiring subs, Izbrand says about 95 percent of SBC's new subs self-install DSL, with a little help from a one-CD system developed with BroadJump Inc., which has since merged with Motive Communications Inc.

ADSL MATURES

Asymmetric DSL (ADSL), the predominant DSL flavor deployed in the U.S., was significantly enhanced with the adoption by the International Telecommunication Union of the G.992.3 standard.

Also under development is an enhancement called ADSL2+. In a nutshell, ADSL2 increases downstream data rates to more than 12 megabits per second, while extending the reach from the central office to the subscriber by approximately 600 feet, according to the DSL Forum. ADSL2 accomplishes this by basically doubling the bandwidth (to 1.1 MHz) used to carry high-speed traffic over a copper wire. ADSL2+ will push spectrum usage past 2 MHz, allowing for downstream traffic to flow at 20 Mbps.

Centillium Communications Inc. has developed silicon designed to boost data rates even higher, says Bruce Zahedivach, director of marketing for the chipmaker's DSL product line. The technology both expands the available spectrum four times beyond current ADSL use, and also boosts the bits-per-tone modulation. Combined, these advancements not only increase the coverage area for 20 Mbps downstream, but can hit a maximum level of 50 Mbps in some areas. By changing out the customer premises equipment and line card at the central office, a telco can "increase the service coverage area for key premium [data] rates," says Zahedivach. So far, he acknowledges, this technology has seen more interest in Japan than in the U.S.

FIXED WIRELESS: FROM CARDIAC ARREST TO PROMISING FUTURE

The implosion of WorldCom Inc., and Sprint Corp.'s decision to not seek new customers for its Broadband Direct MMDS service last September, seemingly placed fixed wireless in broadband's intensive care unit. MMDS, though, is far from dead, and operators expect to have key differentiators enabled by next-gen MMDS technology, including portability within a service area footprint.

A second key attribute of new fixed wireless technology is the transition from traditional "super-cell" architectures that called for a large, single transmitter to serve a market to a cellular-phone-type architecture that taps multiple transmitters in a given market. This new architecture addresses line-of-sight issues, long-considered the Achilles heel of MMDS.

Sheldon Fisher
Fisher
Sprint, although in a holding pattern, is testing next-gen gear from Navini Networks Inc., IPWireless Inc. and other vendors yet to be named. Two announced technical trials by Sprint (with IPWire-less in Montreal and with Navini Net-works in Houston) marked the service provider's effort to understand what the performance of those networks would be and what kind of service offerings the networks could carry, says Sheldon Fisher, vice president of Sprint Broadband Direct. Specifics of the trials have not been made public.

Taking the leap to an actual deployment of IPWireless' technology is Clearwire Technologies Inc., which in January became the first fixed wireless service provider to offer next-gen wireless broadband service with a rollout in Jacksonville, Fla.

Jeff Mucci, senior vice president of sales and marketing for Dallas-based Clearwire, points out that fixed wireless technology has graduated from line-of-sight to non-line-of-sight, and from a truck-roll install to self-installation. A big facilitator, according to Clearwire, is IPWireless' use of standards-based UMTS (Universal Mobile Telecommunications System) as the air interface. The service's modem–small and battery-powered–can run a local area network.

SBC Yahoo! content page
A screen capture from an SBC Yahoo!
content page. According to SBC, the content relationship with Yahoo! is a contributing
factor in DSL adoption.
In Jacksonville, Clearwire utilizes four towers, and its transceivers use wide-band Code Division Multiple Access (CDMA) for transmission. Transceiver equipment is hung from existing cellular towers that are spaced from 1.8 to 3.5 miles apart, comparable in terms of distance to PCS services. The service is targeted primarily to businesses. Signals are received either by the wireless modem or via a subscriber antenna mounted on the outside of a building.

Clearwire, Mucci says, has started testing small, PCMCIA-sized modems, and by year-end expects to see modem technology on a chip, appropriate for personal digital assistants, tablet computers and consumer electronics devices.

With these advances "portability will be the strategic difference for wireless," says Mucci. "Portability will fundamentally change the way people use the Internet, and wireless technology is the enabler of that opportunity."

With "several hundred" subs in Jacksonville, Clearwire "is constantly evaluating purchases of additional spectrum," Mucci says. A key stakeholder in Clearwire is the Instructional Television Fixed Service, which provides Clearwire with its spectrum in the 2.5 GHz to 2.7 GHz band.

SPRINT AND WORLDCOM ON THE SIDELINES

According to Fisher, Sprint is continuing to work on a flexible, more sophisticated platform for a possible rollout at an unspecified date. "We can imagine a world where the MMDS data and PCS voice may be combined in a mobile handset," he says. Of key concern with such a service is a device or handset with sufficient power to handle high-speed connections.

Fisher's network vision is of a ubiquitous broadband wide area network, possibly allowing users to toggle between a Wi-Fi network to Sprint's next-gen fixed wireless network to a PCS network.

WorldCom, which filed for bankruptcy last summer, is offering MMDS service in 13 markets to small and medium-sized businesses and is still actively pursuing small- and medium-sized business customers in those markets, says Joe Brooks, vice president of sales and marketing for WorldCom Broadband Solutions.

"We certainly have taken a look at second-generation technology and have deployed one cell (in Memphis, using IPWireless' gear)," says Brooks. However, WorldCom's MMDS licenses and service is one of the assets WorldCom is considering for sale as it restructures the company. Consequently, WorldCom is, at least for now, undecided about its direction.

WorldCom has not released subscriber numbers for its MMDS service. Sprint says it has 50,000 fixed wireless subs in its 13 markets.

802.11b: HOT SPTS EVERYWHERE

Wi-Fi hotspots are proliferating nationwide, with hotels, coffee shops and airports turning to "hot spot operators" (or HSOs) to offer their patrons a fast ride–up to 11 Mbps–on the Internet. Yet, as Christian Gunning, director of product management for Boingo Wireless Inc., points out, Wi-Fi's short range is its stumbling block. Boingo's mission is to "take a fragmented network . . . and turn (it) into one, seamless network," he says.

Boingo serves as a hot-spot aggregator, linking together Wi-Fi networks and selling a single service. As of February 26, Boingo had 25 HSO partners and a network comprised of more than 1,200 locations worldwide, with each location typically supporting multiple access points. Anticipated market growth of hot spots is expected to be between 10,000 and 12,000 this year. Boingo launched the service, which targets business travelers, last year, but has not released subscriber figures.

The secret sauce of Boingo's ability to serve divergent hot spots is software developed in-house that, once installed, senses whether a Wi-Fi network is present, asks the user whether he or she wants to connect to it, and provides a log-in screen to permit access. This contrasts with users, especially those running older operating systems, who have to re-configure their computers for each hot spot. Boingo's software includes a personal Virtual Private Network feature for security. Boingo also plans to support Wireless Wide Area Network services such as 2.5G and 3G.

In an effort to seek more partners, Boingo in March bowed a platform that enables customers of wireless operators, telcos, ISPs and cable companies to access the Boingo network. Operators will be able to offer the service using their own brand.

BROADBAND FROM THE SKY RESURRECTED

With about 150,000 subscribers, Hughes Network Systems' Direcway service remains the most successful and high-profile satellite broadband satellite provider. Until recently, competitors to Direcway have languished, or worse, but infusions of cash and new business plans have helped revive the sector.

Total subscriber numbers, according to Christopher Baugh, president of Northern Sky Research, are about 200,000 in North America.

For its part, Hughes is ready to launch its next-gen platform, Spaceway, sometime in the first half of next year. The Ka-band Spaceway platform, due to replace the Ku-band Direcway service and primarily target enterprise customers, will be able to send data down to Earth at a rate of 512 kilobits per second, a nice improvement over the 128 kbps delivered by Direcway.

Emerging from a brutal year last year when it declared bankruptcy, Ku-band provider StarBand Communications Inc. in January released the StarBand 480 Pro, a new four-port modem that, according to director of corporate communications Sheila Blackwell, requires no software to be installed in a subscriber's computer. The device is capable of delivering download speeds of more than 1 Mbps, she says. The company claims 40,000 subscribers, and is "within walking distance" of emerging from bankruptcy, Blackwell says.

StarBand is focused on the 40 million potential residential and small business customers who aren't serviced by cable or DSL.

WildBlue Communications was resurrected late last year when a group of investors lined up to infuse the startup with $156 million in new money. WildBlue expects to roll out service using Ka-band spot-beam technology in 2004.

Baugh notes that "the satellite market has not become so much an isolated market," but instead has attracted businesses to augment existing, wireline broadband services. Hughes in particular has been successful in selling an augmentation service to large businesses as a contingency network if a terrestrial network fails.

FRIENDLY ALETNATIVES: MSOs TURN TO WIRELESS

The business customer is a big prize for all broadband players and cable operators are beginning to turn to wireless to service these customers.

Charter Communications, for one, has been testing technology developed by Wireless ByPass Inc. in a West Coast system, according to a source at the MSO.

The core of the Wireless ByPass technology is a hub, or originating signal device, hung from the edge of the Charter network. Standard coax runs into the hub, and the device filters out all channels except for the 6 MHz channel reserved for DOCSIS data traffic. That signal is then beamed across a distance, beyond the cable network, to a customer premises unit using the unlicensed 5.8 GHz portion of the spectrum.

With between 10 and 15 businesses within range in the trial area, the Charter engineer says, "I can service them all."

Also turning to a wireless partner is Time Warner Cable's San Diego division, which is working with wholesale fixed-wireless broadband provider SkyRiver Communications Inc. to serve business customers not passed by its network. According to a Time Warner manager quoted in a SkyRiver press release, the partnership with SkyRiver lets the operator serve businesses not directly passed by its cable network, often establishing service in two or three days.

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