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"Wireless broadband revenues, driven by local telephone service and Internet usage, will grow at a 418-percent compound annual rate over the next five years, according to Peter Jarich of the Strategis Group.
In the "U.S. Wireless Broadband: LMDS, MMDS and Unlicensed Spectrum" report, the Strategis Group predicts that wireless broadband revenues will reach $3.4 billion in 2003, compared to 1999 revenues of $11.2 million.
"By 2003, we forecast that no less than 34 percent of U.S. households and 45 percent of U.S. businesses will
be serviceable by broadband wireless networks," said John Zahurancik, vice president of broadband information for the Strategis Group.
Wireless avoids the "last mile" problem Internet use, and the demand for broadband, will continue to increase. U.S. households with Internet access will nearly double to 90 million by end of 2004, from 46.5 million now, according to Jarich.
The economics of broadband wireless are compelling, according to Jarich, since 80 percent of the cost of
installing fiber optic systems is labor - a cost that increases every year. For wireless, on the other hand, 80
percent of the cost of installation is electronic equipment - equipment that is getting more powerful and cheaper by the month.
Also wireless avoids the "last mile" problem, where an operator delivering broadband service may be required
to lease that last-mile line from a carrier. Should problems arise, the operator will be blamed in many cases,
even if the carrier is at fault for the poor service. So broadband allows a company to control delivery and the
quality of its service.
Even a minuscule market share can generate tremendous revenues Wireless broadband technologies, such as Local Multipoint Distribution Service (LMDS), "present an
inexpensive means to market entry" for local telephone service, the report notes. "With U.S. local phone
revenues topping $110 billion in 1999, the incentive to enter the market is clear; even a minuscule market
share can generate tremendous revenues."
The Strategis Group said that demand for "broadband connectivity in the local loop is a relatively new
phenomenon. For years, narrowband solutions -- phone lines -- have managed to serve the average user's
needs in an economical and robust manner. Demand for new services, however, has conspired to destroy this
model and caused the need for bandwidth to skyrocket."
Internet usage, for example, has grown dramatically over the past five years. "Once a medium of the technologically savvy, the Internet has become a critical business tool and a 'daily essential' for many home users," the report says. "As Internet content becomes more interactive and oriented, the need for high-speed access rises in turn."
Nextlink has bought a huge number of FCC licenses, and is one of the largest players in the evolving LMDS market
The report notes that in 1997, "less than five vendors had the ability to produce an operating LMDS system,
and few had been tested extensively. Today, any number of vendors -- including major integrators such as
Lucent, Nortel and Cisco -- can provide a working system. Capable of voice, data, Internet and video services,
these systems can meet any customer's local access needs." |
