Re: Fixed Wireless(LMDS/MMDS) Stats from Audio Investor/Strategis Group
Thread- Here's another set of interesting stats and projections about the LMDS/MMDS market. I'm going to make an attempt to keep documenting how this access solution rolls out. Lot's of name dropping below too. -MikeM(From Florida)
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Peter Jarich of the Strategis Group discusses wireless broadband
WIRELESS BROADBAND REVENUES -- driven by local telephone service and Internet usage will grow at a 418% 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% of U.S. households and 45% of U.S. businesses will be serviceable by broadband wireless networks," John Zahurancik, vice president of broadband information of The Strategis Group, said.
And 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 is compelling according to Jarich, since 80% of the cost of installing fiber optic systems is labor[good for brain/brawn<g>] - a cost that increases every year. For wireless, on the other hand, 80% 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.
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 multimedia- oriented, the need for high-speed access rises in turn."
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."
Jarich notes that there are a number of interesting companies in this sector. With regard to carriers Sprint (PCS) and MCI Worldcom (WCOM) are both attractive "world class players." Both have been aggressively acquiring smaller "wireless cable" companies and their spectrum rights for voice, data, and broadband applications.
Nextlink (NXLK) has bought a huge number of FCC licenses, and is one of the largest players in the evolving LMDS market. The company is using both fiber and wireless to deliver broadband, and has "a compelling business model" according to Jarich. Highspeed.com is also using the LMDS spectrum.
Teligent (TGNT) has a "leg up" on competition as the company has been building out wireless broadband for several years now - a process in which they have worked out many of the technical problems that have arisen with new and redesigned equipment.
On an international basis wireless is seen as a very attractive way to get broadband distributed without the major disruptions of laying fiber. Companies in this sector include Diginet Americas (DGSY) (Latin America), Formus (about to go public) (Europe), Telgent, Nextlink (Canada), and Advanced Radiotelecom (ARTT).
The equipment vendors in this market could benefit from huge demand. Jarich notes that they may be the first beneficiaries of the wireless buildout, since "you need equipment before you can offer service."
Major vendors include Lucent (LU), Nortel (NT), and Cisco (CSCO). Other smaller players in this sector include Netro Corp. (NTRO), P-com (PCMS), Spike Technologies, Triton PCS (TPCS), Erickson, ADC (ADCT), and Newbridge Networks (NN).
In the unlicensed spectrum area a number of companies have produced interesting products. Products in the unlicensed spectrum have included products like cordless phones, garage door openers, and the like. But more recently this unlicensed spectrum area has seen products like wireless LANs, and wireless Internet access. Companies in this sector include Breeze.com, Wireless Inc., and Adaptive Broadband (ADAP) (California Microwave). Adaptive Broadband has a "best of breed" system according to Jarich, and has an agreement with U.S. West that covers a large part of the Western U.S.
Many companies will do very well in this sector due to the explosive growth of the wireless market according to Jarich, the potential is just beginning to be recognized by investment professionals and the public. Recorded 2/00.
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