April 20, 1999
Wireless Broadband Offers Promise -- And
Volatility
By Carolyn Whelan
The push toward broadband Internet access was a driving force in the
recent deal between Excite and @Home, which provides high-speed Web
connections (see Weekday Trader, "Excite Deal Shows Cable Modem Is
King," January 19).
But as cable modems and the telephone companies' Digital
Subscriber Line (DSL) technologies vie for consumers'
dollars, a much more powerful technology is emerging with
great potential for the lucrative small to medium-sized
businesses market: wireless broadband.
Wireless broadband is a microwave-based technology that allows quick and
cheap broadband Web access via portable radio towers. Yet this promising
technology has been held back by its high set-up costs and capital-intensive
nature, which has deterred many an investor.
But recent moves by powerhouses Cisco Systems, Lucent Technologies,
Northern Telecom, Sprint and MCI/Worldcom have pushed the technology
into the fast lane. Over the last few months, all those tech powerhouses have
either bought or taken major stakes in smaller wireless broadband companies,
or are in partnerships to offer such service.
*********************************************************************
The advantages of broadband wireless -- particularly a newer technology
called point-to-multipoint -- are that it has about ten times the capacity of
DSL, but with none of DSL's distance limitations, and it can be installed more
quickly and economically.
That makes it ideal for small- to medium-sized businesses with 15-500 lines
that need high-speed access to the Internet, fast. Other possibilities? Hotels
and conference sites that need temporary, low-cost broadband access . "They
face tremendous opportunity. . .[in] an underserved segment of the market,"
says John Hodulik, an analyst at PaineWebber.
************************************************************************
That's why new players are jumping in. "It's a pretty large sweet spot,"
explains Bo Fifer, an analyst at Alex. Brown. "The vast majority of commercial
office buildings just don't have a broadband connection."
The speed of the rollout is impressive.
In six months Teligent launched service
in more than 25 markets, an unheard-of
rate for most wireline operators. Thus
far, Teligent says it has over 1,000
separate organizations connected.
And the market may be on the verge of
exploding. The U.S. small business
market for broadband access will grow
by around 64% this year alone, to $478
million, from $290 million in 1998,
according to Ray Boggs, an analyst at the International Data Corporation; it
will continue to grow at a projected 37% annually until 2002, to $1.015
billion. (That's not even counting medium-sized businesses, which Boggs
guesses could add another 15 percentage points to the growth rate.) And "the
market for this equipment is as large internationally as it is domestically," adds
Lior Bregman, a managing director at CIBC Oppenheimer.
|
