Wireless Broadband Fosters Start-up Vendors
By Sheila Galatowitsch
from the October 2000 issue of Broadband Week
At least once a month, Strategis Group analyst James Mendelson gets a call from a new company developing fixed wireless broadband equipment. It seems the promise of a lucrative market and the uncertainty surrounding standards is too tempting for a growing number of technology companies to resist.
In the slowly developing wireless broadband market, there is still plenty of room-and financing-to accommodate both new entrants and seasoned start-ups. As Mendelson says:
"Before the lottery, everybody buys a ticket."
But winning this game will take more than just buying a ticket. To survive the almost certain shakeout as the market matures over the next two years, smaller vendors are aggressively courting service providers, partnering with big-name systems integrators and working to ensure that their technology becomes part of an emerging standard. Some may even pursue investment or acquisition by a bigger player to stay in the game. Along the way, they are leading industry efforts to devise workable, affordable point-to-multipoint wireless broadband access technology.
One veteran start-up is six-year-old Netro Corp. in San Jose, Calif., which went public last year and this spring raised nearly $400 million in a secondary offering. Netro's systems for local multipoint distribution service frequency bands are deployed in 55 networks worldwide. In the United States, the company is working with service providers Winstar and Nextlink to test its 28 GHz system and plans to announce a deployment contract with a second-tier LMDS carrier later this year.
Although Netro sells directly to several service providers outside the United States, its key strategy is teaming with systems integrators such as Lucent Technologies, Motorola, Siemens, Cisco Systems and Nokia. Many large network equipment suppliers are developing their own wireless broadband access technology, but choose to partner with start-ups to get the benefits of innovation or complete their product portfolio for various frequency bands. Their smaller partners get to be part of an end-to-end solution that includes fat pockets for vendor financing, a prerequisite for most deals with service providers. Partnering with the giants also increases a start-up's exposure. "Our partners are our front line of service," says Jonathan Jaeger, Netro's senior product marketing manager.
Among its competitors Netro counts both big-name vendors, such as Alcatel and Nortel Networks, and start-ups like Ensemble Communications Inc. in San Diego, Calif. This three-year-old private company, which is partnering with Lucent, Samsung and ADC Telecommunications, recently raised $100 million in four rounds of financing. Ensemble's system is in trials with carriers worldwide, including Adelphia Business Solutions trials in Pennsylvania and New York. With its greater capacity, higher bandwidth and single radio design, Ensemble's technology represents the next generation advance from what is now on the market, says Carlton O'Neal, vice president of marketing. "Our model has functionality beyond current demand," says O'Neal. "Carriers are dying to deploy something that is read for prime time."
While Ensemble expects to make its LMDS system commercially available later this year, Hybrid Networks Inc. in San Jose, Calif., is having trouble keeping up with demand for its multichannel multipoint distribution service technology. "We are on a roll right now," says Deborah Burton, vice president of sales and marketing. A 10-year-old company that last year decided to focus exclusively on fixed wireless broadband, Hybrid now has 53 commercial deployments with carriers worldwide, including the Sprint high-speed Internet services in Phoenix and Tucson, Ariz. Sprint, which owns 22 percent interest in Hybrid, will spend $10 million with the vendor this year for a multi-city build-out. Hybrid also partners with system integrators Andrew Corp. and Thomcast Communications. With all this activity, Burton finds it difficult to follow up on incoming sales leads. "I have more opportunity than I have people."
Hoping to steal away some of that opportunity is Vyyo Inc. in Cupertino, Calif., formerly PhaseCom, which raised $100 million in an April IPO. This summer Vyyo and its major system integration partners ADC Telecommunications and Nortel, along with several other vendors, formed the Wireless DSL Consortium. The group plans to use the Vyyo air interface approach-which itself is based on the cable TV industry's DOCSIS interoperability standard for cable modems-as the initial reference point for defining open standards for wireless broadband technology. Also this summer, heavyweight Cisco, which entered the MMDS technology race with its acquisition of Clarity Wireless two years ago, helped form a consortium under the IEEE Industry Standards and Technology Organization banner. The Broadband Wireless Internet Forum will pursue development of a standard based on the Cisco technology approach. While it isn't participating in a standards consortium, Hybrid Networks considers its system on a fast track to a de facto standard, says CEO Michael Greenbaum. The vendor has assured Sprint and other MMDS carriers that it is willing to make its proprietary standard open.
The best technology-not the best standard-ultimately will win this game, says Todd Carothers, vice president of marketing for Adaptive Broadband in Sunnyvale, Calif. Adaptive has signed more than $1 billion in contracts with such service providers as Fuzion Wireless and Telecom Wireless Corp. since the first commercial deployment of its product for unlicensed spectrum a year ago and expects to roll out production units of its MMDS and LMDS products by year's end. "The industry will move to the curve of the best product at the lowest price," Carothers says. And may the best vendor win. |
