Can Mobile Wireless Save Broadband?
DSL operators are running on life support and raising prices drastically to compete.
This retreat is happening not only in the cable and digital subscriber line (DSL) worlds, but also in the fixed-wireless broadband market, which was expected to help speed broadband growth thanks to its simpler, cheaper deployment.
Can Mobile Wireless Save Broadband?
November 21, 2001 12:00am
Phillips Publishing International,Inc.
Wireless Insider via NewsEdge Corporation : With the end of the Internet boom and an economic retrenchment, the broadband market is suffering. Major carriers are backing off from aggressive deployment plans. This retreat is happening not only in the cable and digital subscriber line (DSL) worlds, but also in the fixed-wireless broadband market, which was expected to help speed broadband growth thanks to its simpler, cheaper deployment.
Sprint [FON], for example, has replaced the Web page for its Broadband Direct service with a simple statement saying, "We are suspending our effort to acquire new residential and commercial Sprint Broadband Direct customers. If you are a current Sprint Broadband Direct customer this will not affect you." SBC [SBC] and AT&T [T] have also backed away from previous fixed-wireless strategies.
If fixed wireless can't make headway, what about the cable and DSL alternatives, which by some estimates cost four to six times as much per square mile to deploy?
They're not doing much better. DSL operators are running on life support and raising prices drastically to compete. Some cable broadband operators also have had to stop taking on new customers.
The overall problem appears to be that users aren't buying into the broadband vision in quite the way the industry expected them to. They like having Web pages download a few seconds faster than over traditional dialup, but that makes broadband a luxury purchase rather than a necessity. In jittery economic times it's easy to forego broadband -- if you've been laid off, you've got the extra 30 seconds to spare.
Even without the economic pressure, the installation, reliability and customer support experiences of broadband are horrible. It's astonishingly easy for customers to study the situation and refuse to deal with it, even at prices that cut margins that don't exactly thrill providers either.
Some industry figures have blamed this consumer apathy on the lack of compelling new content that would demand broadband. "If we as an industry want to take the Internet and, ultimately, the U.S. economy to the next level, we are going to have to give consumers better reasons for purchasing broadband service -- better than faster email and Web surfing," said Harris Miller, president of the Information Technology Association of America in a statement on the organization's Web site.
ITAA argues that the reason for broadband's troubles is the "failure to deliver a series of 'killer apps.'" Massive capital expenditure for faster Web surfing is not unlike building the auto industry, the oil industry and nationwide road and fuel distribution networks solely to give teenagers a place to make out in private. Sure, cars are put to that use, but it's hardly enough to justify all that trouble.
To continue the analogy, all that investment has produced far more than mobile bedrooms. The economic benefits of our transportation networks are both obvious and crucial, and a similar argument can be made for broadband communications networks.
Telecommunications Industry Association President Matthew J. Flanigan made just that argument in an October letter to President Bush. Flanigan claims that we have "largely exploited if not exhausted the benefits of standard dial- up telephone connections." He argues that broadband deployment is necessary to "take our economy to the next level of growth and performance," and that this next level is ultimately worth some $500 billion per year in enhanced economic activity.
Given that current broadband is proving unable to support itself solely by customer revenues, Flanigan calls for a program of government tax credits and more broadband-friendly regulation aimed at encouraging next-generation technology and services.
Clearly, there are immense benefits to be reaped at some point from a stable, accessible and affordable broadband infrastructure. But there's also a considerable gap to be closed between here and there, in terms of both applications and technology.
In the meantime, there is a demand for a certain level of speed at a certain price. Faster email and Web surfing may not be enough to prime Flanigan's broadband economic engine, but the industry shouldn't turn up its nose at real customer interest in something that narrows that gap even slightly. The technology best positioned to do this, strangely enough, is mobile wireless.
While Sprint is freezing the borders on its fixed wireless network, most major carriers, including Sprint, continue to move ahead on higher-speed 2.5G offerings such as general packet radio service (GPRS) and 1XRTT. At 144 Kbps, these services don't offer the raw bandwidth of cable, DSL or fixed wireless, but they can meet the demand that exists for faster Web surfing.
True, 144 Kbps is an optimal speed, and sustained throughput may be somewhat lower, but that's equally true for "56K" dialup connections, which seldom deliver more than about 40-44 Kbps. If cellular providers can reliably double the speed of dial-up connections, they could snap up the center of the consumer bandwidth bell curve -- customers who want to spend less time watching the hourglass cursor, but don't often transfer large files or watch streaming video.
This strategy would represent a dramatic shift for wireless carriers, who engineered their networks precisely to provide mobility. However, there's no requirement that the phone actually move. Indeed a large portion of their systems' processing overhead is spent in dealing with mobility. Knowing that a specialized data device is going to remain in the cell from which it initially connects would make things easier on the network.
Furthermore, the cellular network already has its bread and butter application in place and working. This is key to giving broadband room to grow. Explaining its future plans for Broadband Direct on its site, Sprint notes that it "remains hopeful that the advantages of the next generation of fixed-wireless technology, which includes self installation, no line of sight limitations, increased capacity, and the ability to offer voice services will make fixed wireless a viable consumer broadband product."
Voice is a commercially proven application, and cellular networks already have it in place. Thus while the traditional broadband business is still struggling to build both network and application ends of the bridge, the wireless business has its less ambitious bridge already in place.
There are issues facing this strategy. One is that it represents a different way of doing business than carriers are accustomed to. It would presumably involve different terminal equipment than a standard handset, although this would ultimately prove advantageous. With less stringent requirements in areas like portability and power consumption, a fixed (or "movable" as opposed to "mobile") broadband modem could be cheaper to produce and offer better performance than a pocket handset. Also it would require a different pricing paradigm. Wireline Internet access saw limited uptake while it was billed by the minute. Flat-rated data pricing will be necessary to bring customers onto cellular networks for their desktop and laptop connections. In short, fixed-wireless data will have to be treated as a totally separate service from the mobile high-speed data carriers are preparing to offer.
However, the biggest obstacle for long-term strategic planning is that this option doesn't provide a smooth upgrade to the final goal of megabits per second broadband. Ultimately, though, it doesn't need to. The infrastructure investment is already justified by mobile data services and, especially, by improved voice capacity. The relatively low cost of equipment would be mostly spread among subscribers who have already shown an interest in buying equipment to enable higher speeds.
In the meantime, this option would help build customer demand for higher transmission speeds, while giving the industry time to tweak the business model for even higher broadband. It won't reduce the costs of building those networks once they're ready to be built, but the industry is already facing that deployment curve.
At the end of the day, 2.5G mobile wireless isn't the vehicle that will take us to the broadband future so many people envision. However, it can get us a step closer to that goal at little cost, and at a time when broadband needs to regain momentum.
--John Sullivan >TK Alcatel [ALA]: Boeing [BA]:
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