Mobile Data in the Little Apple
by Lynnette Luna
Telephony, Jul 8, 2002
Deep within the heart of Kansas' rolling green hills lies Manhattan, otherwise known as the Little Apple, a sprawling college town that will soon be home to North America's fastest mobile phone network.
It's an unassuming place for a high-tech, third-generation system. But then, the people building the network are just as unpretentious. They pose little threat to the wireless carrier community, instead choosing to attack the struggling cable modem and DSL providers in smaller markets that the big wireless operators don't care much about.
“Cable modem and DSL providers are limited in their ability to compete because of a lack of capital,” said George Tronsrue, CEO of Monet Mobile Networks. “They rolled out broadband where they could in the 1990s. At this point, they haven't been doing anything more than that. And some are trying to retreat, so our timing has worked out.”
He should know. Tronsrue oversaw broadband rollouts at Metropolitan Fiber Systems, Teleport, Espire and Nextlink. When the managing partner of the Mayfield fund approached Tronsrue for his expertise in building this wireless incubator company, he went for it. “I had been bored on the wireline side,” he said. “This was an opportunity to become a catalyst in the industry.”
In 1999, Tronsrue invested in the company's initial round of financing for what was then called Burst Wireless and joined its board of directors. He stepped in as interim CEO for what was supposed to be a six-month stint, but as the dotcom revolution unraveled, setting up the company to become a wireless broadband operator took longer than expected. “I enjoyed what we were doing, so I went back to the board to ask if I could stay,” he said.
Few in the wireless industry have even heard of Monet Mobile. Its executives don't run around in the typical circles, nor is it part of any wireless trade associations. But it has quietly amassed powerful investors such as CDMA innovator Qualcomm, Intel Capital and Soros Private Equity Partners, raising $45 million to buy licenses and build out high-speed wireless services in 12 markets — and in a market where broadband projects aren't openly welcomed.
“The first six months of our existence, we met with over 50 different vendors of different technologies, from the Lucents and Nortels to the guys working in their garage developing solutions,” said Mark Schultz, chief external affairs officer for Monet.
Monet ultimately decided to deploy a high-speed technology based on the CDMA standard called 1X evolution data only, or 1X EV DO. The technology uses a dedicated 1.25 MHz channel to deliver high-speed Internet applications at speeds of up to 2.4 Mb/s.
Manhattan, Kan., will become the first city to experience 1X EV DO this fall. But even before this launch, Monet had already beaten other major operators to the punch. It launched commercial 1X networks in October in Sioux Falls, S.D., and in Fargo, N.D., in January before Verizon Wireless. 1X technology, which provides data speeds of up to 144 kb/s, is the step before 1X EV DO. Monet has built out 1X in all of its 12 markets to meet FCC requirements, but it has only launched two commercially, preferring to launch 1X EV DO instead. All other CDMA operators are focusing on launching their 1X networks this year.
Tronsrue and his company have some hurdles ahead. It's unclear just how many other CDMA operators will launch 1X EV DO, which threatens the economies of scale Monet needs to offer price-competitive service in all of its markets. Today, just a few operators around the world are dedicated to the technology. Some U.S. CDMA carriers say they are planning to wait for another solution, known as 1X data and voice, or 1X EV DV, which makes better use of their spectrum because it combines both voice and data on the same 1.25 MHz channel.
“You have to dedicate spectrum to just data, and that's not attractive to us,” said Tom Crook, director of technology research and development with CDMA operator Sprint PCS. “We're not doing anything actively that would help the economies of scale with DO.”
Verizon Wireless supports the idea of deploying 1X EV DO, but it first wants to discover what sort of demand it can stimulate before justifying dedicating its precious spectrum for a data-only strategy. “There is risk in the ‘if-you-build-it-they-will-come’ mentality,” Bill Stone, executive director of network strategy with Verizon, told Telephony in March.
Verizon is testing the service with the enterprise and consumer markets using PCMCIA cards and more traditional form factors such as wireless-enabled PDAs. Verizon wants to know how much customers might be willing to pay and what applications they are looking for.
Other operators scattered throughout Asia have plans to deploy 1X EV DO.
PC card provider GTRAN, one of Monet's 1X data card providers, recently gave some hope by introducing the world's first dual-band 1X EV DO data card, which today is used in Korea. Novatel, Monet's other 1X data card provider, has not made any announcements supporting 1X EV DO.
For its trial in Manhattan, Monet used infrastructure equipment from Com Dev, a Canadian-based producer of broadband wireless infrastructure that views 1X EV DO as a way to enter the mobile wireless market. But Monet hasn't made any announcements on who will provide commercial EV DO equipment.
As a result, a new idea has popped into Tronsrue's head in recent months. Why not partner with larger CDMA operators, and deploy and run 1X EV DO networks for them?
“We need someone to see the value of EV DO and get some leverage to bring down the cost. That will help speed EV DO to the market,” he said. Many operators are consumed with maintaining their voice business, and the rollout of 2.5G and 3G will require considerable capital and effort, which makes them ideal partners for Monet,” Tronsrue said.
Now Tronsrue and his team are pounding the pavement. He's trying to convince CDMA operators that the opportunity to target the broadband DSL and cable market might pass them by if they wait for EV DV, which likely won't become commercial until 2005.
The idea is to craft a partnership so that operators don't have to carry it on their balance sheets — a reasonable goal because Monet has access to funding, said Tronsrue. That could mean that a large operator would invest in Monet by giving it spectrum and some cash, or partitioning part of its spectrum for EV DO.
“The idea is taking a slice of spectrum and transferring it. We'd have their brand and a piece of the back office,” Tronsrue said. “That would give leverage with vendors, economies of scale opportunities and distribution.”
Even if no one else sees the opportunity for EV DO, Monet's management team plans to move forward, looking to buy more licenses from third parties so it can bolster its economies of scale.
“EV DO is a product that can take advantage of the whole broadband market,” said Tronsrue. “And there's not a whole lot others can do about it.”
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