Seybold - High-Speed Las Vegas
By Andrew M. Seybold <andy@outlook4mobility.com>
5 February 2003
About a month ago, the Supreme Court reinstated NextWave's licenses for spectrum in 93 metro areas. Ever since, there has been speculation as to how this spectrum would be used. Anyone who still thinks that NextWave will sell its spectrum was not in Las Vegas the first weekend in March. Why Las Vegas and why this particular weekend?
It was a NASCAR racing weekend and 175,000 fans flocked to Las Vegas for a weekend of automobile racing and to spend millions of dollars on NASCAR merchandise including jackets, hats and radio scanners. It was also where NextWave and its partners demonstrated just how fast CDMA2000 1xEV-DO really is. Partners at the event included Digital Orchid, the San Diego startup that provides NASCAR content over phones and PDAs using the existing data networks, Lucent Technologies and Qualcomm. Packet Video was also there demonstrating its video over EV-DO technology.
The attendees read like a who's who of the wireless, content, system integrator and application developer communities. This particular venue was chosen because NASCAR fans are not only fanatics about racing, they are tech-savvy. Many of them carry sophisticated radio scanners so they can listen to the chatter between the drivers and their pits and many are already using Digital Orchid software to follow NASCAR events when they are away from the track.
The demos were exciting. NextWave, with the help of Lucent Technologies, set up a COW (cell on wheels) at one end of the track and a number of devices were online with the Sierra Wireless AirCard for EV-DO. There were PDA devices from HTC, HP and others, HP Tablet PCs and even a desktop system set up to show surveillance camera output, streaming video and audio, race particulars and Internet surfing.
Some of the demos were set up to show the difference in speed between GPRS, CDMA2000 1X and 1xEV-DO. I found these to be the most impressive. Since I have been using both GPRS and 1X all over the nation for the past few months, I am aware of the actual speeds that can be achieved and I felt that the demos were fair. Obviously, the EV-DO network was not heavily loaded, but it was being accessed a fair amount and it was pushing a lot of data (video and interactive games) down to ten or more devices being used to demonstrate EV-DO capabilities.
The thing that impressed me most was that in addition to NextWave's partners, whom you would expect to see, the guest list included a host of well known companies from a wide variety of market segments. There were systems integrators who want to be able to sell EV-DO to their clients, content providers who are looking at any future NextWave network as a way to distribute their content to mobile workers, mobile consumers, homes and small and medium-sized business customers. Several major computer hardware and software companies, at least one national DSL service provider, a couple of major ISPs and some device vendors were there as well.
Major players in several large industries were looking at the capabilities of EV-DO and listening to NextWave's plans with great interest. These companies may be among the first real customers on the NextWave network when it is built. Notice I did not say "IF" it is built. I came away from the weekend's activities convinced that NextWave will not only be able to get its reorganization plan through the courts, it will emerge and be able to fund this network. There is a pent-up demand for high-speed broadband services and since DSL and cable modems only cover a small fraction of the population for stationary services, I believe that NextWave's vision of a high-speed, broadband, data-only network that will cover most of the top 100 markets will become a reality.
NextWave As A Reseller?
I believe that NextWave can be successful building a data-only network and then reselling it to other operators and companies that want to provide access to their own services and/or networks via a high-speed wireless connection if it does it right and in a timely fashion.
Why would a network operator, with its own network providing both voice and data services, want to resell high-speed data services on the NextWave network? Most existing wireless operators, both GSM/GPRS and CDMA, are able to offer slower data speeds as well as voice. But taking their systems to the next level will be expensive and it will require reallocating a chunk of their spectrum for 3G services or purchasing spectrum at future auctions or from other operators. If they resell EV-DO on NextWave's network they can conserve their own spectrum for voice and slower-speed data and probably handle their current and future voice traffic with spectrum they already have.
As far as devices are concerned, there will be chipsets that will permit EV-DO and GSM technologies to work together in the same devices. These chipsets will provide the ability to use, for example, a GSM network for voice, the EV-DO network for high-speed data and when out of NextWave coverage, GPRS for slower-speed data access. The same will be true for CDMA voice-and-data networks, and soon customers will be able to move from Wi-Fi to EV-DO, GPRS and CDMA2000 1X supported by devices and backend servers that will make this type of roaming fairly seamless.
Other than the fact that NextWave could help mitigate a wireless operator's need for new spectrum in the near term, why would a wireless operator consider reselling on a network that offers equal access to every network operator? The answer to that one is easy. They would resell high-speed data services in order to remain competitive. If an operator doesn't strike a resale agreement with NextWave it might lose some of its high-end customers that provide higher ARPU (Average Revenue Per User) to networks that do resell the network. Then, to gain a competitive edge, creative network operators will work with content providers to differentiate their product offerings.
Certainly, some high-speed data customers will be happy just to get a fast, fat wireless pipe to use--they will have almost the same capabilities as they do now when sitting at a desktop computer with a wired connection to the Internet. IT managers will welcome this high-speed data pipe because their applications will, for the most part, run across this network just fine--they wont have to do anything differently to enable their corporate applications.
I think that you will see wireless operators that choose this route differentiate their networks with unique content. They will seek out content partners that will help make their service over the NextWave network more attractive than the "other guys'" service. They might even go so far as to pool some spectrum in areas where NextWave doesn't have coverage so they can earn additional revenue from other networks in the NextWave reseller system.
The wireless community could rally around the NextWave network as a way to put high-speed data in place in the U.S. sooner and with less risk to each player. If the wireless community worked together to build out this data-only network instead of individual 3G data networks, we could more quickly determine the demand for data, learn what applications users want and will pay for. Perhaps once the FCC or someone with some sense provides a true, long-range spectrum plan, individual operators could build out their own networks to cash in on the demand created by the NextWave system.
I don't know about you, but in these uncertain times I would rather spread the risk among a number of players and not take it all on myself. Unfortunately, some wireless network operators won't believe that this type of arrangement is in their best interest. They will claim that their technology is "better" and that that owning the entire network is "better." Is that smart business in today's environment? I'm not so sure.
Building and reselling a data-only network is an ambitious undertaking but I, for one, believe NextWave can pull it off and make money for itself, its stockholders and the stockholders of any company that buys into the network.
Andrew M. Seybold
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Copyright 2003 Outlook 4Mobility
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