* * * * * CABLE DATA COM NEWS * * * * *
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Tracking the Development of High-Speed Cable Data Services
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Vol. II, No. 12 * * * * * * * * * * * * * * * February 1998
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DIRECTNET MAKES WIRELESS CABLE INTERNET FLY IN FLORIDA
After Early Success in Ft. Lauderdale,
Start-up Plans Rapid Expansion in 1998
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While most wireless cable operators' Internet initiatives have
yet to make it off the launch pad, start-up DirectNET Inc. has
already built a successful operation in Ft. Lauderdale, Fla. by
providing fast downstream data connections to bandwidth-starved
businesses.
Armed with wireless cable spectrum rights acquired through
long-term lease agreements, DirectNET plans to offer broadband
wireless services in at least four other U.S. markets by the
end of 1998. The company also plans to form affiliate deals
with other wireless cable spectrum holders to further expand
distribution.
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Wireless Cable Internet Primer
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The same core cable modem technology employed by MSOs in the
wired world is also used by wireless cable ISPs like DirectNET.
Similar to wired cable Internet deployments, a wireless
operator installs a cable modem termination system (CMTS) and
related networking gear in their headend to offer service. The
CMTS modulates digital data signals onto radio frequency (RF)
channels which are then upconverted to the wireless cable
spectrum band for broadcast transmission to roof-top antennas
at subscriber locations. Coaxial cable is run from the antenna
to a downconverter (which shifts the wireless signal frequency
back into the cable television band) and then into the cable
modem inside the customer premise. The cable modem demodulates
the incoming high-speed data signal and passes it on to an
individual PC or local area network (LAN) though a 10Base-T
Ethernet link.
A 6 MHz wireless cable television channel can support 27 Mbps
of downstream data throughput using cable modems with 64 QAM
technology. However, a telephone-return path must typically be
used as a near-term solution for upstream communication.
Operators may be able to use a high-speed wireless return in
the future if key regulatory and technical hurdles can be
cleared.
Like broadcast television, wireless cable transmission is based
on line-of-sight technology. Reliable wireless service
delivery requires a direct line of sight between the
transmitter tower and receiving antennas installed throughout a
local market. As is the case with broadcast TV, obstructions
like dense tree cover, hills or tall buildings can hinder
reception. Distance is a consideration too, as wireless cable
signals can typically only be received within a 35-mile radius
of the transmitter.
Wireless cable technology clearly has limitations, but it also
has key benefits, most notably, the ability to rapidly
introduce high-speed data access throughout a metropolitan area
without the cost or delay of wired plant upgrades. Rather than
installing thousands of miles of fiber, coax or twisted-pair
wiring, a wireless operator installs a headend and transmission
tower and is open for business.
"The beautiful thing about wireless high-speed data delivery is
I can come into a town and in 60 days be built out. I'm not
stringing wires from pole to pole or digging up streets," said
Pete Nicoletti, president, DirectNET.
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The DirectNET Story
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DirectNET was founded in November 1996 by Dave Long, a wireless
cable spectrum holder, and Nicoletti, the owner of a successful
systems integration business in South Florida.
In February 1997 the company started a technical trial of
broadband Internet services in the 2.1 GHz multipoint
distribution service (MDS) spectrum band. DirectNET supported
10 non-paying customers using Hybrid Networks Inc.'s 4 VSB
wireless cable modem system during the test.
In June, DirectNET upgraded to Hybrid's new Series 2000
platform, which uses 64 QAM modulation rather than VSB. After
overcoming some initial integration headaches, DirectNET
increased the trial to 20 users in July.
Hybrid's Series 2000 cable modem system segments a standard 6
MHz television channel into three 2 MHz subchannels, each
providing 8.7 Mbps of data capacity. Nicoletti says DirecNET's
trial found the Hybrid platform delivers downstream Internet
access to end users at up to 1.5 Mbps, the equivalent of a
traditional T-1 line, although upstream capacity is limited by
the use of a telephone return path. Analog telephone modems
only delivers 33.6 Kbps upstream, but the Hybrid system does
support an ISDN return path at up to 128 Kbps, as well as frame
relay connections.
Satisfied with the trial results, DirectNET launched
commercially in September 1997 and began marketing its service
in November. By February, DirectNET had landed close to 100
customer accounts in the Ft. Lauderdale area, primarily
business sites with LANs, serving a nearly 1,000 Internet
users.
While DirectNET's highly asymmetric service offering is not
appropriate for some business applications, Nicoletti says it
meets the needs of most users that simply want faster
downstream access.
"About 80 percent of the market is perfectly suitable for
asymmetric usage: fat pipe down, skinny pipe up," said
Nicoletti. "For the vast majority of people that are looking
for fast Web surfing and downloads, this is fabulous."
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Pricing and Packaging
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Rather than selling low-cost service to residences like cable
operators, DirectNET has focused on providing premium Internet
connections to business users, a market segment that is hungry
for alternatives to the high-priced data offerings of local
telephone companies.
"The way economics work, you don't get a second look unless
you're at least 50-percent lower than the competition," said
Nicoletti. "What we try to do is price our service
significantly less than a dedicated ISDN connection and give 10
times the speed."
DirectNET's basic Internet package for a single small business
or home office user is priced at $75 per month. To receive
service, customers must purchase a wireless cable modem
equipment and installation package for $800. The package
includes a Hybrid N-201 single-user cable modem and a bundled
3Com U.S. Robotics 33.6 Kbps analog modem.
DirectNET service for a business network is priced at $199 per
month with a dial-up return and $299 per month for a 128-Kbps
ISDN return path (not including local telco charges), plus
$1,500 for equipment and installation. The business network
equipment package includes a Hybrid CCM-201 multi-user cable
modem (or Hybrid's N-201 modem and a proxy server) and a
bundled dial-up or ISDN modem.
For either package, customers can opt to continue using their
existing dial-up ISP for upstream connectivity, reducing their
monthly DirectNET service fee by $25.
Business customers that have signed up for DirectNET service
say they are thrilled to finally have a more affordable
alternative to the local telco, BellSouth Corp.
"DirectNET has a sorely needed solution to a big problem. Bell
South bleeds businesses, charging $1,000 a month just for a T-1
pipe," said David Bishop, president of Enhanced Data Solutions
Inc., a DirectNET customer. "I was looking at laying out $1,000
a month and now I pay only $100. I'm so glad these guys came to
town."
"I have to admit I was a little skeptical about DirectNET at
first, but I've never had a service outage in four months,"
Bishop added.
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Service Strategy
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In addition to underpricing telco competitors, DirectNET is
focused on providing superior service.
The company has quickly expanded to 35 employees, including a
stable of RF engineers and systems integration specialists that
provide turnkey customer installation and support services.
Rather than outsourcing key service functions, DirectNET
handles all elements of the customer activation process,
including antenna installation, wiring, modem installation, and
local network configuration.
"We have antenna and network installation crews that are now
geared up to do 100 installs per month," said Nicoletti. "If
there are no issues, we can install a customer within three
days of the order."
That's a far cry from the glacial response businesses typically
receive from local telephone companies.
Bishop says when he inquired with BellSouth about ordering a T-
1 line, he was told there would be a wait of 30 to 45 days for
installation.
"You can't afford to wait 30 days if you're a growing
business," said Bishop. "I called DirectNET and within two
weeks we were turned on."
In November, cable operator MediaOne launched its own telco-
return cable modem offering in DirectNET's service area at a
lower price. Appealing to cost-conscious residential users,
MediaOne is only charging $37.95 per month for unlimited
Internet access, including cable modem rental.
By focusing on the business market, Nicolletti says DirectNET
will be able to hold its own against cable competitors like
MediaOne. Because many businesses are not passed by cable,
they will be unable to receive wired cable modem service in the
near-term. Additionally, Nicoletti believes most local cable
systems will not have the networking expertise required to
support demanding commercial Internet customers.
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Expansion Plans
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With a successful launch in Ft. Lauderdale under its belt,
DirectNET is now working to offer service in five other markets
where it has access to wireless cable spectrum: Pensacola and
Jacksonville, Fla., Chattanooga, Tenn., Tulsa, Okla. and San
Diego, Calif. DirectNET plans to get the ball rolling by
launching service in Jacksonville and San Diego in the second
quarter.
As part of its expansion strategy, DirectNET is also working to
negotiate joint ventures or affiliate service agreements with
other wireless cable spectrum owners interested in entering the
broadband Internet business.
"The trick with us, since we're a revenue driven company, is to
figure out what we can offer that derives the most revenue for
the person with the bandwidth and for us with the expertise,"
said Nicoletti.
If all goes well, Nicoletti says DirectNET will be operating in
up to 8 markets by the end of 1998 and generate $10 million in
revenue for the year. |
