Pardon me, I thought that this would be interesting to you all. Apologies if it was posted previously. Frank C.
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Broadband Goes Downtown
September 25, 1998
Inter@ctive Week via NewsEdge Corporation : The
more bandwidth that businesses consume, the bigger
their appetite for network resources grows.
The continuation of this feeding frenzy is sparking
broadband wireless service providers to make major
investments not only in the spectrum licenses needed to
offer services, but also in advanced technologies that
will enable them to deliver higher-speed services in the
coming years.
The providers leading the broadband wireless services
race are Teligent Inc., which has licenses to operate
Digital Electronic Messaging Services at the 24-
gigahertz tier in 74 markets, and WinStar
Communications Inc., which has licenses to operate
broadband wireless service at the 38-GHz tier in 54
markets. Also drawing attention -- although it has yet to
deliver any services -- is WNP Communications. The
company came away from this year's federal auction of
Local Multipoint Distribution Service (LMDS) licenses
in the 28-GHz tier with winning bids in 40 markets,
making it the largest holder of LMDS licenses. WNP is
awaiting formal approval of its licenses by the U.S.
Federal Communications Commission.
Teligent (www.teligentinc.com) and WinStar
(www.winstar.com) are aggressively testing and
marketing services that deliver high-speed, low-cost
voice and data service to small and midsized
businesses. Both companies provide local phone
service that matches what the Bell companies offer in
terms of enhanced services. They also offer
long-distance service on either switched or dedicated
lines for domestic and international calls.
Without question, though, the service that is attracting
the most attention is Internet access. Both companies
offer speeds ranging from 56 kilobits per second to T1 --
equivalent to 1.544 megabits per second -- and provide
dedicated access, domain name services, e-mail, network
management, network news and Web hosting. WinStar
also offers Asynchronous Transfer Mode and frame
relay services, as well as professional services,
including network integration and design.
Broadband wireless technology is more than adequate
to support these services, says John Nitzke, a senior
analyst at Forrester Research Inc. The key issues are
how broadband wireless providers roll out their services
and which customers they target.
"Successful broadband wireless companies are going to
have to target business areas outside of the main
downtown areas, because most downtown areas already
have more than enough fiber to handle the needs of
customers located there," he says. "Where broadband
will play an important role is in the outlying business
areas that have a relatively dense population of
business customers who aren't well-served by fiber
networks."
Playing The Big Rooms
Right now, Teligent and WinStar aren't following that
pattern. Instead, they're testing and rolling out services
in the downtown areas of several cities. Both companies
provide a full bundle of services in major markets that
include Boston, Dallas, Houston, Los Angeles, New
York and Washington, D.C.
The strategy behind building broadband wireless
networks in downtown areas is to reach as many
business customers as possible while installing as few
base stations as possible, says Rick Hanna, division
president and senior vice president of sales and
marketing at Teligent.
In Houston, Teligent has installed seven base stations
in downtown proper and has mapped the area to
determine which office buildings are within the line-of-
sight of those base stations. With this strategy,
Teligent expects to be able to offer its services to 100 of
Houston's downtown buildings by year's end.
Teligent is using this strategy to set up shop in at least
15 other downtown metropolitan markets at the same
time, Hanna says.
One of Nitzke's predictions is that broadband wireless
providers will focus on smaller businesses that are
based in large office buildings. The theory is that
wireless providers can kill many birds with one stone,
since there are numerous potential clients in each office
building. This idea is supported by a new report issued
by market watchers at Pioneer Consulting, which
estimates that more than half the revenue generated by
broadband wireless companies will come from
businesses with fewer than 10 employees.
Knock On Every Door
Teligent and WinStar recruit new customers by
approaching both the building owners and tenants. This
kind of targeted approach is essential for broadband
wireless because providers need to install expensive
equipment in each building. The cost of the equipment
varies with how many customers are being served at
each location; a general estimate is $1,000 in equipment
for every customer served. This requires not only
getting enough customers in a given building to justify
the cost of installing gear, but also securing permission
from building owners to put the equipment in place.
Teligent's primary marketing focus is on buildings with
more than 20 tenants whose average monthly
long-distance bill is more than $1,000. With a building
that meets these criteria, the company can justify free
installation of the equipment necessary to run the
system, Hanna says.
Like Teligent and WinStar, WNP plans to target
multitenant business buildings with its services, says
Tom Jones, president of the LMDS start-up. With the
FCC (www.fcc.gov) expected to approve WNP's
licenses this month, WNP is gearing up to roll out
services in 1999.
Jones says office building tenants already are
demanding that building owners provide them with
high-speed voice and data connectivity, preferably from
one service provider.
"Landlords are quickly realizing that their tenants need
these connections like they need water, electricity and
basic phone service," Jones says. "The current wireline
providers simply can't keep up with the demand, so
they'll begin to look to wireless as an answer. If they
don't, they're going to be at a competitive
disadvantage."
Within three years, all three companies expect to offer a
full range of services to all of the markets for which they
hold licenses. For a company like Teligent, Hanna says,
this will mean it will have rolled out its services in all 74
of its licensed markets and will have 300 to 400 office
buildings per city on its system.
As the companies expand their customer base, the cost
of providing those services will continue to fall, Hanna
says. The decrease will let broadband wireless
companies cost-justify broadening their target markets
to include buildings with as few as two business
tenants, as well as residential apartment buildings.
MMDS, Anyone?
Multichannel Multipoint Distribution System, one of the
first broadband wireless technologies, has been slowest
out of the gate for voice and data service. Instead,
MMDS is used primarily by wireless cable providers to
deliver video programming. Many operators hope to
add high-speed Internet service, assuming the U.S.
Federal Communications Commission agrees.
Some companies use their MMDS spectrum to
wholesale broadband access to Internet providers,
which may add voice service. But prospects for such
services are murky. "Data is more forgiving than video
or voice," says Donna Nims, director of sales at
spectrum wholesaler WavePath.
<<Inter@ctive Week -- 09-21-98>>
[Copyright 1998, Ziff Wire] |
