The Broadband Boom: Part 2

There are big surprises in the air for the Bellheads and cable head ends. At ISPCON this week, I’m looking at some of them.

The big buzz is focused on fixed wireless and satellite services. Both are poised to grow even faster than DSL or cable modem service in the coming years.

ISPs have their biggest opportunity in fixed wireless. They can use multipoint microwave distribution systems (MMDS), with equipment from a variety of vendors, to deliver broadband speeds to any customer without wires.

MMDSs use unlicensed spectrum in the 2.4GHz frequency range, and new equipment is coming out offering even more capacity in the 5.8GHz range. By using technologies borrowed from cellular phones, there should be room for even unlicensed operators to squeeze 15 channels of broadband data into this space without getting into one another’s way.

Best of all, MMDS lets an ISP “own” its customer. Once the ISP sets up an antenna network, it can offer voice over IP (VOIP) and bid to take over all of a customer’s communications needs.

The folks offering the hardware aren’t start-ups, either. One of the niftiest solutions I’ve seen is Nokia’s RoofTop system. But there are plenty of others out there, such as BreezeCOM, which seems to be targeting small ISPs.

Wireless vendors will still have a problem in rural areas, however. In the boonies, their backhauls to the Internet will still be conventional T-1 lines. If no fiber is available nearby, the ISP may have to limit the amount of bandwidth customers use to maintain speed. In plain English, no Napster for you unless you want to spend $2,000 per month for it.

But otherwise, it’s heaven. The radios cost $300 each, and the price is declining. The central systems are reasonably priced, and Moore’s Law governs that, too. If you’re a phone company dealing with 30-year depreciation schedules and a competitor whose costs decline with Moore’s Law walks into the market, who do you think will win?

There’s another way to rain on the Bellheads’ parade, one with capital and big brand names behind it. I’m talking satellite.

Hughes Network Systems has been selling its DirecPC. for years, offering 400Kbps downloads but requiring 56Kbps modem-based uploads. Starting next month, its new software will offer 128Kbps uploads directly through the satellite. Users need a different dish to get both data and video, but the start-up cost is just $199, no worse than a DSL modem.

Next, Hughes’s big competitor, the DISH Network, has worked a deal with a company called StarBandsm to offer similar speeds, feeds, and prices. In addition to DISH Network, StarBand is also selling its service through Juno and at your local RadioShack, tied to the Microsoft Network. It’s two-way system from the get-go.

Even bigger news is just two years away. In 2003, Hughes will deliver Spaceway, a $1.5 billion investment using a different frequency band, speeding uploads to 512Kbps and downloads to multimegabit speeds. (Look, Ma, no wires!)

The folks at eMarketer figure fixed wireless systems will draw nearly four million customers by the end of 2003, and satellite systems will draw another quarter million. Personally, I think those estimates are conservative. I suspect someone else feels that way, too, which may be why stock in phone and cable companies looks so cheap nowadays.

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