Enterprise focused ISPs start to blaze the trail for WiMAX

Rethink IT, Dec, 2004

The WiMAX community has been awash for some time with optimistic predictions about the broadband wireless technology's prospects in the internet service provider (ISP) world. A quarter of US wireless ISPs will migrate to WiMAX in 2005-6 and a further 25% in 2007-8, according to ABI. Broadband is now offered by 92% of rural service providers, with 22% of them using at least some wireless, usually in unlicensed bands.

Now, as equipment testing and availability draws closer, some of these WISPs are making their move. The telcos may be hoping to kill off the ISP through a wired/wireless triple play offering, but their strategies will take time to get off the ground and, in the meantime, trailblazers hope to gain critical mass in unlicensed spectrum in their chosen markets. Outside of rural areas with no access to DSL and cable, the primary target is the enterprise, at least until the subscriber equipment becomes sufficiently cheap to be deployed to the mass market without heavy operator subsidies.

TOWERSTREAM

The most high profile example is TowerStream, which has already launched enterprise services based on pre-WiMAX Aperto equipment in Boston, New York, Rhode Island and Chicago and recently announced its latest location in Los Angeles, with San Francisco as the next target.

The company is building points of presence on tall buildings in Los Angeles, such as the Aon Center, to deliver services over a 10-mile radius from early next year.

In San Francisco, service should be up and running by the end of the first quarter of 2005.

TowerStream shows just what can be done with the technology today, even ahead of the formal standard and certification processes for WiMAX that will make the technology dramatically cheaper, and mainstream, next year. It is building its base gradually and cautiously with a profitable T1 replacement business, but this low risk start is laying the ground for a future, more ambitious move into offering the triple play of voice, data and video to the mass market, in competition with cablecos and telcos.

The way in which it is building its coverage is confirmation that grass roots businesses can emerge in broadband wireless, in just the same way that they did in Wi-Fi, but that there is an acceptable business model available to them. Because the most important fact about TowerStream is that with funding of just $6m from friends and family, it is already operating at a profit. This is at a time when a base station costs around $30,000 and each customer premises equipment is between $500 and $700. Think how profitable it might be when volume chip pricing cuts in.

TowerStream already has 700 customers in total, uses Aperto equipment from end to end, and has 'networks in the sky' built on just nine base stations in Boston, where it says it already has 3% of the T1 market, and fewer still in the other cities where it operates.

The simplicity with which a smart thinking start-up has approached broadband is evident in the company's model. It wanted to bypass the Regional Bell Operating Companies (RBOCs) completely, knowing that if it went into competition with them on T1 prices, its backhaul would end up priced at just enough to squeeze out most of the profit. So it bypasses them and either terminates all its traffic directly at a major internet hub, or contracts with long distance carriers to take it there from one single point.

"We decided to put 18GHz microwave towers up as a kind of network in the sky. These need line of site to work. The first thing we did was negotiate their sites, and we then used these for backhaul for our broadband wireless base stations which use some of the same locations," said CEO Jeff Thompson. The TowerStream service then carries data in 5.8GHz unlicensed spectrum from the base stations to the customer.

The targets right now for TowerStream are mostly the smaller to medium sized businesses, but it will take on 10Mbps-20Mbps delivery for just over $3,000 a month and is happy to talk to bigger enterprises about bigger loads.

It offers a Service Level Agreement just like any other service supplier, which it is happy to leave on its web site, where the performance guarantees include 4x9s reliability (99.99%) on network uptime, low round trip latency and less than 1% packet loss.

But it's TowerStream's approach to the future that makes the most interesting listening. "From the day WiMAX 802.16d equipment is available, we will install it. It's not a big part of the costs of the network, it's mostly the site acquisition that make up the bulk of our network costs," said Thompson. TowerStream has towers on the Empire State building in New York and the 1,100-foot Aon Center (formerly the Standard Oil Building) in downtown Chicago.

"And when 16e (the mobile version) is ready, the WiMAX Forum is trying its hardest to make it a software download, so it should be a simple matter to turn our metropolitan networks into a mobile telephony business overnight," added Thompson.

As a precursor to this, and to prove that he is deadly serious, Thompson hints that he is about to pull the trigger on an experiment that will get his company ready for this service sometime towards the end of 2006, by trying out Wi-Fi now.