WiMax in Rural America

Executives With Three of America's Largest Broadband Wireless ISPs Share Their Wisdom On WiMax in Rural Applications

By Timothy Sanders

April 20th, 2005
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Introduction

The buzz on WiMax these days is electric. The term is nearly as prevalent as Wi-Fi albeit with a difference. Wi-Fi and hotspots became popular as deployments launched. WiMax is famous without any product on the shelves.

It is no surprise then, that service provider perception of what WiMax is, what it means to them and what the future holds is variable to say the least. Virtually everyone agrees that it is a very good thing---perhaps a watershed initiative for the broadband wireless industry. What will the ultimate impact be of WiMax both in the US and the global wireless marketplace.

Internationally, it seems WiMax is already poised to take off---hungrily awaiting product. Numerous countries have aggressive service providers fielding broadband services largely in the 3.5 GHz spectrum. Likely gear to serve this market will be amongst the first systems produced.

But what of the US? Will licensed band (2.5 GHz) services explode and dominate the market? Will this happen but primarily in metropolitan areas? Or will the WiMax standard for unlicensed band gear (5 GHz range) gain early footholds? In either case what of rural America? What part will WiMax play in the rural US?

Obviously these are crucial questions for rural service providers. Before trying to answer them perhaps some WiMax background is in order.

Exactly What is WiMax
WiMax seems new but in many ways it is nothing new at all. Much of the technology in one iteration or another has been around for several years. Several vendors offered variations of the current WiMax flavor---indeed they donated the seed technology to the WiMax Forum. However, these firms all built 802.11 proprietary systems. Each fielded a media access control (MAC) that offered specific improvements over the Wi-Fi standard. What was missing amongst these numerous vendors was interoperability---one vendor's gear would not work with another's. That and the support of vendors at the chip level with built in support for the technology. These existing systems work well. Many second generation versions of these technologies are being deployed every day. They aren't broken. However, partially due to a lack of interoperability, the gear is not competitive price wise with other mass market broadband technologies. Cable modems long ago dropped below $100 for customer premise equipment (CPE). Telco digital subscriber line (DSL) technology is also at sub-$100 levels. A consistent standard drove prices down and customer adoption up.

At its core WiMax is just such a standards initiative. This is the great gift that Intel has given to the broadband wireless industry. Virtually everyone agrees that broadband wireless is here to stay and that standardization is essential. How quickly WiMax gear is adopted will fuel expected price reductions.

Having defined WiMax in terms of its economic impact, there do remain important technical and business considerations to examine.

WiMax---The Technology and the Business Case
Current WiMax thought seems to be that the licensed band carriers (mostly at 2.5 GHz) largely controlled by Clearwire and Sprint/Nextel will dominate the market in the US. That is arguable. Much of the buzz about WiMax has centered on customers receiving signal through walls, windows etc. Basically eliminating the non-line-of-sight (NLOS) problem. This absolutely requires a licensed band solution. Why? The essential answer is power. Licensed band spectrum by being an exclusive (and thus interference protected) band is allowed to use much more power radiation than unlicensed band gear. Unlicensed band radios WiMax or otherwise will all have power limitations.

This suggests some questions: Will independent wireless Internet service providers (WISP)s be inundated by major licensed band carrier launches as today's collection of small WISPs slowly wither away? Clearly no WISP today could challenge a major carrier's initiative into the mass market. Is the business case for rural America strong enough to justify the cost of licensed band deployments? Or will major carriers follow the money and launch in metropolitan areas early and often? Our respondents agree that the licensed band may be where the best opportunities lie. However, as with most things wireless there are complications.

Clearwire does appear very aggressive and probably controls somewhere around fifteen percent of the US 2.5 GHz spectrum either through ownership or leases. Its initial launches have been in both metropolitan and smaller markets. Sprint was an early player in broadband and controlled approximately thirty five percent of US markets. In the intervening years it has done little to field a broadband wireless strategy-or even articulate one. Through its recent acquisition of Nextel it secured the old WorldCom 2.5 GHz licenses bringing its share to somewhere around seventy percent of available licenses controlled. Much of the licensed band success in America will hinge on Sprint's decisions in this band. Sprint does appear to be taking steps to secure and re-bid on leases coming due. Does this bode well for aggressive deployments. It is true that additional licensed spectrum may become available soon. But who will control it? More importantly will rural America be on their radar screen?

WiMax will support the 5.8 GHz unlicensed spectrum and likely more later. So if major carriers initially ignore rural markets will independent WISPs, many of whom serve rural markets, deploy this technology---albeit with the power limitations unlicensed band implies? Perhaps. I spoke with some of the nation's largest independent carriers (both licensed band and unlicensed) to poll their thoughts.

Prairie INet
Prairie iNet serves 110 markets in the Midwest ranging from 2,000 to 30,000+ size towns. It has artfully survived the boom, crash and rebirth of broadband wireless. It deploys 802.11 unlicensed band multi-point wireless gear in its markets. Its CEO Neil Mulholland is a seasoned veteran whose opinions turn on what he feels is a realistic appraisal of the market drivers that will fuel WiMax adoption---or not.

"WiMax is an improvement on 802.11 systems," said Mulholland. "However, the gear we have today is working---the industry isn't broke and it doesn't need fixing."

Mulholland explained that in his view the price of the technology is the broadband wireless industry's real problem. He agrees that Intel has done a terrific job marketing the initiative and creating hype---perhaps a bit too much.

"I am seeing some WiMax fatigue," said Mulholland. "There has been hype for several years now---people are ready to be shown a solution."

Since Prairie iNet holds no licensed spectrum, and sees little licensed band competition in the near term, its decisions turn on whether WiMax is enough of an improvement over existing unlicensed band gear to adopt. In Mulholland's view even the availability of unlicensed band gear may be down the road.

"I expect to see licensed band product come to market first," Mulholland said.

Mulholland concedes that WiMax does offer enhancements and standardization (which should fuel savings). In particular, the focus on spectral efficiency could pay strong dividends to carriers. The business case though is what adoption rates will turn on.

"The vendor that gets CPE equipment to the $100 range, whether WiMax or not is the one who will win," said Mulholland. "At the end of the day if non-WiMax gear is significantly cheaper, we don't see people paying a premium for it."

This is not to say that Prairie iNet would not use the technology. Mulholland feels that his company might use it for future new city build-outs. It is unlikely however to replace functioning 802.11 networks unless there is a needed performance boost. Reliability of equipment will inform the final decision for Prairie iNet.

"Those of us who have been out there five years or so lived on the bleeding edge of technology and nearly bled to death," explained Mulholland. "Our preference at Prairie iNet is to buy field-proven gear if it is there."

Mulholland believes this means that carriers will wait to see what happens in actual deployments---the bigger the carrier, the longer the waiting period. He feels operators could be skittish. For these reasons he asserts that orders will be slow at first and that having or not having WiMax won't make or break rural markets.

"I think most surviving operators today are technology agnostic," added Mulholland. "We are looking for a good Chevrolet at a great price."

AMA/TechTel
Texas based AMA/TechTel is perhaps the largest broadband wireless carrier in the US with over 8,700 broadband fixed wireless customers. It adds about 200 new wireless subscribers monthly. Today AMA/TechTel is also a competitive local exchange carrier (CLEC) with some 30,000 total subscribers on voice, dial, wireless and other services. It owns a multi-dwelling-unit (MDU) company and a structured cabling service.

As Douglas Campbell, vice president of Enterprise Solutions explained, the company's origins go back a way.

"We started in 1995 as a bulletin board, then a dial service," said Campbell. "We deployed our first broadband wireless customers in 2000."

Campbell added that the carrier's network of 100 markets spans more than 25,000 square miles of both metropolitan and ultra rural markets as small as 21 households and as big as 200,000. It holds no licensed spectrum, although it would be interested if such were available. It heavily invested in voice over Internet Protocol (VoIP) service and uses wireless gear from Alvarion, Motorola, Aperto, Ceragon, Avantri, Axxcelera and others---the bulk being Alvarion product.

"Despite being a technology company we are not enamored with technology," said Campbell. "The business case comes first and foremost---technology is just a delivery mechanism."

Campbell explained that it is a company all about being a solution provider. On the residential side it focuses on the bundled package of service (voice, video and data). For enterprise customers it offers managed solutions of the latest technology more affordably than customers could do it for themselves.

This is a carrier with a customer base and investment it must protect. Despite that it is very bullish on the WiMax initiative.

"Our network is too big to be on the bleeding edge," said Campbell. "But we will move promptly to use WiMax when we feel the time is right."

Much like Prairie iNet AMA plans a wait and see approach as early networks are deployed. Campbell added that he sees the firm layering WiMax over its current network and gradually replacing existing gear prudently.

"We think there are a lot of questions still on how voice and data will be handled on 802.16." Campbell said.

"Licensed band gear may be out in 2006," said Campbell. "However, we don't expect unlicensed band equipment on the market until maybe late 2007 or early 2008."

Despite its positive stance towards WiMax product lines, the company turns a seasoned eye to the market drivers that will determine its final decisions. Because AMA is both a wireline and wireless company it factors market needs heavily into its thinking. Much as it does today it will use wireless to shore up weaknesses in towns where it may field both fiber and DSL services. On the technical side, the company would look for gear that reduces interference issues and increases spectral efficiency. It also has to be economically viable. Because AMA is more heavily weighted towards wireless in rural markets its focus will be on reliability also.

"We don't see WiMax as a Holy Grail," said Campbell. "This will likely be a slow steady process of adoption for us."

AMA believes when it goes into a market rural or otherwise it must work very hard to build relationships with the communities. Its solutions must assist the community's needs.

"Particularly in rural markets if problem pop up you may not get another chance," offered Campbell. "You have to earn the trust of the rural marketplace."

Campbell emphasized that in the five year range the company hopes to see the technology widely available. It does wonder with all the talk of licensed band service where that leaves carriers like it.

CommSpeed
Also one of the largest broadband wireless carriers in the US, Northern Arizona-based CommSpeed is primarily a licensed band carrier. Sporting over 6,000 subscribers served by a network encompassing 27,000 square miles it is very representative of a larger licensed band rural carrier.

Until recently the company continued to field first generation 2.5 GHz licensed band gear, partly because its geography (low tree cover and advantageous high-ground relay sites) made it very tenable.

However, the firm controls licenses in the Midwest where tree cover is a significant issue.

"We feel the business case of our company is forcing us to adopt WiMax gear or in our case precursor WiMax gear," said Mark Davis, vice president and general manager of CommSpeed. "The second generation CPE we have chosen will be more price and quality competitive."

When asked to prognosticate on when WiMax radios will be available for rural deployments in the US, Davis answers very frankly.

"I don't know," Davis said.

He added.

"We've chosen to use current second generation WiMax precursor gear from NextNet because it supports NLOS and meets our current business needs," said Davis. "In a sense it doesn't matter when WiMax hits the market because we are going to use this anyway."

Davis believes that NextNet is a company central to the WiMax initiative. He is confident its WiMax gear will be backwards compatible with its current product. The company has already ordered its first systems. CommSpeed expects the gear to reduce costs by allowing more widespread user installation, greater signal penetration and fewer truck rolls.

Davis holds numerous opinions on WiMax adoption particularly in rural areas. He explained that he anticipates that 5 GHz unlicensed gear will see the most sales early on (as soon as it is available). Currently his company uses 5.8 GHz unlicensed spectrum for backhaul with licensed at the edge. So CommSpeed is hoping for both. Granting that international demand will drive vendors to licensed band product lines first, Davis expects to see unlicensed gear not far behind.

"To extend our footprint beyond our license boundaries we would certainly use 5 GHz WiMax radios," said Davis. "Certainly we would like to have more licensed spectrum but 2.5 GHz spectrum is scarce."

This last comment reflects what is likely to be a common lament for rural broadband. The major companies who control most licensed spectrum in rural markets are probably the least likely to deploy there. Smaller, aggressive carriers like CommSpeed would---if it could obtain or lease a license.

Davis explained that they are hoping to see CPE costs in the next couple of years around $100 and sub $200 sooner. Whether they will or not remains to be seen. Davis is also intrigued by the possibilities of mobile broadband wireless using WiMax standards.

"If cell providers continue to maintain high price premiums on broadband service and mobile WiMax gear comes quickly enough, there could be real opportunities there," Davis predicted.

Conclusions
Discussions about WiMax availability particularly in rural America often raise more questions than they answer. However, common threads can be drawn from the comments of these seasoned independent operators.

All of the carriers we spoke to are positive about the promise of WiMax. However, their experiences in the crucible of broadband wireless have taught them to be conservative. This is no bad thing in terms of positive public perception of the technology. However, it probably means they will be slow to adopt technology for technology's sake. Clearly, reliability, cost savings and the business case will rule the day. These are everyone's primary market drivers. Existing gear both licensed and unlicensed is getting the job done for carriers aggressively deploying-but carriers always look for improved solutions.

In the US the biggest opportunities probably lie in the laps of Sprint and Clearwire. What is very unsure is how aggressive their strategies will be. For rural customers, it seems clear that those markets are least likely to be early recipients of major carrier deployments. Will that leave rural America bereft of WiMax service? Perhaps. If vendors launch comprehensive lines of product what previously happened may happen again. Smaller, independent carriers will continue to aggressively roll out gear (most unlicensed) in rural markets, while steadily adopting WiMax into the mix. Clearly no one seems to be waiting on new devices to deploy. There is tons of demand and smaller carriers are rolling out service as fast as they can.

Tim Sanders is founder of TheFinalMile, Inc., a fixed wireless consulting group. His experience came from running a multistate Wireless ISP. He can be reached at tim@thefinalmile.net or 828-253-0702.