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It's
in the Trees
By John Latta
May 2000 - Broadband Wireless Business
www.broadband-wireless.com
Broadband to the home is in a quagmire. DSL providers
are racing to install using the existing copper loop while cable
MSOs are spending to overbuild and create a digital plant so that
cable modems can be installed. Horror stories abound on installations
botched by company bureaucracy or incompetence, especially with
DSL installed by ILECs. Yet, the hidden factor behind many of the
installation problems is Windows and the PC. In spite of all the
promises for plug-in-play the reality is much different than the
practice. Home PCs are seldom part of a network infrastructure and
as a result NIC cards are rarely found in home machines. Breaking
open an old PC loaded with ill-behaved games, a version of Windows
corrupted in "DLL Hell," and an ISA bus hardly provides
the foundation for stable broadband connectivity. Must the broadband
provider also be a PC repair technician? This is hardly the basis
for building a robust broadband digital infrastructure. From an
operator's perspective retail sales and home install using up-to-date
PC technology is where the promise is. At the same time this distorts
the business model where consumer purchase of the modem limits the
revenue stream from the modem. Ideally a broadband provider would
like to collect use fees on the modem over a long period of time
as a continuing revenue stream in addition to the service and portal
charges. Executives also speak of the potential of a virtual unlimited
upsell for the broadband customer. We have heard numbers up to $200
a month and above for the well connected broadband home. Unfortunately
the reality is quite different. Broadband attach rates average 3.5%
and in some neighborhoods go to 8% of the homes passed. If Internet
access is so compelling why are the attach rates so low? We expect
that just getting a truck roll is a major barrier in the market.
Thus, the quagmire is a circular market cycle between poor installation
performance, high end user total cost, and lack of compelling user
scenarios.
How to break the cycle? This is not a problem easily
addressed because of its complexity and the fact that it spans many
aspects of the food chain in a broadband network. Ultimately how
this will be broken rests with the consumer finding broadband as
a significant value to their personal lives. A recurring theme from
executives in broadband industries is that the Web will drive demand
for broadband connectivity. Yet, our market assessment is that this
is a shallow perspective. Digital connectivity must have an impact
on individuals. This can be in terms of saving time, easing the
burdens of life, enhancing life's experiences or building the family,
to name a few. There are many criteria to use and these can be readily
laid out. The critical factor is that broadband and the Web are
only infrastructure components, not the end solution, which the
consumer finds compelling. Further, market analysis indicates that
this is not just driven by entertainment. The value rises significantly
when consumers are directly responsible for how bandwidth or information
is used. The best example is the success of cellular telephones
where the users find value in casual voice. That is, always available,
anytime, anywhere and trivial to use. Yet, in the broadband market
we are some distance from achieving the objective of high value
consumer products and services. Two key elements in the value of
broadband include the total bandwidth and the size of the return
path. Our analysis indicates that at least 3Mb/sec on both the forward
and return path will be required. With both DSL and cable modem
just struggling to deliver connections, the industry is years away
from these levels of performance.
To address this broad range of issues we must start
at the infrastructure level and certainly one of the more important
is the broadband connection itself. It is here that wireless can
plan an important role. To put this in context we ask the question,
"Is broadband wireless a disruptive technology?" To address
this we refer to the book "The Innovator's Dilemma" by
Clayton M. Christensen, Harvard Business School Press, 1997. This
book defines how sustaining technology can be overtaken by disruptive
technology and lead to the downfall of traditional companies because
they fail to recognize the power of disruptive technology. In spite
of the fact that the market for broadband is only emerging, the
quagmire outlined above makes traditional broadband solutions especially
venerable to disruptive technology. Thus, what are the requirements
for broadband wireless in this context? The list includes, at a
minimum: pervasive connectivity, consumer install, superior performance
and low cost.
Broadband wireless falls down in pervasive connectivity
due to line-of-sight requirements. This is a major issue that is
rarely discussed in public forums such as conference. For both of
the major service bands, MMDS and LMDS, achieving non-line-of-sight
propagation is very difficult. The key issue is trees, especially
in residential areas where trees are an important element in the
neighborhood environment including individual home lots. The stock
response to an MMDS test site is an example of what the technology
is capable of doing is Phoenix, Arizona and this is hardly representative
of most urban areas. How about Bangor, Maine? Thus, for wireless
broadband to solve this problem it must address how it can access
a high percentage of the households in a given region. One approach
is to go lower in frequency but this is highly unlikely. Right now
any available frequency up for grabs is being driven by the need
for 3G (mobile) services. The upcoming auctions for television channels
60-69 will be dominated by cellular operators seeking to provide
new broadband services to the individual. The next approach is technology
and here it appears that the prospects are better in MMDS. The only
company which represents it has a potential solution is Gigabit
Wireless. Its AirBurst technology uses spatial and temporal diversity
to receive and transmit non-line-of-sight signals. Further, it has
the potential of achieving 10Mb/sec downstream to the home with
approximately 1/3 of that in the upstream channel. Gigabit Wireless
also claims that its technology can be self installed by the consumer.
The combination of pervasive connectivity and superior digital bandwidth,
has the potential for disruptive technology over DSL and cable modems.
The answer to the quagmire is in the trees.
www.broadband-wireless.com
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