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The broadband wireless equation

The Canadian marketplace has yet to see the true impact of broadband wireless services.


March 1, 2001  


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The early crusade for fixed wireless took a powerful punch in the shoulder when Canadian providers had to throw in the towel after failing to yield profits.

Reflection has shown that the technology itself was not at fault. Rather, it was a flawed business plan and the lack of perspective for the service. The focus on small- and medium-sized businesses did not extract the true potential that wireless broadband has to offer, leading to a whirlwind of mergers and their eventual demise.

Today, new fixed wireless providers are emerging from the ashes and seem to have discovered the equation that will lead to their success. Providers have realized that they simply cannot reach their true potential alone, and must combine with wireline to be capable of providing comprehensive access solutions.

TECHNOLOGY BENEFITS

Wireless broadband technologies offer many benefits to an overall access strategy. Technologies such as Local Multipoint Communication Systems (LMCS) can be used in a point-to-multipoint network application. The technology can transmit two-way voice, data, Internet and video services to business and residential customers. When viewed in the context of the competitive environment, LMCS can serve as an alternative, an extension or as direct competition to fiber-based networks.

Competitive local exchange carriers (CLECs) view LMCS as a relatively easy way to extend the reach of the network and to broaden the available market. And, some form of wireless technology will likely be the only option for competitors to enter secondary markets across Canada. Wireless holds the promise of delivering next-generation services to all Canadian consumer and business customers.

Broadband wireless technology offers several advantages over traditional fiber-only networks, including speed of deployment, the ability to selectively target customers, and the ability to defer capital cost by operating on a “build-as-you-go” basis. Deploying equipment is less time-consuming and complex for operators than is establishing the necessary rights-of-way (RoW) to deploy copper or fiber routes.

The technology also allows a provider to selectively target customers that require the services, resulting in immediate revenue generation. By operating on a customer-by-customer, build-as-you-go basis, a provider can defer the majority of the capital cost. The cost structure is based on deploying customer-premises equipment (CPE) at each customer’s location, rather than completing the entire network infrastructure, thereby lowering total infrastructure costs.

CONNECTING REMOTE AREAS

Wireless also offers the ability to connect more remote areas with major communications networks. As an alternative to the high price of laying fiber, schools, hospitals and secluded communities can now get connected via wireless technologies. The existence of an economical option, and the demand in these regions for advanced services, means customers in rural areas can now gain access to the same kinds of technologies that players in larger centres already have.

Yet, despite the many benefits of fixed wireless solutions, it has often been a difficult road for its carriers. In fact, the initial winners of LMCS spectrum have seen operations come to an end. Hindrances for fixed wireless growth have included competition from DSL and cable technologies on the residential side, competition from DSL and inexpensive fibre on the commercial enterprise side, and the lack of a proven business plan for smaller carriers. For service providers in general, it has not been until recently that the viability of different wireless local loop (WLL) business plans emerged, based upon the success of the commercial rollouts. That viability lies within a new relationship between fixed wireless and the fiber that it was supposed to replace. This is borne out by the emergence of providers (such as Stream Intelligent Networks) that use wireless technologies as a means to extend network reach.

The Canadian marketplace has yet to see the true impact of broadband wireless services. However, the continuing adoption of the Internet by a business population that is not exclusively found along fiber runs in the downtown of Canada’s metropolitan cities will lead to an increase in the use of these services. Also important will be the recently announced initiatives by various levels of government (e.g., the Alberta SUPERNET) to see that all of its constituent businesses have broadband access.CS

Iain Grant is Managing Director of the Yankee Group in Canada, a technology-consulting firm in Brockville, ON. An economist by training, Mr. Grant has more than 20 years of diversified experience in the management, development and utilization of information and communication technologies.


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