Good article from the Wall Street Journal on WiMax.
Internet and Phone Companies
Plot Wireless-Broadband Push
By JESSE DRUCKER and ALMAR LATOUR
Staff Reporters of THE WALL STREET JOURNAL
January 20, 2005
Several big Internet and phone companies are moving to provide wireless high-speed access to the Internet -- without phone lines or cable -- challenging the dominance of those traditional connections to millions of U.S. homes and offices.
EarthLink Inc. hopes to be selling this kind of Internet access, known as wireless broadband, in multiple markets across the country by the second half of this year, according to a company executive. Sprint Corp. and MCI Inc. are actively testing the technology, while AT&T Corp. plans to begin deploying it in 2006.
The city of Philadelphia is moving ahead with the nation's largest citywide deployment of the technology know as Wi-Fi and next month will announce details for its plan to blanket the city with cheap wireless Internet access. The reason, city officials have said, is that parts of some neighborhoods haven't been wired for high-speed Internet access via phone or cable lines, and others can't afford it.
These various wireless moves have the potential to yet again shift the balance of power in the rapidly changing U.S. telecommunications industry, giving consumers a potentially cheaper and more flexible alternative to phone and cable lines for Internet access and many other services.
One of the technologies drawing the most attention is WiMAX, which is similar to the popular Wi-Fi standard that millions of people have used to set up wireless networks in their homes but is slated to have a range of several miles. Since WiMAX has yet to be certified, companies are using precursors to the technology.
If the technology takes off, millions of phone and cable customers could cut the wires that tether them to the regulated telecom world. That means being able to surf the Internet and send e-mail at high speeds -- maybe eventually make calls over the Internet -- with a wireless-enabled computer in any room in a house or any outside space covered by the technology. The advantages of portability should be obvious to anyone who remembers when there were no cellphones.
Besides lopping off some wires, wireless broadband could open the door to more competitors. It is expected to become relatively cheap to deploy over time, which could mean lower prices and more options for consumers and businesses.
One disadvantage: The spectrum that Wi-Fi uses is unlicensed and more prone to interference. These plans are different from the so-called 3G cellular networks that wireless companies like Verizon Wireless are rolling out to zap e-mail and video via cellphones.
Before anyone can cut their old cords, however, the technology must clear a number of hurdles. And no one expects to see the telephone companies and cable operators, with their dominance of the Internet-access market, to cede much of that turf easily or soon.
In fact, the Bell companies also are actively testing various wireless services as they rush to dominate an array of emerging technologies like Internet calling. Qwest Communications International Inc. has tested wireless broadband in several markets and plans to roll it out to consumers and businesses in 18 months. Verizon Communications Inc. and BellSouth Corp. have also run advanced trials.
Sprint, for example, has been doing trials of wireless broadband using equipment from Motorola Inc. called "Canopy," in rural markets in North Carolina and Kansas. There, customers receive high-speed Web access wirelessly. Once the wireless broadband services are standardized, "that would allow us to truly compete with a broadband type of application that would compete with cable and DSL providers," says Oliver Valente, Sprint's vice president of technology development. DSL is the most common high-speed technology for Internet access via telephone lines.
Sprint is also looking at offering national WiMAX services, combining its valuable radio-wave spectrum with that of Nextel Communications Inc. The two companies last month announced plans to merge.
Adding to the incentive: Some of the Bell telephone companies are stepping up their lobbying to the Federal Communications Commission to eliminate their obligation to give Internet service providers access to their high-speed networks. Companies like EarthLink and Time Warner Inc.'s America Online need to find new ways to get into people's homes if they are to continue with their current business models.
"We're getting squeezed," said Tom Tracey, vice president and general manager for next-generation broadband services at EarthLink, which has been trying out a similar concept since early last year, partnering with a company called DigitalPath to provide wireless access in several small cities in California.
EarthLink is looking at both Wi-Fi and other wireless technologies, including precursors to the hotly anticipated WiMAX technology, as it seeks to expand its base of 5.4 million customers. "We need to find other broadband channels of distribution," says Mr. Tracey.
The Bells argue that they shouldn't be forced to share their lines. "We're incurring all of the costs of building these networks and we don't feel we have to share them with our competitors below what it costs us to build and maintain our network," says BellSouth spokesman Jeff Battcher.
If some of the Bell companies succeed in blocking others from using their lines, consumers would only be able to get their high-speed Internet service from their phone or cable company. Cable companies generally have no similar obligation to make their networks available to other providers. (An exception is Time Warner Cable, which, as a condition of its merger with AOL, is required to allow other Internet providers on its high-speed network.) In March, the Supreme Court is expected to hear from a coalition of Internet providers seeking to require cable operators to make their networks available.
The battle over broadband is particularly important since providers such as EarthLink and AOL are still largely dependent on dial-up subscribers, a group that is steadily declining as high-speed Web access becomes cheaper.
Today, consumers and businesses can access the Internet via dial-up, a modem that sends data over a cable line or high-speed access via a phone line using DSL subscriber. Consumers can also use Wi-Fi, a technology that provides wireless Internet access in a limited area -- at home or in a public space.
Enthusiasm for wireless broadband has increased in recent months as more companies and suppliers enter the market, convinced that it now works. Clearwire Inc., a company founded by early wireless guru Craig McCaw, is offering service in a few cities and aspires to be a national wireless-broadband competitor. Smaller Internet-service providers -- such as AMA TechTel and NextWeb Inc. -- are gradually expanding beyond rural areas and suburbs, and into large cities. All the companies charge a fee for unlimited access to the Internet, as there is now with phone and cable links. In some cases, customer pay more for higher speed and less for lower speed.
Established telecom-equipment makers are also increasingly turning to this area. In the past week, Lucent Technologies has announced partnerships with both Alvarion Ltd., a maker of wireless networking equipment, and BelAir Networks, a Wi-Fi equipment maker whose gear MCI is testing. MCI is also testing gear from Tropos Networks, which is being used by Philadelphia for its wireless rollout.
Wireless-broadband services have a rocky history. Companies such as Winstar and Teligent tried to offer similar services during the telecom boom of the late 1990s, with limited success. Sprint's efforts with so-called fixed-wireless technology led to a $1.2 billion write-down.
For the technology to get even more affordable, experts say the much-hyped WiMAX technology needs to be certified and standardized, which could still be a year away, and another year after that before it is widely available in laptops and other devices.
Intel Corp. has already played a large role in spreading Wi-Fi through its Centrino chipset in laptops and is a big WiMAX backer. Intel is also teaming up Clearwire to develop the WiMAX standard for portable wireless Internet access. The services being contemplated by Sprint, MCI, and EarthLink could operate over so-called unlicensed radio-wave spectrum. WiMAX is likely to operate over licensed spectrum, which requires expensive licenses and could be a barrier to entry.
The type of equipment customers would need could differ depending on provider. Clearwire sends its customers a device about the size of a large paperback book that customers plug into their computer with an Ethernet cable. With some companies, a small antenna on a rooftop or windowsill may be required.
The stakes are high. In the competition to provide the best broadband, the victors could end up supplying communication services ranging from phone to Internet access and even to television. The winners might also have access to revenues from other services such as Internet ads.
Moreover, companies like the Bells that already have customers for regular phone services see broadband and Web services as a way to keep those customers loyal. "If a customer has an SBC e-mail address, he is more likely to stay with us," says Michael Coe, a spokesman for SBC Communications Inc.
But the Bells are hedging their bets, in case wireless broadband takes off this time. They are investing in the technology, even as they spend billions to lay fiber lines that will be capable of delivering ultra-high speed Internet access and TV.
Verizon said it would consider installing wireless equipment in areas where DSL wouldn't be feasible, but it's not a technology the company expects to deploy widely. Last summer, Verizon quietly announced it was using equipment from Alvarion to test services in Grundy, Va. BellSouth has been testing wireless broadband for two years, and says it's encouraged by the results.
Qwest has performed four trials of WiMAX during the past 12 months in hilly, urban, suburban and open rural areas and expects to start commercial development in 18 months. Wireless broadband "offers high data speeds at what will eventually be low costs." says Balan Nair, Qwest's chief technology officer.
Write to Jesse Drucker at
jesse.drucker@wsj.com and Almar Latour at
almar.latour@wsj.com