Broadband Home Report: February 23, 2003 Issue

Broadband Anywhere: Focus on Wireless

We've spent considerable time investigating wireless connectivity inside and outside the home, and want to provide an update on what we see as the increasing momentum toward "wireless anywhere". This article focuses on the technologies and services for providing broadband beyond the range of Wi-Fi networks. The following article covers the emergence of 802.11g as the new standard for wireless networking in the home.

As more homes have multiple computers, including laptops, a rapidly-increasing number are being equipped with Wi-Fi networks. As people get used to having broadband connections and mobile devices, they start wishing they could have broadband wherever and whenever they want it.

People might want to use broadband in lots of places: at work; at home; in public places like hotels, airports, and coffee shops; outside buildings; and in cars, trains and planes. Many companies are working on a wide variety of technologies and services to make broadband available at all of these places.

"Broadband anywhere" is the objective -- just like using your mobile phone almost anywhere is now taken for granted.

"Inside Out" With Wi-Fi

There are two broad ways to approach "broadband anywhere". One is to extend wireless local area network (WLAN) technology to cover wider spaces inside and outside buildings: we call that the "inside out" approach. The other is to extend wireless metropolitan area network (WMAN) technology to reach into buildings - we call that "outside in". Many companies are working on these approaches; we believe both will play a role.

"WiFi Everywhere"

"Wi-Fi" is key to the "inside out" approach. The technology is very inexpensive and has become so popular that the word "Wi-Fi" has been picked up by the popular press and often misused as a synonym for "wireless".

"Wi-Fi" refers literally to The Wi-Fi Alliance, a nonprofit trade association formed “to certify interoperability of wireless Local Area Network products based on the IEEE 802.11 specification”. It is also used as shorthand for “Wi-Fi Certified” to refer to products which have passed the Alliance’s interoperability tests.

The original "Wi-Fi" designation was for lower-speed 802.11b products; it has been extended to include higher-speed products based on the 802.11a standard and will be further extended to 802.11g when that draft standard is ratified later in 2003.

The 802.11 technology covered by the "Wi-Fi" designation was developed as a WLAN technology designed to cover a building. It operates in unlicensed frequency bands with low power and has a relatively short range. The WLAN usually connects to a wireline for broadband access - typically T1 or DS3 to an office, cable modem or DSL to a home.

Hotspots, Hot Zones and Community Networks

As Wi-Fi equipped notebook computers and PDAs continue their rapid growth curve, companies are focusing attention on providing wireless services outside the home. One approach is to provide Wi-Fi "hotspots" in public places, and extend the hotspots so a series of them form a "hot zone".

Continuing to expand these areas is one way to start covering a larger area and some are working on "community networks". However, the low power and contention within unlicensed bandwidth by multiple sources suggests this may be a difficult model to scale. The growth and expansion of Wi-Fi from a home to a neighborhood to a metropolitan area looks like the waves coming out from a stone thrown in a pond--they are rings of increasing width which fade out as they get farther from the center point.

"Outside In" with Metropolitan Area Networks

A wireless metropolitan area network (WMAN) approaches the problem a different way. These technologies provide wireless broadband services from a tower to buildings and to the streets around them.

Several companies offer technologies specifically for "fixed broadband wireless" designed to provide broadband service to communities not served by wireline services. Some, based on low-cost 802.11 technologies, are suited for smaller areas and light usage; others are proprietary. Most require a "line of sight" (LOS) from the base station tower to the individual home, and use an outdoor antenna at the home pointed to the base station. Some use "mesh networks" to route data from one home to another until it reaches the base station.

Phone companies have been on a quest to extend their coverage from the narrowband voice world to the broadband data world, and have made huge expenditures on spectrum in which to offer so-called "3G" services capable of significantly broader bandwidth than today. 3G technologies with names like WCDMA and EVDO continue to be developed and have been deployed in some places. However, some now believe that these "traditional" technologies will provide only limited bandwidth at a high price, and that other approaches may be more appropriate for wireless broadband data -- especially for the consumer market.

A new group of young companies has been focused on developing technologies to cover wide areas, just as cellular can do, but starting from the premise that they are being designed to carry broadband data -- and that voice is just another data type which will be accomodated. These technologies aim to provide true broadband with data rates of 1-2 Mbps to many simultaneous users at prices comparable to wireline broadband. They typically are "non line of sight" (NLOS) and capable of penetrating trees and walls to reach into buildings. They are usually targeted to notebook PCs and PDAs, use a small modem or PCMCIA card, and are customer installed. They generally operate in licensed spectrum. A few of these technologies are based on 3G; most are not.

Although still in the early evolution stages these technologies appear to be proving themselves in market trials and some are now moving to deployment. Here are some recent developments:

Clearwire has started commercial service in Jacksonville, Florida using technology from IP Wireless. While focused on "areas of Jacksonville where DSL and cable service are not available" the technology also appeals to many people because it is portable and can be used anywhere, not just at home.
Navini Networks and IntroWeb are deploying one of Europe’s first NLOS broadband networks, starting in eastern Holland and then expanding to the northern region of The Netherlands. Navini’s Ripwave™ system provides "untethered broadband access anywhere in the coverage area." IntroWeb will initially offer high-speed data services to primarily residential customers who live in townships of 2,000-10,000 people and also to small-to-medium sized businesses.
ArrayComm successfully completed the first stage of their i-BURST Personal Broadband System trial with Korean telecommunications operator KT. Additional KT evaluation plans include using multiple cell sites in a dense urban environment in the first half of 2003. The evaluation is being held in advance of Korea's development of services in the 2.3 GHz frequency band, with key spectrum usage decisions expected later this year. (We wrote about CKW Wireless, Arraycomm's service consortium in Australia, in BBHR 12/17/02.)
Flarion Technologies and Hanaro Telecom are also conducting field trials of wireless broadband in Korea. Hanaro is seeking to develop a combined wireless and wireline service which will allow residential customers to be able to use broadband Internet both inside and outside of their homes; it deploys multiple broadband last mile access technologies to ensure rapid rollout in high-density areas while preserving access speeds and minimizing coverage overlaps as well as capital expenditure.

The IEEE is busy formalizing standards for these metropolitan area broadband technologies. IEEE 802.16 focuses on fixed wireless, and has recently completed final approval of several standards. IEEE 802.20 has just been formed to focus on mobile applications.

These WMAN technologies can be used over a wide area and in a moving car; they can also be used at a coffee shop or at your home if that is within range. We call this the "outside-in" approach for "broadband anywhere".

Room For Both

At the moment, the "inside-out" approach appears to be ahead because of economies from the high volume of Wi-Fi equipment and the enormous hype in the press. The "outside-in" technologies are potentially disruptive to existing players in hot spots and wireline broadband. Once deployed over large areas, they could make hot spots and wireline broadband access redundant.

We do not believe that one approach will wipe out the other. Each is likely to find a zone in which it operates most effectively and is the most cost-effective for its application. We believe there will be increasing integration by operators of systems which use both WLAN and WMAN technologies with handoffs between them based on the user location and movement. Several WMAN companies have announced seamless hand off between Wi-Fi inside and near a building to their WMAN technology outside.

Where there are dense aggregrations of people and users - especially in and near buildings -- it's likely that wireline to the building and wireless in and around it will make the most economic sense. Further away from buildings, or in areas with low population density, pure wireless makes the most sense.

In the short term, because the efforts related to Wi-Fi and WLAN technologies are typically handled by different units of companies than the WMAN technologies, users are likely to see a wealth of choices -- with lots of overlap and confusion. For the companies, it may result in duplicate spending and resources. We expect this to settle down over time.

Things to Watch

Broadband wireless is in its infancy, and there are more questions than answers at this point. Here are some things we're watching:

The WMAN trials and launches are important both as a wireless competitor to wireline broadband services and as providers of broad coverage of "broadband anywhere".
The new fixed wireless technologies enable penetration of markets in which wireline companies find it difficult to cost-justify deploying wired technology. Many companies are working to provide broadband services to previously "unserved" and "underserved" makets. Kyle Ackerman says that many people are unwilling to compromise between the places they want to live and raise kids and the places they work; his company Xtratyme provides broadband wireless services to their homes.
These technologies provide a great opportunity for wireline companies to fill market gaps. Many telephone companies -- including Verizon, Sprint and BellSouth in the US -- are experimentlng with many flavors of these offerings and are already running trials to see if they are cost effective and reliable for consumer broadband services.
Broadband wireless cuts across all aspects of these companies. Different parts of these companies are charged with different aspects of satisfying customer needs - the wireline groups see wireless as a logical extension of DSL, while the wireless groups see broadband data as a logical extension of voice services.
We expect to see cable companies pay more attention to broadband wireless. Several wireless technology and service providers have expressed an interest in helping cable companies deploy these services.
The "hot spot" business is just getting started, with several large entrants. Most seem directed to the business-traveler market. We question whether consumers will have a high willingness to pay for these services, and wonder whether hot spots represent a stand-alone business or an incremental service as part of a broader communications offering.
Korea is especially important. It has the world's highest penetration of wireline broadband services. Wi-Fi and 3G are already being deployed, and many carriers are working out how to integrate wireless and wireline service offerings. Several carriers are working with the newest technologies from Flarion and Arraycomm.

Conclusions

Wireless broadband technologies are all in their infancy, and the applications are largely unknown. People's behavioral habits always adapt slowly to the availability of new capabilities.

We believe the end game is unlikely to be dominated by one technology. The outcome will be determined by the economics of various technologies, the development of popular applications to drive volumes, and consumer willingness to pay for these applications.

It's too early to predict the outcome, but it's fun to watch the game.

( www.wi-fi.org ) ( www.clearwire.com ) ( www.ipwireless.com ) ( www.navini.com ) ( www.arraycomm.com ) ( www.kt.co.kr/kt/eng ) ( www.broadbandhomecentral.com/report/backissues/Report0212_12.html ) ( www.flarion.com ) ( www.hanaro.com ) ( www.xtratyme.com )