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October 1, 2005
By Tara Seals
This summer the FCC in a 4-0 vote adopted an order classifying DSL as an information service, not a telecom service, under Title I, in line with the U.S. Supreme Courts decision in June on cable modem service in NCTA v. Brand X. The deregulation effectively releases the Bells from the requirement to make DSL circuits available to competitors at reasonable cost, leaving independent ISPs without a guaranteed way to offer broadband to their customers. With cable and DSL potentially out of the picture, purveyors of wireless broadband and BPL technologies look to provide the salvation ISPs may need.
In the aftermath of the FCCs ruling, phone companies, in theory, could refuse to honor wholesale contracts, or could raise wholesale rates above what the RBOC charges for its own Internet service charges.
Even so, some say line-sharing may not go away anytime soon. Kyle Dixon, senior fellow with The Progress & Freedom Foundation, says broadband providers have maintained net neutrality for years without official FCC action, so the policy statement is not necessary.
Nonetheless, in the wake of the FCC decisions several giant companies placed their lots with broadband over powerline, a technology that allows service providers to use the electrical grid to provide bandwidth for Internet access, video conferencing, cable television, local and long-distance telephone services and interactive video, effectively replacing the telco or cable provider within a building.
Google, the Hearst Communications Inc. media group and bankers at The Goldman Sachs Group Inc. invested what The Wall Street Journal said was around $100 million in CURRENT Communications Group LLC, a BPL equipment-maker. Shortly after, IBM announced a partnership with Houstonbased power utility CenterPoint Energy to build a BPL network. And Motorola Inc. said it was integrating Intellons HomePlus 1.0 INT5200 chipset into its Powerline LV product, which is a combination of Motorolas Canopy broadband wireless system and BPL, targeted to utility companies, ISPs, CLECs and others looking to circumvent the cablecos and incumbents.
Meanwhile, wireless companies also are looking to attract ISPs. The effort may be helped by the fact that broadband wireless access has been a viable alternative for ISPs already, in rural areas outside the reach of DSL.
This is not a new concept for many of them, says Bert Williams, vice president of marketing at wireless mesh networking company Tropos Communications Inc. He says he has seen an uptick of interest from ISPs looking for a new way to gain access to customer homes in areas affected by the line-sharing rules, and expects an explosion of service providers of all types in the space in the next 12 months. We are seeing steady progress from where we were even six months ago, he says, especially among service providers.
While deploying a wireless network is more cost-effective than running fiber or building copper networks, ISPs should be aware of the realities. To provide true broadband, by which I mean symmetrical, high-speed throughput, requires densecell architecture, says Williams. Big stick approaches like setting up a single WiMAX AP for a 30-square-mile-radius will not work, because client devices are limited by size, weight and battery life, and dont have the power to connect over long distances to the receiver and talk back to it at high speed. Those are simply the laws of physics.
Mesh architecture improves the economics of dense-cell architectures by requiring backhaul at one in 10 base stations rather than at every tower an attractive proposition for new market entrants looking to deploy high-speed, cost-effective broadband wireless access.
Some municipalities are rolling out metro Wi-Fi or pre-WiMAX in unlicensed bands on a wholesale basis to service providers. ISPs could use these networks to provide citywide broadband, although the quality of service and dedicated bandwidth DSL-based ISPs differentiated on before would not be available.
Its still early days, and the market is still developing, says Phil Belanger, vice president of marketing at wireless equipment-maker BelAir Networks. Hybrid WiMAX and Wi-Fi may be the future, with Wi-Fi on the edges and licensed WiMAX delivered by a service provider everywhere else. Theres a love-hate relationship with the unlicensed bands. There are lots of client devices available there, but its hard to monetize.
The success, failure and general outcome of the trend to a third network could have larger repercussions than simply keeping ISPs in business. According to research from UBS Warburg, new technologies could upset the current duopoly between the Bells and cable MSOs, and eat into their profits, particularly those of the Bells. UBS forecasts DSL revenue will grow 32 percent in 2005, versus 37 percent in 2004 and 41 percent in 2003. The emergence of a third network or new combination of technologies that can provide an alternative to the current competitors networks would likely slow these carriers consumer growth further, according to the report.
In the end, it may come down to cost versus bandwidth. There is no brand loyalty when it comes to bandwidth, says Dave Schaeffer, founder and CEO at ISP Cogent Communications Inc. Whether you purchase wireless or wireline, the only concern of the end user is that the network is robust enough to meet their needs. The provider that can offer robust bandwidth at the lowest price point will gain market share over time.
BelAir Networks www.belairnetworks.com
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