Wireless strikes back
Common wisdom says that the last mile problem will be solved by either DSL or cable modems -- depending on who can build out first.
What most prognosticators fail to notice is that the majority of households simply won't be wired with fast network access in the next three years. Why? In some cases because the local phone and cable companies are lame, and in others because those houses are too far from the central office or not wired for cable.
But as events last week showed, there is a third choice, and by 2003 it may eclipse both DSL and cable. What's this service? Wireless.
Two separate announcements last week showed that at least some visionaries believe in wireless. Paul Allen's Vulcan Ventures coerced MCI into pumping $300 million into Metricom, and Allen himself upped his Metricom investment by the same amount.
Metricom makes a wireless Internet access network, called Ricochet that works at the local level. Much like a PCS network, Metricom wires neighborhoods by placing a small transmitter and receiver on lampposts, shopping centers and other buildings. Metricom currently operates at an average of 28.8K-bps, and is available in only three areas: Seattle, Silicon Valley/San Francisco, and Washington DC. But the wireless boxes are easy to deploy, and some universities and airports have installed them as well.
Clearly 28.8 is too slow for most users. But Metricom has developed a 128K-bbs version of their system. And that's what all the money is for -- Metricom will use the cash to roll out their 128K-bps service nationwide. They plan on wiring up 12 metropolitan areas by mid-2000, and 48 more areas a year later. And Metricom will plug those network access ports into MCI's global high-speed network.
That's good news for New York, San Francisco, and other cities with an aging cable plant that's expensive to retrofit, and a recalcitrant phone service that can't figure DSL out. If they can deliver real 128K-bps service, and they price it right, this wireless option could trump both the landline alternatives. Wireless is much less expensive to deploy than wireless, both inside and outside the home and office.
Also last week, AOL gave wireless another shot in the arm. AOL invested $1.5 billion in Hughes Electronics Corporation. Hughes owns and operates DirecTV, the biggest and most successful satellite television service in the U.S. Hughes also sells DirecPC, a brain-dead one-way high-bandwidth service that delivers Internet to the home via satellite, but uses a modem to connect from the home to the PC.
Some of that money will be used to develop a WebTV-like box combining DirecTV with analog modem access to AOL. But the bulk of it will be used to jumpstart Spaceway, Hughes' two-way satellite-based Internet access service, which will be available in 2002. AOL over two-way satellite should be as compelling and low-priced as anything cable or DSL have to offer. And it'll be available anywhere in the U.S. Anywhere.
So by 2002, we'll have Metricom in most major metropolitan areas, offering 128K-bps Internet access wirelessly. We'll have AOL available via two-way high-speed satellite. And I'll bet most cable and phone companies will still be promising their customers high-speed access any day now.
But that's not all going on in the wireless space. On the satellite side, Teledesic plans on having their IP optimized broadband worldwide data service up and running by 2003. And since Bill Gates and Craig McCaw are the main investors, you can bet that it'll be running by then.
And wireless local loop applications are under development around the world that will bring high-bandwidth wireless connectivity to a neighborhood without running wires to each house. These are still a short ways away, but by 2002, they should be in deployment.
DSL and Cable have about two years to get their act together and wire the world. IF they don't, wireless will overwhelm them. And if you believe Paul Allen, MCI, AOL and Hughes, it just makes more economic sense. Let me know what you think about wireless in the talkback below.