Broadband wireless access (BWA) has been available for about 5 years, but a new generation of equipment and services has raised the technology’s profile in the European residential sector during the past 12 months. The new BWA has considerable potential. Although it is unlikely to have much impact on existing broadband players in the short term, both service providers and vendors in adjacent sectors should keep a close eye on developments.
Fixed wireless equipment capable of broadband speeds generated widespread interest during 1999 and 2000. European governments licensed dozens of operators in a variety of bands, often via national spectrum auctions. However, most providers failed to make any headway, at least in Western Europe, and a rash of bankruptcies led to widespread disillusionment with BWA. Those operators that survived are targeting business customers that cannot get wired broadband access.
In the past 12 to 18 months, interest in BWA has revived for two reasons. First, the success of Wi-Fi equipment based on the 802.11 standard has renewed faith in wireless as a potentially important broadband technology. Second, a new generation of equipment (referred to as “N-BWA”) that does more but costs less is attracting widespread interest.
A slew of startups and established wireless equipment vendors is hyping N-BWA, including Airspan, Alvarion, ArrayComm, Axxcelera, Flarion, IPWireless, Navini, Redline and SR Telecom. In some cases, these vendors have powerful support from key technology enablers, including Intel and QUALCOMM.
N-BWA equipment does not fit an obvious niche yet because providers believe it:
- Poses a challenge to mainstream fixed broadband services, at least in the medium term
- Is largely a niche fill-in access technology, primarily suited to regions that DSL cannot reach
- Is an alternative to 3G with the cost characteristics of fixed broadband but the convenience and reach of a mobile service (often dubbed “4G”)
- Is an alternative to Wi-Fi (802.11) that is better suited to wide-area applications
Standards rivalry reflects the confusion about the ultimate role of N-BWA. Two standards, 802.16 and 802.20, are vying for attention. The 802.16 standard has strong backing from Intel and the Intel-led WiMAX Forum. It is primarily seen as a wide-area variant of 802.11, better adapted for use in public networks as a local-loop technology. However, a recent variant, 802.16e, is designed specifically for mobile applications. The 802.20 standard is being designed from the start with mobility in mind; Flarion Technologies is leading this initiative. It is less well developed but is building considerable momentum.
Most companies in the N-BWA field are small, privately funded startups. Most are still trying to land major contracts that will reassure the market about their long-term prospects. Almost all of the contracts signed to date are for relatively small networks or are trials—though some of these trials (e.g., between Flarion and Nextel in the United States) could lead to much larger deployments in the next 1 to 2 years. Exhibit 1 lists some of the recent service launches in Europe.
The Stuttgart service gives a strong indication of the potential of this technology. Airdata offers customers city-wide access to the Internet at a price and speed comparable to fixed broadband.
- Support for universal broadband (UB): This has been an important boost for the technology in countries such as Sweden, where there is a political commitment to UB. France also has committed to the idea of UB with a role for wireless. In other countries such as the United Kingdom, major service providers and users are lobbying for spectrum and grants.
- Mounting agreement and coalescence around two standards, which are both complementary and competitive. Although this competition may confuse the market initially, rivalry could result in more rapid development of workable standards and a clearer role for the two main candidates.
- Spectrum efficiency, which eases regulatory obstacles. The World Administrative Radio Conference (WARC) reached an outline agreement in 2003 on the global use of certain bands around 5 GHz for BWA.
- Success of 802.11, which may have ended long-standing consumer resistance to the principle of fixed wireless technologies.
- Confusion about exactly what role N-BWA will play, which may hold back large-scale commercial deployment and affect investor confidence. N-BWA sits rather awkwardly between DSL, 3G and Wi-Fi, and it lacks the clear market-segment definition that these technologies currently enjoy.
- DSL is very well entrenched in many countries (in some cases along with cable modem). DSL is mature and already well down the cost curve that N-BWA has yet to traverse.
- Acquiring the necessary spectrum remains fraught and complex, despite the outline agreement at the WARC, and must be undertaken on a country-by-country basis—adding to costs and investor uncertainty.
- There is still a lack of capital in the industry and many investors were badly burnt by the widespread failure of BWA (LMDS) providers between 2000 and 2001.
Service Provider Recommendations
- Participate in standards efforts and lobby for early agreements. Lack of agreement on standards is an obstacle to the deployment of N-BWA in public networks because most service providers dislike using proprietary technology here.
- Understand the challenges from other technologies. Some N-BWA vendors have set ambitious goals for their technology, but there are plenty of alternatives—both entrenched (DSL, cable modem) and potential (Wi-Fi, 3G, fiber, powerline).
The Yankee Group originally published this article on 2 March 2004.
- Issue an RFP and conduct a trial of N-BWA if you have not already done so. N-BWA is a promising candidate as a fill-in broadband technology; it could become even more significant. Service providers must ensure they are not caught short by developments.
- Consider the wider implications of N-BWA, which has potential applications as both a fixed and a broadband technology and could hasten the convergence of fixed and wireless services in some cases.
- Lobby regulators about the value of N-BWA to ensure availability of spectrum on fair terms. Most governments want broadband to be as widely available as possible and N-BWA can play a role in universalizing broadband.