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FOCUS Issue 0013 (2004)

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FOCUS Issue 0013 (2004) Independent, original, in-depth coverage of the trends and technologies shaping the BWIA industry Recipient of Part-15.Org’s 2002 Wireless Advocate Of The Year Award Steve Stroh, Editor Special Issue Issue 2004-02 Clearwire - New Craig McCaw Venture Poised To Ignite BWIA Industry In 2004 . 1 Clearwire – New Craig McCaw Venture It Begins . 2 Poised To Ignite BWIA Industry In 2004 Finding The Sweet Spot of Telecom . 2 Assembling The Pieces . 3 Details – Spectrum, Part 1 – Background . 5 Details – Spectrum, Part 2 – History . 6 Details – Spectrum, Part 3 – Present . 8 Details – Equipment . 10 I’ve predicted that 2004 would be a watershed Details – Talent . 11 Details – Financing . 12 year for the Broadband Wireless Internet Details – Branding . 12 Details – Target Markets . 13 Access(BWIA) industry. In 2004 there is a Details – Base Stations, Backhaul, and Internet Bandwidth . 13 unique confluence of demand, technology, Details – Mobility . 14 Details – Voice Over Internet Protocol (VOIP) . 15 opportunity, regulatory cooperation on spectrum Details – Timing . 16 Details – Integration / Consolidation . 17 issues, and market uncertainty in the face of an Details – Market Positioning . 17 Details – Lessons Learned . 18 impending technical standard (WiMAX) that Details – The McCaw Factor . 19 many predict will totally commoditize BWIA. In Backup: Why Another Type Of Wireless; Why Another Network; Why Now? 20 uncertainty, there is opportunity, and no one FOCUS Subscription Form . 21 understands that lesson so well as “billionaire ISSN: 1536-7215 wireless entrepreneur” Craig McCaw. FOCUS On Broadband Wireless Internet Access is founded upon the following tenets: There are a number of disparate pieces to this 1. Internet technology is becoming the foundation for nearly all communications, commerce, and entertainment services; story that only form a 2. For Internet access to be truly usable, always-on Broadband Internet access complete picture if you is required; 3. By the end of the first decade of the 21st century, Internet access will be know where to look. In ubiquitous; 4. In the “last mile”, wireline-based technologies and systems will generally the preparation of this prove to be insufficient or not cost-effective to provide ubiquitous, always- story over the last six on, Broadband Internet to most homes and businesses; 5. In the near term, Broadband Wireless Internet Access in all its forms – Sub weeks, I’ve seen no 11 GHz, Above 11 GHz, Free Space Optics, Ultra Wideband, Licensed, License-exempt has emerged as the most likely technology to provide cost- evidence that anyone effective, ubiquitous, always-on Broadband Internet Access. FOCUS on Broadband Wireless Internet Access is written in an informal, easy- else has developed a to-read style, with an emphasis on clear explanations of why a particular company, complete picture of what product, or development in the Broadband Wireless Internet Access industry is significant. Each issue contains a number of original, in-depth articles and news McCaw is planning. So, stories. FOCUS is a just-in-time, short-lead-time publication, using Adobe Acrobat (.pdf) format, and email distribution. FOCUS On Broadband Wireless Internet in typical FOCUS Access is published by: Steve Stroh fashion, I’ll stitch P.O. Box 84, Redmond, WA 98073-0084 USA Craig McCaw (In McCaw 425-939-0076 Cellular days) together a number of [email protected] disparate pieces of the www.focusonbwia.com story of McCaw’s new venture, which is called All logos, trademarks, etc. referenced in FOCUS are the property of their respective owners. FOCUS On Broadband Wireless Internet Access Clearwire, and offer what I consider to be a very mode”) McCaw has been quietly assembling all compelling story. Clearwire… led by McCaw… the needed assets to create a compelling new is the I’ll know it when I see it development that class of services that combine the hottest I believe will launch Broadband Wireless elements of Internet and Telecommunications: Internet Access from a perennial “niche” method • Wireless; completely bypasses the of providing Broadband Internet Access to increasingly antiquated infrastructure and “mainstream” and quite possibly, dominant anti-competitive practices of the incumbent method of deploying Broadband Internet telephone companies Access… If… and it’s a major if… McCaw acts • Broadband; making use of new generations quickly enough, it’s likely that he’ll be able to of wireless equipment to offer Internet rout rival companies and Broadband Internet access at speeds in excess of DSL and Access technologies who had planned on a far cellular telephone “3G” next generation more leisurely adoption/upgrade cycle to data/Internet services Broadband competition than what McCaw has in • Mobility; the technology of Broadband mind for Clearwire. Wireless systems to offer full mobility has It Begins The genesis of this story was an quietly emerged; the label “Fixed Wireless” email message from a person who prefers not to doesn’t necessarily apply any longer be named for publication. Their initial message • Voice Over Internet Protocol (VOIP) was “Do you know anything about a rumor I am telephony; the ability to offer telephony hearing about a McCaw backed company services for a fraction of the cost of launching a 4G network in Florida (and 30 more conventional telephony by using VOIP cities soon to follow)?” Over the next few days technology, over wireless we exchanged emails and insights, and once I Finding The Sweet Spot of Telecom The was alerted to this story, a more comprehensive “Sweet Spot” of Telecom is an inability to picture of what McCaw may be attempting with service the majority of potential customers with Flux U.S. began to emerge. I’m indebted to my new-generation, more cost-effective telecom correspondent for alerting me to this services such as those emerging in countries development. such as Korea… and Mexico. When you need to hide something in plain The Sweet Spot of Telecom is bordered by sight… how do you do it? Stage magicians wireline telephony, wireless telephony, and perform their “magic” in full view of an current Broadband Wireless Internet Access audience by providing a distraction. In the US service providers. Their respective inabilities to business press, you can’t get a much better satisfy the demand for lower cost, higher- distraction than the week before the Christmas performance, telecommunications services and holiday, when most businesses begin to wind scale such services offers a huge opportunity. down in preparation for relaxed holiday In other countries, notably Korea, the Sweet operations, and the hot business news is how Spot of Telecom has been filled by retailers are faring in the critical Christmas sales inexpensive, high-performance DSL. In season. So, purely in hindsight, it seems natural Mexico, it has been filled by reasonably-priced, that the earliest hint of news of Craig McCaw’s medium-performance Broadband Wireless newest venture - to provide Broadband Wireless Internet Access. In Sweden, it has been filled Internet Access services would begin to emerge with municipally-funded FTTP deployments. in the week before Christmas 2003. In the US, wireline telephony companies Since before that article, and continuing to the haven’t, and by all reliable estimates cannot present (likely the primary reason for “stealth (financially) and will not (no effective 2 Issue 2004-02 FOCUS on Broadband Wireless Internet Access competitive threat, little regulatory pressure) I believe that McCaw has correctly identified deploy fiber-to-the-premises (FTTP) or indeed the Sweet Spot of Telecom and is prepared to “FAC” (Fiber Anywhere Close). There will be exploit it with his new venture, now named small demonstration projects, and the Clearwire, and will use Broadband Wireless occasional new development, and some Internet Access do so. municipal government FTTP deployment, but Assembling The Pieces McCaw’s brilliance in the main, FTTP won’t happen in the near in forming Clearwire is not so much in term, and perhaps not the long term. Note… identifying the opportunity, or deciding that FTTP is no longer a question of technology, but “Broadband Wireless is the way to go”, but rather it is a question of willingness to deploy rather in quietly assembling the pieces and the in the near term. Absent such willingness to strategy to effectively and rapidly exploit the deploy FTTH in the near term, a void is opportunity. Here is a summary of the “pieces” created. of Clearwire that have been assembled, and Wireless “telephony” companies are unable to then each piece will be examined in depth. offer effective competition for the lack of FTTP • Spectrum Several years ago, McCaw deployments; their networks, systems, and created Fixed Wireless Ventures to standards are optimized entirely for voice, with opportunistically acquire spectrum that grudging accommodation of moderately higher became available; at the time it was felt (than dialup) Internet access speeds. They prize that McCaw had no specific use in mind standardization of systems above all and are for the acquired spectrum. Last year loathe to make use of new generations of McCaw formed Flux U.S. to buy wireless equipment to be able to offer individual MMDS/ITFS licenses in the broadband speeds. To them, voice is the “killer 2.5 – 2.69 GHz band wherever possible. app”, the one service that they know how to This year McCaw bought Clearwire, an make money on. existing BWIA service provider which has Broadband Wireless Internet Access service developed an exclusive arrangement with providers who are successfully exploiting “The ITFS Alliance”, a consortium of Broadband Wireless technology are small and ITFS licensees. the best of them are funded and organized only Note: From this point forward in the for regional expansion; none to date has a article, for the purpose of brevity I’ll use credible plan to “go national” or has established the term “MMDS” to refer to the entire anything like a dominant brand or identity in (USA) 2.50 - 2.69 GHz band, inclusive of the minds of prospective customers.
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