Broadband wireless to provide much needed competition in datacomm market

Long thought to be the near exclusive domain of the large incumbent telcos, the high-speed data communications market could soon begin to experience greater competition from established and emerging broadband wireless players. Companies such as TeraGo Networks Inc. are already giving established players a run for their money, and others such as the yet-to-be-named joint venture from Inukshuk Internet Inc., Allstream Corp. and NR Communications should go a long way to breaking the stranglehold incumbents have on the market. TeraGo focuses on providing service to suburban business parks where a substantial number of businesses operate, and the Toronto-based company is adding new customers every day. Bryan Boyd, president and CEO of the broadband wireless player, told delegates at the Canadian Telecommunications Forum in Toronto last month that his company focuses on the larger business segment (RoW, Feb. 4/03), now has more than 1,100 customers, infrastructure in 13 Canadian cities and is adding about 50 new customers a month. Rollout SchedulePhase I This phase, which will begin shortly, will allow the parties to validate technological and commercial acceptance of the service and to develop the detailed business plan. Commercial service is slated for early in 2004. Allstream will contribute $5 million. NR Communications will contribute the equivalent of $5 million in fixed wireless equipment. Inukshuk Internet will contribute the use of 60 MHz of its licensed multipoint communications services spectrum in the 2.5 GHz band. Phase II This phase will expand the reach of the network to a greater number of communities in both urban and rural areas of Canada. Allstream will invest an additional $10 million in cash and $30 million in services. NR Communications will provide an additional $40 million in equipment. Inukshuk Internet will contribute full ownership of the 60 MHz licences to the new entity. Boyd tells Report on Wireless that his company has demonstrated over the past three years that broadband wireless is a viable alternative to wireline-based technologies. "We’ve being using this platform for three years and have spent a lot of time perfecting it and making it work, but we’re one of very few worldwide that has actually embraced it. There are others in other parts of the world - the United States, Asia and Europe - but (they) are not as commonplace as fibre-optics-based carriers or DSL." Boyd welcomes the entry of another competitor, and says the industry is starving for competition to the incumbents’ fibre-optic or DSL connectivity offerings. On November 19, Allstream, NR Communications and Inukshuk - wholly owned by Microcell Telecommunications Inc. - announced their new wholesale product. "It’s great for the industry because it validates the technology platform that’s very much reliable. For a company like Allstream to get behind the technology just demonstrates the viability of it," Boyd says. This new joint venture won’t be a competitive threat to TeraGo, Boyd notes. "We actually focus on a larger customer than what’s being targeted (with this venture) so it’s no direct hit on (us), more complementary I would say," he tells RoW. Joint venture to wholesale capacity to others John McLennan, vice-chair and CEO of Allstream, said in a conference call that the decision by the new joint venture’s management to create a wholesale offering represents a substantial opportunity to advance competition in the marketplace. It also allows Allstream to address the economic shortcomings of its original small- and medium-sized business (SME) plan, he said. "This is not really addressing our core sweet spot at Allstream. We wouldn’t be taking this to the large enterprise customers. But what we are excited about is it really does begin to allow us to go into the lower mid-sized and SME market, which we believe is a very profitable and largely untapped market at present," McLennan said. "The investment that it was going to take to really address that market properly (following the Metronet acquisition) was going to be prohibitive and it wouldn’t have allowed us to achieve the kind of financial returns we are achieving now … But with the cost structure that this new infrastructure would allow - the very simple installation on customer (premise equipment), no truck rolls - we’re very, very hopeful and excited that we have an economic model that can support the expansion of our addressable market into that segment." Microcell Telecommunications president and CEO André Tremblay said this venture will help Inukshuk realize its vision to be an integrated provider of a variety of service offerings. "For Microcell, it’s clearly a product that we will direct to consumers. You can imagine the strength of products that would include City Fido, for example, bundled with high-speed Internet and probably as well a Voice over IP (Internet Protocol) feature." The future of Inukshuk Internet has been somewhat clouded since the company received 12 of 13 multipoint communications licences in 2000 (RoW, April 3/00). While the company has conducted technology trials with two equipment vendors and spent millions of dollars to roll out its learning plan (RoW, Nov. 27/01), it had trouble finding a partner to help the build-out of its near-national network. Now Inukshuk has the partners. "By combining the capabilities and strengths of each company, we have formed an exciting venture that can now quickly deploy high-speed Internet, IP-based voice and local networking services and bring the benefits of more competition to Canadians," Tremblay said during the conference call. Tremblay dismissed suggestions that the company’s various service offerings have competing objectives. "As it relates specifically to Sprint (Canada Inc.), it is far from competing with Sprint, it is open to Sprint. If they want to go out and have a solution that makes economical sense to drive up their high-speed Internet business, it’s a perfect solution for them and we expect they may see it in this way," he said. Proven technology Nick Kauser, CEO of NR Communications, said during the conference call that the plug’n’play functionality of the customer terminal will make it a very attractive proposition for service providers. He said that the core non-line-of-sight equipment has been well tested in a 6,500-unit deployment in Mexico and another 3,500 are deployed in other regions. The customer premise equipment will retail for approximately US$250. Additional enhancements, needed for the Canadian deployment, are currently being tested. Kauser was unable to talk about details of the other companies involved in providing the technology enhancements due to non-discloser agreements.Initial network deployment is scheduled to begin shortly, with first commercial service to be launched early next year.

Broadband wireless to provide much needed competition in datacomm market

News | December 3, 2003

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