IP: Research Suggests All Is Not Bleak

[Dave Farber <dave () farber net>]

------ Forwarded Message
From: Dewayne Hendricks <dewayne () warpspeed com>


Research Suggests All Is Not Bleak

The broadband fixed wireless industry has supposedly been in the
doldrums for a year or more. Vendors are bleeding red ink and singing
the blues. More than a few have dropped out.

by Gerry Blackwell
[March 26, 2002]
<http://isp-planet.com/fixed_wireless/research/2002/isp-market_wireless_repo
rt.html>

Apparently whatever ails the industry overall isn't having much
effect on the ISP market segment. Or not according to surprising new
research from ISP-Market LLC, a Walnut Creek, California-based
consulting and research firm.

For ISP-Market's most recent study, Broadband Wireless Access 2002:
Service Provider Profiles, Market Drivers and Spending Projections,
the firm surveyed 120 ISPs already offering broadband fixed wireless
services. The report projects ISPs will spend $345 million on fixed
wireless network equipment in 2002.

Over 50 percent of the respondents indicated they planned to deploy
from ten to 30 additional access points in the first half of the year
alone. Given that most survey participants are Tier 2 and 3 players
and many only have a few access points now, this is significant.

And it's not just existing wireless ISPs who are spending money on
wireless. For another study last October, ISP to xSP: Putting the
Service in Service Provider, the firm interviewed 120 randomly
selected U.S. ISPs about their plans for offering additional
services. Thirty percent said they would launch broadband fixed
wireless access initiatives in 2002.

Again, this is a significant increase. ISP-Market estimates that less
than 10 percent of ISPs-600 to 700 all told-had deployed fixed
wireless services by the end of 2001. Managing partner Tom McCafferty
admits the firm's estimates tend to be conservative. Others have
suggested there may be as many as 1,200 wireless ISPs in the U.S., he
says.

Near-term key findings
The firm also quite deliberately did not ask participants about plans
for 2003 or beyond. "We don't want to be the kind of company that
says, 'This market will be worth $8 billion by 2005,'" McCafferty
says. "We've got access to same group. We'll work with them again
later this year."

So why, despite a general economic slowdown and supposedly reduced
confidence in the fixed wireless industry should 2002 be the year of
the wireless ISP? McCafferty says it's a combination of factors.

One is that with the disappearance of many competitive local exchange
carriers (CLECs), it became more difficult for ISPs to find other
ways to provide broadband access.

"There was a major decline in Tier 2 and 3 ISPs' access to DSL,"
McCafferty says. That was enough to make many of them start looking
at fixed wireless. "And then the fact that they don't have to deal
with the telcos [if they go with a fixed wireless solution] makes it
even sweeter."

The other big factor was equipment availability. "Price-wise it's
there now, the stability is there. There are just not as many
question marks on the equipment as there were," McCafferty says.

"Now they can deliver some kind of broadband solution and the ROI is
half the time it would be if they went with DSL from the telco. And
for the first time they're not having to share revenues with anyone."

Another factor may simply be that the new entrants saw others having
success with fixed wireless and jumped on the bandwagon. McCafferty
did not actually ask participants in the later wireless ISP survey if
they were making money on fixed wireless services, but they must be,
he reasons.

"Looking at what some of their expansion plans are, I would certainly
hope that they're making money," McCafferty says. "Of course that may
not be a good assumption given the track record of this industry."

He's only half joking. Most analysts believe companies like Winstar
and Teligent failed largely because of their now discredited
build-it-and-they-will-come network expansion strategies.

<snip>



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