While cable and telephone companies battle in the trenches in a ground war for broadband subscribers, a new set of rivals is launching a stealth attack from the air.
High-speed wireless Internet access for the residential mass market — a technology that has long been promising the moon but failing to get off the ground — has now hit the airwaves with new services that threaten to change the balance of power in the broadband business.
“What we're doing is a very extensive, very aggressive rollout of what I think is absolutely phenomenal technology,” says Dean Proctor, vice-president of regulatory affairs at Montreal-based Microcell Telecommunications Inc.
It is not the first time that Microcell and its subsidiary Inukshuk Internet Inc. have announced ambitious plans for a wireless network that will rival cable and telephone high-speed Internet services.
Like other companies with similar dreams, Inukshuk has been struggling in the slumping economy of the past few years to develop a network that in 2001 was estimated to cost between $300-million and $500-million — then offer a service at a price matching the $44.95 a month that cable and phone companies are charging.
Now, Mr. Proctor says, the network, the technology and the business case have all come together in a commercial service launched under Microcell's iFido brand in Richmond, B.C., and Cumberland, Ont.
It's part of a $135-million joint venture involving Inukshuk, Allstream Inc. and NR Communications LCC. AOL Canada Inc. says it will test the network in Toronto.
“Now people can see it, touch it, use it,” says Mr. Proctor, adding that the new service is a simple “plug and play” setup involving a modem and transceiver box
While the regular price for the modem is $325 and the service costs $40 a month, the modem's cost drops to $25 for those who sign a two-year contract; as well, under an introductory offer consumers can purchase the modem for $125 and get six months' service at $20 a month, he says.
What makes broadband wireless more viable for the mass market today is a new generation of non-line-of-sight technology, which does not involve the expense of installing antennas on subscribers' rooftops and making sure there are no trees, hills or tall buildings obstructing the radio signals. With the new technology, the signals find a way around obstructions and link up with transceivers inside the home, Mr. Proctor says.
Furthermore, according to Ron McKenzie, senior vice-president of strategy and corporate development at Allstream, the service uses technology from NextNet Wireless Inc. of Minneapolis that is compliant with an international wireless broadband standard called WiMax currently under development. What this means is that the equipment likely will come down in price substantially, as the new standard is adopted and other systems deployed around the world, he says.
“It dramatically changes the cost paradigm from previous generations of wireless technology.”
The wireless-land line battle is not restricted to residential service. On the small-business front, Allstream — the object of a takeover offer by Manitoba Telecom Services — is offering a $59.95-a-month service that also could have an impact on a handful of smaller companies, such as Toronto-based TeraGo Networks Inc. that have created a strong niche market in recent years for wireless broadband services directed at businesses in suburban areas where wire-line access is not readily available.
Bryan Boyd, TeraGo's president and chief executive officer, says his company, which has 1,000 business customers across the country, saw its revenue rise 70 per cent last year and is still expanding its network. He says the new technology gives Allstream the resources to approach a smaller business customer than his company can with its line-of-site wireless. However, he maintains that there is still plenty of opportunity in the marketplace for his high-bandwidth line-of-site services, which cost an average of $1,000 a month.
For businesses that need far more bandwidth than residential broadband services deliver, wireless can be a winning proposition.
At Toronto-based Tennis Canada, for example, information technology manager Hanna Gancarz says a TeraGo wireless link gives her organization twice as much bandwidth at half the price of an underground cable connection. She says the technology can be installed and expanded quickly — a key concern for an organization with a staff of 50 that must make arrangements to provide Internet access for hundreds of journalists, officials and participants attending an annual week-long tournament.
Line-of-site fixed wireless is now a mature and robust technology that is far more cost efficient and reliable today than it was a few years ago, when several wireless Internet service providers went out of business or failed to raise money for their proposed networks, according to Pentti Tegelberg, director and general manager of fixed wireless at Toronto-based Primus Telecommunications Canada Inc.
Mr. Tegelberg says some companies have made a success of line-of-site wireless by building their networks slowly, finding customers then locating transmitters nearby, rather than following a grandiose “build it and they will come” concept. The new non-line-of-sight technology with its lower installation costs will, he says, “create the opportunity to truly build a local access infrastructure that will compete with the copper wires of the incumbent telephone companies.
“It is an opportunity as large as you care to dream about,” he adds.
His optimism is shared by Michael Cytrynbaum, chairman, president and chief executive officer of Milton, Ont.,-based Look Communications Inc., a broadband wireless television and Internet service provider that has been struggling to survive ever since it began operations in 1999. “Copper is a legacy system and I think its time has come,” he says.
Nevertheless, wireless providers will find it tough competing with cable and telephone companies in the consumer market, according to Trevor Corey, a Toronto-based associate partner in the consulting company Accenture. “I think the cable and telephone companies have such a leg up in this area that it may be hard to take the stranglehold away from them.”
Broadband wireless is a good alternative for business, but “the jury is still out on whether it can be a consumer play,” Mr. Corey says. But, he adds, “the broadband marketplace is poised to grow and any broadband access provider is likely to be in a fairly good spot.”
Special to The Globe and Mail
