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The Business Case for High Capacity Wireless Broadband

This presentation explores the competitive landscape of high-capacity wireless broadband technologies in comparison to DSL and fiber optics. It emphasizes the role of wave division multiplexing technology in enhancing fiber capacity and the significance of becoming a low-cost carrier in the wireless market. Key insights include the importance of product simplification, lean operations, and the need for successful deployments based on empirical data. Additionally, the potential for spectrum leasing and the advantages of utilizing high-capacity wireless at 39 GHz are highlighted as sustainable strategies for growth.

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The Business Case for High Capacity Wireless Broadband

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  1. Broadband Wireless The Business Case for High Capacity Presented by: Paul S. Bachow pbachow@bachow.com 610-660-4900 February 20, 2001

  2. Full Disclosure FD • I have investments in the following wireless assets: • 39Ghz Licenses • 31 cities • 35 million covered pops • Public company equity • Private company equity

  3. DSL vs. Fiber • DSL and Fiber serve different: • Markets • Parts of the network • Fiber has a transparent path to: • Increasing capacity at ever falling costs • Highest deliverable customer bandwidth

  4. Re-define Fixed Wireless • There are two types of fixed wireless • High capacity • Fiber like • Metro networks • Licensed • Low capacity • DSL like • Unlicensed • Point to Multi-point

  5. High Capacity Wireless • Wave Division Multiplex (WDM & DWDM) technology has drastically increased the capacity of fiber • Without a WDM type technology wireless cannot compete with fiber • YIG (Yttrium-Iron-Garnet) technology from companies like Verticom enable WDM type wireless capacity increases

  6. YIG Technology • High capacity was: • 16 T-1’s 2 years ago • DS-3 1 1 year ago • OC-3 2 months ago • OC-6 now • OC-12 9 months from now • OC-24 2 years from now

  7. DSL is a failing business case • 2.3 truck rolls per install • $1,300 per residential sub of up front costs w/o sales commissions • Will take years to reduce this cost • Average residential rate $39.95 • RBOCs can’t reach break even at $39.95 • 5.5 year payback assuming 50% gross margin

  8. DSL vs High Capacity • High capacity competes with fiber, not DSL • Low capacity wireless competes with DSL, not fiber • Due to limited time the balance of this presentation will only focus on high capacity wireless

  9. The Wireless Business Case • The marketplace is more competitive than ever • Only all IP service business plans work • 1700 competitors and each is focused on time to market • Service prices are falling • Winners will have the lowest cost structure

  10. How to Win Temporally • Differentiate • Unique services • Broadest offering • Fastest provisioning • Is this a sustainable game plan?

  11. How to Win Permanently • Become the low cost provider • Simplifies your offering and network • Allows you to compete on price • Easier initial sales • You can match competitors’ offers which reduces churn • Allows you to remain in business

  12. Becoming a Lowest Cost Carrier • Does not mean you charge the lowest prices • Customers in a small office building not served by others should pay more • You have less customers to spread your installation and equipment costs over • You still need a business case to determine rates • Let others take the losing deals

  13. Becoming a Lowest Cost Carrier • Requires: • a simple product offering • a lean organization • flexible equipment • integrated equipment • the lowest cost structure in the following 5 areas:

  14. Lowest Cost of: • Equipment (on a cost per MBIT basis) • Example: OC-3 links loaded • Native IP • Installation • One install serving multiple customers • Simple network design requires licensed freq. • Operation • All on net

  15. Lowest Cost of: • Sales per add • Use outside sales organizations already selling to your potential customer • See what ARTT is doing with ISP’s, ASP’s and web hosting companies • Back office • Self provisioning of bandwidth increases • Web based bill review

  16. Fiduciary Duty • Requires most efficient use of capital • Success based deployments, not field of dreams • Payback analysis before all expenditures • Flexible network, lowest chance of stranded costs • Cash flow is the goal, not market share

  17. FCC has proposed partial spectrum leases • A license holder will be able to lease part of their 39 Ghz spectrum • Will enable multiple carriers without spectrum to day to incorporate licensed wireless in their network • Should standardize the use of high capacity wireless in all domestic networks

  18. High Capacity 39 Ghz, a sustainable advantage • Success based deployments • Ability to re-deploy lower capacity equipment to new installs • Easy to engineer, no coordination with others • Low installation costs, simple to upgrade • An end to end network increases gross margins and manageability

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