The telecom industry just can't shake the bad news hanging over it like a summer haze. Some analysts think wireless is simply seeing collateral damage from the overbuilding of (wired) core networks at the expense of the edge. On the other hand, as I've said before, we've seen some real policy, financial and technical issues at the cellular companies, and they are the bellwether in the minds of most observers.
Sadly, this pessimism has spilled into wireless , most notably fixed wireless, which harkens back to the very roots of radio communications-early analog point-to-point systems and even the first nationwide long-distance network in the '50s.
More to the point, fixed has taken hits lately. Two high-profile suppliers, Spike Broadband and Triton Network Systems, went belly-up after significant investment. MCI and Sprint, leaders in MMDS, both cut back rollouts. Wireless competitive local-exchange carriers ART, Teligent and Winstar all went Chapter11. Perhaps most disappointing, fixed and quasi-fixed products have really stalled as an Internet access method. I expected greater penetration by now.
Research uncovered two interesting reasons for this sad state. First, an out-of-business company blamed "clueless customers" for its downfall. But the unaddressed market out there is largely unpopulated by engineers, so most suppliers need to tune up their marketing. Customers buy capability and performance, not technology.
Second, radio is still too expensive for nonindustrial roles. Cable and DSL together penetrate only about 11 percent of U.S. households today. The problem? Price. For most people, $40+ a month is too much. And, while installation costs are usually low, radios designed for residential application are themselves still costly, at $500 to $600 or more.
It's generally assumed that we need to get much closer to the $20 monthly cost of dial-up service before we can expect a big uptick in demand for any broadband. And it's bad enough trying to build an unlicensed radio at the price of a cable modem, but don't even think about MMDS and LMDS radios and low cost at the same time. MCI and Sprint are holding off further deployments, waiting for lower prices and business models that make sense.
There's not a doubt in my mind that the marketing and cost issues can be successfully addressed over the next few years. And demand for Internet access and broadband communications services in general is only going to grow. It's just a matter of VLSI-and looking past the haze.
Craig Mathias is an Analyst with the Farpoint Group (Ashland, Mass.).
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