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Increased WiMAX and BWA Opportunities in the US for Smaller Firms

by: Tim Sanders, Maravedis Partner and founder of The Final Miles
Contact the author at tim@thefinalmile.net

Sprint and Clearwire hold the most promising opportunities in mobile broadband wireless at least in terms of volumes. However, in the short term, the number of smaller companies that are finding success in the broadband wireless space using numerous approaches should not be underscored.

From research conducted for our US report, “Opportunities and Challenges for WiMAX & Broadband Wireless in the USA” we discovered many important key findings. Among the most important, and perhaps most surprising, is the level and quality of opportunity we found existed for smaller companies in the US utilizing WiMAX or BWA technologies.

On the technology front, many of these smaller firms (mostly those using licensed spectrum) are interested in mobile plays. However, carriers we surveyed almost uniformly were not waiting for mobile WiMAX technology. They were busily deploying with fixed/portable services now. They see competitive advantage even with this technology.

Niche Approaches

The companies we surveyed differed widely in size, business model, spectrum use and location so one may wonder, why is there so much opportunity? The answer is that carriers are choosing niche opportunities and they focus on the strengths they do have rather than the things they lack. Companies with licensed spectrum leverage that strongly. If they bought 700 MHz spectrum in an earlier auction, they went ahead and deployed with proprietary gear. If they are unlicensed band carriers, they carve out a business customer niche or focus on rural areas where competition is less.   

In general, carriers with licensed point-to-multipoint spectrum pursued residential customers. Unlicensed band carriers usually focus on business customers. However, every carrier wanted to increase its business customer base. This was, in fact, a key theme revealed throughout the research. Carriers are increasingly focused upon business customer opportunities. Some carriers such as Towerstream, Covad Wireless and others focus on business customers exclusively.

Other carriers like Digital Bridge Communications launched specifically to build-out in rural markets of Tier 2 to Tier 7 in size. Some firms leverage themselves around strong back-office elements such as billing, network monitoring, technical and customer support and other elements---even to the point of offering this as a service to other carriers.

The watchword of the day for smaller carriers is niche opportunity.

Spectrum

One clear differentiator for smaller carriers concerned their access to licensed spectrum. Some smaller carriers, particularly independent Telcos and cooperatives, often do have access to broadband wireless spectrum in bands such as 700 MHz, 2.3 GHz and 2.5 GHz. These carriers typically choose to use this spectrum to serve primarily residential customer bases along with business customers. A surprising number of smaller carriers already own 700 MHz spectrum from earlier auctions. And there is huge interest in the current 700 MHz auction.

Unlicensed band carriers are usually business focused. Especially among unlicensed band carriers, interest in the “lightly regulated” 3.65 GHz band of frequencies is high. Obtaining a license is simple and cheap and reporting requirements are minimal. Plus there is gear available that works in these bands. Many carriers, even some using licensed point-to-multipoint spectrum expressed interest in this technology.

In general the distinction between unlicensed band carriers and licensed band carriers is only drawn at the edge of their networks. Many unlicensed band carriers, as well as licensed band providers now use licensed point-to-point spectrum at 6 GHz, 11 GHz, 18 GHz and 23 GHz to backhaul their services. Interestingly both unlicensed and licensed carriers also use 5.8 GHz unlicensed band backhaul.

In fact, customers increasing demands for bandwidth up to as much as 100 Mbps have led many carriers to utilize these traditional point-to-point technologies to serve customers at the edge of their networks.

Partnerships and Collaboration

For a portion of the opportunity that we foresee for smaller carriers, relationships will be critical to this success going forward largely because of access to licensed spectrum. Certainly partnerships can take the form of collaborations for service products and other opportunities, but spectrum leasing or sharing is the element carriers are most interested in.

Numerous carriers are succeeding with unlicensed band plays, but it is still far easier to deploy and serve customers with licensed point-to-multipoint spectrum. Carriers frequently reported an interest in partnering with other spectrum owners to build out market areas, for example, that are smaller than the spectrum owner has targeted for its initial services. Both Sprint and Clearwire for example have holdings in smaller markets that are unlikely to be deployed in the near term. A partner could help leverage a network build-out in this instance. NextWave, which has major holdings in several broadband wireless spectrum ranges, has a strategy predicated on working with carriers to utilize their spectrum. We believe that NextWave will be instrumental in determining how successful partnerships can leverage smaller firms in the US.

Despite sometimes wildly varying business plans and business focus, smaller carriers are finding plentiful opportunities using WiMAX and broadband wireless technology.

For more information you can contact the author: tim@thefinalmile.net