Inventive wireless providers go rural

Rising from the rows of grapes on Michael Spak’s gently sloping vineyard hard by Route 15 is an embryonic symbol of 21st-century rural America: a glass-encased camera with a wireless high-speed link to the Internet.

By Paul Davidson, USA TODAY

http://www.usatoday.com/tech/news/2004-07-14-wireless_x.htm

Whether he’s 200 yards away, in the den of his sumptuous, Southern-style home, or on a business trip halfway around the world, Spak can survey his field on a computer. With the click of a mouse, the security consultant pans the vines for deer, insects or leaves that need pruning.

Until recently, Spak did not have a good high-speed option: Cable does not reach his area, the phone company wanted too much money to bring in DSL, and satellite service was spotty.

But improved wireless technology has allowed several thousand mostly small Internet providers across the USA to cheaply deliver broadband to remote areas via antennas on hilltops, barns and homes. They typically feed off a fixed broadband line to a central antenna site or base station.

A new, versatile technology standard called WiMax is poised to turbocharge the growing business in wireless alternatives. WiMax is expected to expand wireless broadband to most of rural America, challenge cable-modem and DSL broadband in big cities and eventually add roaming features that could threaten the fast-data offerings of cell phone giants.

WiMax is like Wi-Fi — the wireless technology that brought fast Web service to coffee shops, hotels and airports — on steroids. While Wi-Fi serves about a 300-foot radius, WiMax can transmit data as far as 30 miles.

"It’s like taking a (Wi-Fi) hot spot and exploding it to the size of a whole city," says Intel executive Ron Resnick, president of a standards group that certifies WiMax gear.

Within three years, Intel plans to have WiMax chips in most laptops, much as it has done with Wi-Fi chips.

"If Intel places a chip in 100 million computers … many carriers will put WiMax" technology on antenna sites, says Carlton O’Neal, marketing chief for wireless gear maker Alvarion.

Mobile-phone pioneer Craig McCaw isn’t waiting for WiMax. Using a WiMax-like service, he plans to offer wireless broadband in Jacksonville and St. Cloud, Minn., this summer and as many as 40 other cities by next year. "Some people hate the phone company, some hate the cable company, and they feel trapped," McCaw says. "There’s a need for at least a third choice."

Even without WiMax, the number of wireless broadband subscribers has jumped fourfold to 200,000 the past two years, says analyst Michael Cai of Parks Associates. WiMax is expected to help drive that to 2.2 million by 2008.

Wireless networks already are helping farmers check weather and crop prices, improving home schooling and rescuing small towns at risk of losing businesses to better-connected communities.

Spak uses his wireless connection from locally based SkyNet Access to order vines, bird repellant and fertilizer, tasks that would be maddeningly slow with dial-up service. "In a matter of days, (the product) just shows up at the front door," he says.

Wireless had a shaky start

Wireless broadband seemed a failed experiment in the late 1990s. Companies such as Teligent, Winstar and MCI tried to serve apartment and office buildings with rooftop antennas. But transmitters, which cost as much as $200,000 each, needed a clear line of sight to the customer and often were blocked by buildings or trees.

Some equipment makers, such as Alvarion, came up with cheaper gear that doesn’t need a sightline. Most adopted a technology called OFDM that splits a signal into redundant parts so that if some of the parts don’t arrive, a receiver can still discern the message.

Unlike the big players of the 1990s, most of today’s providers save millions of dollars in spectrum costs by transmitting over free, unlicensed airwaves. Although that risks interference, smart gear can pluck out the right signals, especially in rural areas.

Loudoun County, Va., where Spak’s vineyard is located, boasts a couple of dozen wireless broadband carriers. Some are mom-and-pop shops, such as Potomac Lakes Wireless, which serves a few blocks. Owner Robert Peesel, a stay-at-home dad, launched the service a year ago because he could not get phone or cable broadband at his house and had to pay $500 a month for a special high-speed line.

He linked that wire to a $1,000 antenna on his roof and bought 4-foot-tall, $100 antennas for his customers, along with $5,000 worth of testing equipment. He charges 12 neighbors $50 a month each for data speeds that exceed DSL. Peesel says he’s breaking even. His selling point is service. "If my customer has trouble, I’m over at their house in a matter of minutes," he says.

Marty Dougherty of Bluemont, Va., has a more elaborate setup. He mounted a $70,000 bank of encyclopedia-size antennas on an old horse stable and poles that link to an Internet backbone 18 miles away. He beams the signals to 36 Blue Ridge foothill communities that have a repeater antenna on a home, silo or water tower. He trades free service for sites to mount his repeaters.

Dougherty’s residential customers pay $250 for equipment and installation and $59 to $99 a month for service. After a $750,000 outlay, his 2-year-old Roadstar Internet, which he runs with three employees from an old barn behind his house, has 400 customers and turned a profit last year.

Dougherty plans to weave WiMax gear into his network when it’s available. But with WiMax attracting larger players, Dougherty, 39, like many wireless entrepreneurs, hopes "to be acquired. That’s the name of the game: build the business to be bought."

Roadstar’s service has allowed Terry’s Body Shop of nearby Purcellville, Va., to do work for insurance companies that want photos of car damage instantly over fast links.

"It’s given us eight more jobs a month," says owner Terry Martin.

In Aurora, Ill., Bob Konen, owner of a 600-acre grain farm, uses his wireless broadband from local provider PDQLink to check weather and get up-to-the-minute grain prices so he knows when to sell. "It’s improved our ability to keep up with what’s going on in the world," says Konen, 68.

In Scottsburg, Ind., population 6,000, O’Neal Chrysler threatened to pull out because not having broadband meant the car dealership didn’t have quick access to online service manuals.

"That really scares you," Scottsburg Mayor Bill Graham said. So the town launched a $1 million wireless network that already has 500 customers.

Now, wireless broadband is creeping into cities. In Washington’s Capitol Hill area, DC Access serves 50 customers, using personal service to compete with cable and DSL providers.

Jane Osborne, who runs a home-based business, ditched her DSL line for DC Access a year ago.

"Every time I called (the phone company), they would give me some pat answers," she says, noting both services cost about $35 a month. DC Access owner Matt Wade, who lives three blocks away, "is constantly monitoring our network. Last week, e-mails were not going out. He decided I needed a stronger antenna and came over and spent three hours on a Saturday."

Meanwhile, Towerstream has snared 650 business customers in Boston, Providence and Chicago with a service faster than the phone company’s at half the price.

WiMax may simplify, cut costs

WiMax, being developed by an industry standards group, uses the same technology, but it’s faster. The standard will let carriers mix gear from different vendors. That should drive down prices — and attract long-distance, local and wireless giants who like to deploy on a big scale in big markets.

The first version of WiMax, expected next year, would beam signals to rooftop antennas. The second phase, slated for 2006, would let customers mount antennas indoors, cutting installation costs. The third phase, in 2007, would put chips in laptops and handhelds, allowing connections anywhere reached by an antenna.

Experts agree WiMax has potential. "WiMax is going to push broadband usage to rural areas and developing countries," says Pyramid Research analyst Anshu Dua.

But they are more cautious about WiMax’s likely success in big cities and as a mobile service. In large markets with crowded airwaves, a service would have to use costly licensed spectrum. And Sprint and Nextel Communications, which own much of the airwaves suitable for WiMax, have not disclosed their plans. One reason: Both plan broadband services based on their current mobile networks that could compete with WiMax, says RHK analyst Heidi Goldstein.

But AT&T and MCI, which are losing their discounted access to the Bell networks for local phone service, are eyeing WiMax as a way to offer broadband and Internet-based phone service.

"We’re looking at various means, and wireless broadband is certainly one of them," says Jack Dziak, head of corporate strategy for MCI. "It’s very much front and center."

Covad Communications, one of the largest broadband services, and No. 3 Net provider EarthLink plan to roll out wireless broadband in as many as a dozen markets in a year. BellSouth and Qwest Communications plan to use WiMax to reach rural customers they can’t economically serve with DSL.

Ultimately, WiMax could enable a hybrid fixed and mobile service. Since Net-based phone service can easily be added, WiMax could "undermine the evolution" of cell phone carriers’ speedy data services, says Precursor Group analyst David Lytel. WiMax is several times faster.

But Resnick, of the WiMax standards group, doubts it will soon displace ubiquitous cell phone networks, which are better equipped to handle voice traffic.

McCaw says he now can enter both rural areas and larger cities because of his low costs and the airwave licenses he owns.

This year, he bought Clearwire, a service provider with licenses in several dozen cities, and NextNet Wireless, which has technology that sends signals directly to small modems that plug into laptops and a power source. He also snapped up a start-up with Web-based phone technology.

Some analysts are skeptical. "I think it’s going to be difficult for him to compete in markets where there’s a prevalence of cable or DSL," says Lindsay Schroth of The Yankee Group. "They have huge marketing power and brand names."

But McCaw is aggressive. He plans to beat phone-company prices by charging about $25 a month for broadband and $40 to $50 for a package that includes unlimited Internet-based phone service. By comparison, BellSouth’s DSL starts at $34.95, and its bundled voice and Internet service costs $63.90.

McCaw created the first national cellular network. But his record also includes some flameouts, such as Teledesic broadband satellite service. He’s low-key about the new venture.

"We’re trying to be flexible," he says. "If some parts of the market work and others don’t, that’s OK."