Fixed Wireless on the Agenda, Again

Technology advances have something to do with the state of Internet access globally. Mobile will succeed in the Internet services space, as it did in the voice communications space, because the access platform is so much more affordable than a fixed network.

But Moore’s Law helps, as cheap processing and storage mean more-complex modulation, more troublesome transmission media and better air interfaces, plus more sensitive antennas can be deployed.

But it is harder to say when “better technology” alone, or primarily, has significant impact. Fixed wireless, for example, is the approach Starry hopes to take, starting in Boston. You might argue Starry could have launched in some parts of the world where there would be less competition, but infrastructure cost and average revenue per account are issues.

Though customer premises and network gear prices will drop with volume, the Wi-Fi router Starry sells to connect to an existing Internet access service now costs $350.

When Starry first launches its own Internet access service, the window-mounted receivers are not likely to cost much less. Those of you with experience in such things know the business case discussions that will happen.

Starry likely can speed adoption by subsidizing the customer premises equipment, but at the cost of increasing its cash burn rate. And though Starry will have some room under the Comcaste gigabit services pricing umbrella, Comcast will be able to rely on its huge installed base of Internet access customers as it upgrades its whole network to gigabit speeds in 2016.

So Starry will not be able to enter the market, as did Google Fiber, as the “sole provider” of gigabit speeds.

The point is that sophisticated new technology does not always lead to successful attacks on big communications markets.

Much of the spectrum Sprint now has available to support mobile services, for example, once originally was licensed for fixed wireless apps. In the 1970s those frequencies were allocated for educational television.

In the 1980s entrepreneurs tried to use the spectrum to deliver linear TV. Then in the early 1990s telcos and others tried to use it for communications as well. Clearwire had hopes of building a big fixed wireless Internet access business. These days, most of that spectrum is licensed for mobile communications.

Starry will use millimeter wave spectrum that has, in the past, been unusable for consumer communications.

But cheap processing now means we can create viable communication applications (small cell access, indoor cells, some point-to-point apps) where there was no business case in the past.

Historically, the fixed wireless consumer business model has not worked in urban areas, though does function in many rural areas, generally when operated by entrepreneurs with low overhead costs.

But we are going to see more efforts, on a widespread basis, to employ fixed wireless for access. AT&T and Google Fiber, for example, expect to do so on a widespread basis. So will Starry, and eventually, others.

The business model will likely, again, be the decisive factor.