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Wireless
Feeds the Beast Within The 1996 deregulation of the telecommunications industry brought with it fierce competition among the incumbent local exchange carriers (LECs), competitive local exchange carriers (CLECs) and Internet Service Providers (ISPs). This competition, fueled by the explosion of the Internet and a growing demand for high-speed network services, worked to create an insatiable consumer appetite for connectivity. Once a privilege afforded only by large corporations, today Internet connectivity is a modern-day convenience shared across all socio-economic levels of our society. As our culture became more consumed with the Internet, the demand for "always-on" connectivity moved from the corporate and university environments to our homes, our small offices and even our hotel rooms. As this hunger for more access drove demand at an overwhelming rate, service providers scrambled to keep up. Finding affordable solutions that met this need was key to satisfying America’s appetite for faster, better and cheaper access services. Showing Us the Way Early on, traditional service providers convinced us that ISDN, DSL and cable were sufficient for providing coverage to the bulk of the population. Nevertheless several years into the rage, there still remains millions living in suburbs and working in metropolitan areas across America without affordable broadband Internet access. However, a very interesting market did emerge amid the frenzy to get America connected. A very large, yet severely under-served market located in every city and in every state … MTUs. The MTU or Multiple Tenant Unit market in the U.S. alone is huge. It is comprised of two primary segments, Multiple Dwelling Units (MDUs) such as apartment complexes, student housing, and hotels and MCUs, Multiple Commercial Units consisting of business parks, retail shopping malls, school campuses and hospitals. While traditional access services provide high-speed connectivity from a telcos central office or cable headend to the edge of a building, they do not meet the on-premises needs of the MTU market. The Building Office Management Association of America estimates that there are more than 750,000 multi-tenant commercial buildings today and that nearly 75% of the population works in this type of building. National Multi-Housing Council statistics report that over 21 million apartments exist today and over one-third of all Americans live in them according to the Yankee Group. International Data Corporation (IDC) projects that the number of home offices will increase from 7.8 million in 1998 to over 12 million by the year 2002. Even hotel guests are demanding Internet access in increasing numbers. There are an estimated four million hotels in the U.S. and a recent American Express survey showed that 65 percent of all business travelers now carry laptops. So with market numbers staggering, how do you reach this virtually untapped market? That was the multi-million dollar question service providers were struggling to answer. How could they provide affordable service to this substantial market, when no infrastructure was in place or what was there didn’t reach? Everyone agreed MTUs offered a large concentration of subscribers, but the cost of the equipment and building infrastructure made connectivity out of reach for the average consumer. Wireless to the Rescue Service providers were and are in constant search of ways to better meet the demand for voice and data, as well as ways to reap the benefits of offering IP-enabled services to their customers. In areas with existing cable or fiber, providing quality service at affordable prices was easy and the cable operators and telcos quickly moved in to capture the space. But in areas where no infrastructure existed, the solution was proving to be much more difficult and costly. Wireless provided a cost-effective "last mile" alternative to cable and fiber and was an excellent solution for connecting multiple building networks and for buildings without central wiring, much as is the case with MTUs. Broadband wireless systems are inexpensive and present a relatively easy way for a service provider to offer a wide range of high-bandwidth services to its customers. All service providers know that those going after this business today are positioning themselves to better understand and meet the challenges and future requirements of tomorrow to capture and keep this valuable market. Today service providers of all shapes and sizes are working to offer wireless Internet access to MTUs because customers are demanding high speed and always-on connectivity. Building owners and property managers too, quickly realized the benefits that offering Internet services could provide to help differentiate them from the competition and attract and retain, upscale tenants. Broadband wireless access is making MTU solutions cost-effective, quick to deploy and easy to install. Wireless systems are also eliminating the need for leased lines and their monthly fees. Many are scalable for incremental deployment and offer excellent bandwidth management capabilities for controlling network traffic and tracking customer usage for billing purposes. Licensed vs. Licensed-Free Spectrum --The Subscriber Race Although there has been much talk about the value of owning licensed spectrum, the fact of the matter is that owning spectrum is expensive and adds tremendous overhead to a subscriber-driven, price-sensitive business model. For ISPs trying to provide service to customers currently not being serviced by the LECs and CLECs, it makes the business case virtually impossible. So service providers are taking advantage of the inherent cost benefits of using license-free spectrum as well as employing wireless technology to help provide high-speed access services. It’s a tough world out there and it’s all about the numbers. Larger providers are gobbling up small ISPs every day. To successfully compete, ISPs must use every advantage in their arsenal. This means utilizing wireless technology in the license-free spectrum to get around the telcos, and also to reach customers not effectively serviced by existing wireline infrastructure. It will be the service providers that are quick to deploy and fast to offer service to this hungry market that will stand the best chance of winning the race for subscribers, and surviving. Although major LECs already own and prefer licensed spectrum in an effort to control and manage their network traffic, most ISPs prefer the ease and affordability of operating networks in the license-free frequency bands. Products available on the market today equally support both the licensed and license-free networks. Since MTUs are located in primarily metropolitan pockets nationwide, CLECs often pick and choose the highest density areas to target and deploy first. However, to reach the MTU market, there is no advantage to buying licensed spectrum to target these large regional areas. Access solutions operating in the license-free spectrum can also be used as a complement to licensed spectrum as it can expand capacity or extend the reach of existing licensed networks. It also enables quick market entry for early market penetration and capture. License-free wireless networks have traditionally been deployed by small CLECs and ISPs who wanted to avoid DSLAM equipment space rental fees and other fees levied by the LECs. However, it is quickly becoming an excellent alternative for all carriers wanting to operate in new markets and gain quick access. Services, Yes … Solutions, No. Today, the large LECs who can afford it purchase spectrum licenses in an effort to guarantee a minimum quality of service. However, when a company buys spectrum, the service is offered to all metropolitan markets across that entire trading area in an effort to gain the largest number of subscribers possible and to ensure full use of the resource. The access services offered are usually DSL or cable across existing fiber or copper lines. DSL can provide high-speed connectivity, but is unavailable in many regions and where it is available, it is often too expensive for service providers to resell. Its distance limitations also require that customers using higher speeds (256 Kbps and up) be within 5,000 — 10,000 feet of the telco’s central office. DSL and other services such as Frame Relay and Fractional T-1 may be available from a CLEC or ILEC, but these too are often too expensive to be saleable in this very price-sensitive market. Cable operators have had difficulty keeping up with market demand and the level of service their customers want. Cable’s coax lines often require upgrading to deliver high-speed broadband access services. The cost for the cable company to deploy is prohibitive in many rural areas, impacting availability. In addition, as a shared media, cable’s performance diminishes proportionately as the number of users increase, a drawback for use in the high-density MTU market. Value-Added Features and Services Wireless Internet Access systems are becoming increasingly more sophisticated. Cellular architectures, systems with ad hoc networking capability and automatic load balancing features are available today. Fast backbone connectivity is now being provided using spread spectrum direct sequence technology, because it has better range and less latency for outdoor applications. In-building applications can benefit from spread spectrum frequency hopping technology for it’s increased range indoors and ability to co-exist with other signals without interference. Backbone, or backhaul service such as the Internet is quickly becoming commodities that will compete on price alone. It will be the other value-added services that enable service providers to earn incremental revenue while distinguishing themselves from their competition that will make the difference. Multiple services are available which add value and provide additional revenue, including VPN, firewalls, web hosting, email and IP multicasting. Even local on-line services such as regional discounts on dry cleaning or rent payments can now be customized for individual MTUs. As our society has become more mobile, consumers and hotel owners want connectivity everywhere——to the swimming pool, hotel lobby or the atrium. Wireless can provide this mobility for Internet access from the lobby to the pool. Hotels frequently use fast copper to the guest rooms and are now employing wireless in the public areas. Scalability is another large factor in the cost-effectiveness of wireless. By using standards-based architecture, service providers can simply add infrastructure as needed. A second access unit and T1 line can be added to provide more bandwidth to each apartment as needs grow. From a single point of access, an entire MTU property can be provisioned for high-speed services with no cabling required when new users are added. Remote network management from the apartment complex, or network operations center (NOC) also provides large cost savings by reducing truck rolls, and other recurring operational costs. Remote management is available through SNMP and enables administrators to monitor multiple buildings for network performance optimization, system maintenance and to ensure customers receive the services they need. MTU Network Model MTUs are generally high-rise buildings, garden-style apartments or multiple-building complexes. MTU networks provide connectivity using three general architectures: regular fast copper using all Ethernet, an all wireless solution, and a hybrid combining fiber, coax and wireless. For MCU and MDU high-rise buildings with large amounts of metal, such as elevator shafts, and steel floors, fast copper is a good approach. MCUs often use primarily tempered glass and windowless interior space. In this model, existing telephone connections can be used with switched multiplex technology to pass 3 KHz voice and multiplex with high speed Internet (about 53 KHz) as two co-existing signals occupy different frequencies on the same phone line. Alternatively, these could be connected wirelessly by conducting a site survey to determine additional wireless infrastructure requirements, and adding more access units and subscriber units as necessary. The garden style apartment is a common property model, representing over 50% of the MDU market. These are multiple-building complexes with frame and dry wall construction, clear glass windows, and no tempered glass. A new breed of all wireless service provider has emerged who is capturing this MTU segment using a model representing a major departure in the way wireless access was provided historically. This more aggressive service provider offers access to the inside of the building by setting-up micro-cells in a digital canopy that overlays an entire multi-building apartment complex. The micro-cell wireless approach works well for this type of construction since signal penetration through the walls is assured. The wireless infrastructure is located outside the building except for an individual station adapter, which is plugged into the Ethernet port. A wireless bridge is used to link apartment complexes with up to 30 separate buildings. The greater the number of buildings the better candidate the garden style is for wireless, since one access unit can service multiple buildings, and redundancy is built-in as coverage overlaps. Ethernet is installed in each building and a T1 line is installed in a central location. The T1 signal is then propagated to the other buildings using a wireless bridge. The wireless link eliminates expensive street trenching, and permits which could require six months to secure. Recurring leased-line costs are also avoided. Service providers deploying MTUs often use hybrid network technology solutions, deploying each technology where it is best suited for the application at hand. All of these networks have their place, with no one technology providing the complete solution. The ability to provide wireless Internet access and networking, in addition to conventional wire-line services, are important elements of the connectivity toolkit offered by many service providers in MTU markets today. MTU Pricing Models Property owners and managers can now offer different pricing structures to their tenants for basic service or higher bandwidth requirements. From 128K to 1-2 Mbps, customers can order the level or class of service they need and pay only for what they order. The service provider can reconfigure the system from the home office and make the price adjustments in the billing software. By controlling the amount of bandwidth provided to a class of subscriber, service providers can ensure they are able to provide bandwidth to a maximum number of customers. This enables the service provider to offer and charge for multiple service levels in a tiered pricing structure. The service provider’s infrastructure cost per MDU site averages from $350 to $450 per year as a rule of thumb, depending upon volume, environment, and network architecture. This is based upon an average $39 per month subscriber access charge for high speed, always on, 1 Mbps Internet access. Therefore, the service provider’s ROI on the equipment averages less than one year. Apartment dwellers pay between $29 and $49 per month, which is paid directly to the service provider. Hotels generally charge a $9.99 daily rate for 24 hour, always on, 1 Mbps service. Future of the MTU Market What does the future hold for the MTU market? Except for continued explosive market growth and further segmentation no one can know for sure, but the insatiable beast within us all is still hungry. About the author Thomas Walusek is Director of Access Sales, North America with BreezeCOM. |