February 2003

Building A Sound Business Case With Fixed Wireless

BY DAVID ACKERMAN

A sound business case is everything -- just ask competing service providers. As for building one in the fierce metro market, avoiding dependency and selecting a platform that enables flexibility is a good place to start. It can be done with the right technology. This article will examine the options and a real world example of two companies that succeeded in building a sound business case using fixed broadband wireless.

Examining last mile options prompts the question, how much metro fiber is really lit? In a recent article, a leading firm stated that only about 22 percent of the fiber on the 22 metro routes studied is lit. Even though much of the �fiber glut� is dark, there are still widespread rumors that the price of fiber will continue to drop. How much will the price drop throughout 2003? If you�re a competitive service provider, the answer is not enough. Dependency will still exist, which increases the cost of running the network. Leasing from a third party, indefinitely, cannot match the advantages of ownership. Additionally, fiber lacks flexibility. For example, if the optimal location for a network hub site is a mile away from the fiber, costs skyrocket by trenching more fiber (if that is even an option).

As the industry struggles to recover, competition among local exchange carriers and alternative service providers is alive and well. The only way to compete profitably in new markets is to lease lines or to build infrastructure. But leased lines are not economical for competing service providers because of the cost and dependency issue mentioned above. They do not create a sound business case. In fact, many alternative service providers are looking to put in their own infrastructure to reduce the operating expenditures that were driven up by leased lines.

It boils down to reducing expenses. Why wouldn�t service providers want to reduce expenses by building their own infrastructure? One reason might be association. Look what became of so many investments in building fiber networks. But from the beginning, the great fiber build-out required carriers to �guesstimate� how much capacity would be needed in the future. After all, they had one shot at digging, guided only by a lot of growth predictions that, in hindsight, were grossly over-inflated. At anywhere from $500 to $1,000 per foot to trench in metro areas, there wasn�t enough latitude to support the level of miscalculation. Not all infrastructures are alike, however. Building one with the �right� technology is crucial for a safe investment.

Today, service providers are trying to gain a competitive advantage with innovative, economical solutions, while reducing operating expenses. Private networks are looking for the same results. The goal is to deploy solutions that will not only remove the access bottleneck, but also pave the way to expand value added services. In short, they are all striving to create the better business case with a fast payback in the process. Building one�s own infrastructure, with the �right� technology, is still the best way to do it. Fixed broadband wireless, for example, has tremendous deployment flexibility and enables service providers to grow along their networks along with customers� needs. Fiber, on the other hand, must be built up before knowing the size and location of the customer base.

Fixed broadband wireless makes good business sense from all perspectives. Whether you�re a conservative, alternative service provider looking to reduce operating expenses associated with a leased line, an emerging competitive service provider looking to get an early stronghold on a new market, or just a business in need of a private VPN connection between buildings, fixed wireless is a sound choice.

Fixed broadband wireless technology is hardly a newcomer to the high-capacity connections scene. In fact, it�s been a business-to-business alternative all along for interconnecting private networks, bypassing a LEC or connecting to the Internet. It is cost-effective and can be quickly deployed. The good news is that none of this has changed. The better news is that more people today understand that this is a viable solution. It is becoming more practical. It is a contender.

Nothing drives home the importance of picking the �right� technology more than a tangible example. The proceeding summary is one such example. It will overview how a rapidly growing broadband service provider in the Southwest quickly reached profitability in the Dallas market by building a cost-effective last mile solution with fixed broadband wireless equipment.

airBand Communications is a wireless broadband service provider with a strong presence in the Southwest, specifically in Phoenix, Houston, Dallas, and Fort Worth. The company created a sound business case by utilizing Ceragon Networks� high-capacity fixed wireless systems, which enabled airBand to build its backhaul infrastructure with licensed wireless IP rings, expand into the Fortune 1000 enterprise market, grow their networks to meet increasing capacity demands and have the ability to expand its integrated service offering (voice, video, data, and Internet).

The relationship began with a deployment at airBand�s hub site in Phoenix, where the company has a base of business customers. airBand urgently needed backhaul connectivity, but couldn�t even obtain a landline connection from the local phone company within a reasonable timeframe. Given their pressing need to turn up the hub site, deploying a wireless solution was clearly the only way to rapidly secure high-capacity connections. So they connected with Ceragon -- literally to meet their objectives:

� airBand�s aggressive business plan demanded a high-capacity solution that would enable them to accelerate growth by offering services to the Fortune 1000 enterprise market. airBand�s initial customer base was comprised of small to medium sized businesses. They recognized a significant growth potential in selling to larger customers such as financial institutions. However, airBand needed a secure, reliable, high-capacity access solution to launch into this new market.

� They wanted to cut operating expenses by eliminating ILEC leased fiber expenses. Yet, airBand wanted assurance that the payback on their alternative solution investment would be realized within a year.

� airBand wanted to deploy a licensed IP ring backhaul solution that could co-exist with their unlicensed point-to-multipoint offering. They wanted an IP ring solution that could connect their network points-of-presence (POPs) -- also known as point-to-multipoint (PMP) base stations -- one to the other. The company�s goal was to achieve a protected ring with its built-in redundancy.

� They wanted to invest in equipment that could handle Fast Ethernet today and carry expanded services in the future. airBand also wanted a networking product that would enable them to grow with their customers� changing needs. For example, a system flexible enough to integrate voice and video services when appropriate.

� airBand wanted to be able to get a link �up and running� within 30 days, including licensing the spectrum. Moving quickly is a key competitive advantage to a growing wireless broadband service provider. airBand wanted to avoid the cumbersome process of getting a leased line and leverage the speed to market advantage of a wireless solution. They needed a licensed solution that could keep the pace.

Some specifics of the backhaul deployments include:

� Backhauling airBand�s Fast Ethernet services over an IP ring.

� For their offerings, airBand licensed individual frequency links in the 18 and 23GHz bands. This met the company�s requirements for a quick, licensed-product rollout, as obtaining a license to operate in these bands is very easy. The FCC, within a relatively short time frame, issued airBand�s licenses.

� Ceragon�s FibeAir system seamlessly integrated with airBand�s existing point-to-multipoint network.

� FibeAir�s modular design proved to be extremely valuable, enabling airBand to integrate its Fast Ethernet networks and provide an additional Fast Ethernet or DS-3 interface connection. This flexibility will enable airBand to continue to expand its offering and bundled services.

airBand currently has 15 IP links of Ceragon�s FibeAir point-to-point fixed wireless broadband equipment up and running with deployments in Dallas, Phoenix, Fort Worth, and Houston. Additional deployments are underway. Already, airBand is seeing a tremendous payback. Compared to $3-5K per month for a leased DS-3, Ceragon�s equipment is paying for itself in less than a year. The payback on an OC-3 connection is even better. Furthermore, Ceragon�s solution enables more than twice the capacity of a DS-3.

Free from the constraints of dependency, service providers who choose to compete by building their own infrastructures will have the power of choice. And for many, choosing fixed broadband wireless will keep them at the front of the pack. It is a choice technology for emerging service providers, enabling them to offer expanded services, achieve rapid growth and see a fast payback. It also is a means for LECs to reduce operating expenditures. The flexible nature of this technology gives service providers agility -- the key to securing an edge in today�s market.

David Ackerman is president of Ceragon Networks. Ceragon, a leader in the global high-capacity wireless infrastructure market, is a pacesetter in broadband wireless networking systems, enabling rapid and cost-effective high-capacity network connectivity. For more information, please visit the company online at http://www.ceragon.com/.

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