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IT-DISCUSS  November 2004

IT-DISCUSS November 2004

Subject:

11/29 Internet Access, Delivered From Above

From:

Steve Cavrak <[log in to unmask]>

Reply-To:

Technology Discussion at UVM <[log in to unmask]>

Date:

Tue, 30 Nov 2004 08:58:11 -0500

Content-Type:

multipart/mixed

Parts/Attachments:

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text/plain (7 lines) , 29max.jeffxl.jpg (7 lines) , text/plain (179 lines)

Internet Access, Delivered From Above
  By KEN BELSON
  November 29, 2004
  http://nytimes.com/2004/11/29/technology/29max.html




Jeff Thompson may be afraid of heights, but he appears to be at home on the 81st-floor terrace of the Empire State Building. Overlooking the 1,000-foot drop, Mr. Thompson said he saw the entire New York metropolitan area as the battleground where his company, TowerStream, will challenge phone companies for high-speed Internet business customers by delivering fast, cheap service without digging up streets to install cables. Next to him, a TowerStream antenna, perched on the parapet, beamed high-powered wireless Internet connections to companies several miles away. This kind of aerial system, many technology experts say, could uncork the most nettlesome bottleneck in the telecommunications industry: the phone companies' control of the "last mile" of wire that travels from their switching stations to homes and offices. "We're competing against the Bells," Mr. Thompson said, "so we have to work quickly." Waving his arm toward the blaze of buildings and potential customers below, he said with a laugh, "This is when I get excited by heights." With 700 customers in five cities, TowerStream is the most active player in an emerging industry that sells a technology known as WiMax, or worldwide interoperability for microwave access. Unlike WiFi, the radio wave technology in airports and cafes that allows users to log on to the Internet from their laptop computers within 150 feet of an antenna, WiMax delivers broadband Internet connections through fixed antennas that send and receive signals across entire cities. Using the most powerful equipment, a single antenna atop a tall building can provide high-speed data transmission to users as far as 30 miles away, although the optimal range is less than half of that. The radio signals and antennas are unaffected by bad weather and provide an alternative to data cables that are sunk below sidewalks and can accidentally be cut by construction crews. The price is another advantage of the system. TowerStream charges $500 a month for a 1.54-megabits-a-second connection, about one-third to one-half less than the cost of service on comparable T1 lines that phone companies sell to businesses for data transmission. TowerStream can charge less because it does not have to rent connections from Verizon or another former Bell company that runs local switching stations. Getting businesses to buy WiMax is a challenge because the technology is new. But TowerStream, which was formed in 2000 and, according to the company, has been profitable since June, is finding that securing rooftop space on skyscrapers is a hurdle, too.   TowerStream spent more than two years negotiating a lease with the Empire State Building. But from that perch, and similar ones atop the MetLife Building and a phone company office in downtown Manhattan, TowerStream can reach virtually every office in the city, including those that are out of sight of the towers. "The real estate is the hard part of the business," said Mr. Thompson, who serves as chief operating officer at TowerStream. "When you tell people you can reach 10,000 clients, they don't believe you. But everything I see could be a customer."   Mr. Thompson's optimism is warranted, many analysts said. The business of delivering wireless high-speed Internet service is worth about $400 million globally and could quadruple in the next few years, according to the WiMax Forum, a group of WiMax providers and equipment makers. Businesses in urban centers are the primary focus. But customers in rural areas where there are no broadband connections to cable or phone companies are also targets. In those places, antennas can be placed on radio or cellular towers. WiMax is also being introduced in developing countries where Internet access through fiber or copper cable is hard to come by. WiMax and wireless broadband connections may dent behemoths like Verizon Communications and SBC Communications, but they are unlikely to put them out of business. Large companies, particularly brokerage firms and banks, place the highest premium on secure data lines with backup power. Small companies may use WiMax as their primary data line, but for most companies WiMax will remain a dependable alternative to, not a replacement for, fixed lines. "There's a very good market selling to small businesses," said Monica Paolini, president at Senza Fili Consulting, a wireless service company in Seattle. "Businesses don't have much choice in ordering data lines and they love the flexibility of wireless." FreshDirect, an online grocery store based in New York City, for example, ordered a wireless connection from TowerStream in March. FreshDirect already leased superfast DS-3 lines to power its service center in Manhattan and its 300,000-square-foot warehouse in Queens, just across the East River. Now an antenna the size of a pizza box sits on top of the warehouse roof, facing the Empire State Building a few miles west. The company has been expanding rapidly and needs backup Internet access to make sure its Web site and inventory, billing and management systems keep humming in the event any of its primary data lines fail. "In this business, it's not a matter of if, but when, something will go wrong," said Myles Trachtenberg, FreshDirect's chief technology officer. Level 3 Communications provides FreshDirect's primary data connection, and its backup line is from Globix. But Verizon operates only one switching station near the company's warehouse in Queens, and all Internet providers, including Level 3 and Globix, must go through that location. So FreshDirect was still vulnerable if the switching station had problems. Mr. Trachtenberg heard about TowerStream, which began service in New York in June 2003, through a friend, then learned he could get a WiMax connection set up in less than a week. By contrast, ordering a fixed wire line can turn into a logistical nightmare, Mr. Trachtenberg said. While phone companies say they typically install data lines within a few weeks, it can take months if Internet service providers, phone companies and union workers who handle the installation have to coordinate schedules. The biggest problem for FreshDirect in installing TowerStream's service, it turned out, was stringing a quarter-mile cable from the rooftop antenna to the company's servers. That cable plugs into servers that provide access to computers in the offices and on the floor of the plant that keeps FreshDirect's inventory, shipping and billing records up to date. The TowerStream connection also helps power 30 WiFi "hot spots" spread through the warehouse that provide additional Internet access. TowerStream's connection has worked without a hitch, Mr. Trachtenberg said. In time, he plans to use it for Internet phone service as well. Still, there are limits to WiMax's expansion. Because it uses public airwaves rather than a licensed spectrum, signals are vulnerable to interference if providers overload a frequency in a market. (TowerStream says that it has acquired the right to force latecomers who install antennas near theirs to move if interference is created. The company also says that its connections are encrypted and not vulnerable to eavesdroppers.) Mobile phone companies, which are investing billions of dollars in third-generation cellular networks, may also increase the speeds of their data connections to compete with WiMax. WiMax technology is too expensive for residential use. The antennas on a customer's premises cost about $500 each, and phone companies and cable providers already sell cheap high-speed Internet connections for as little as $20 a month. For now, TowerStream and other providers use proprietary equipment and can beam signals only to antennas on rooftops. The WiMax Forum, which helps set industry standards, has endorsed the technology to deliver broadband to fixed antennas, but there is still no consensus on a standard for users to receive WiMax links on laptops and other mobile devices. The biggest player in the push for this standard is Intel, which makes chips used for fixed wireless equipment. When a mobile standard is approved, WiMax providers will be able to give users the same Internet access while they are on the go as when they are attached to a superfast data line, said Sean Maloney, Intel's executive vice president in charge of its wireless business. An approved standard for mobile WiMax will allow Intel and equipment makers to raise production and cut prices, which may fuel demand. Analysts, though, expect opposition to deployment of a mobile version of WiMax, particularly from cellphone carriers who are still pushing WiFi and their own third-generation networks. In the meantime, TowerStream continues its look for skyscrapers where it can plant antennas. This month, the company added service in Los Angeles, and it plans to move into San Francisco in the first quarter of 2005, to go with current service in New York, Boston, Chicago and Providence, R.I. Mr. Thompson said TowerStream planned to be in 10 cities by 2006. Matt Richtel contributed reporting for this article. Copyright 2004 The New York Times Company

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