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September 30, 2010

White Space - Lowers the barrier for entry into the WISP market

The big problem that White Space (WS) devices solve for aspiring Wireless ISPs (WISP), is installation. Presently the WISP business is a mashup of the cellular carrier and satellite TV businesses.  You have to acquire and backhaul to Access Point (AP) mounting locations just like the cellular carriers.  Wi-Fi's range is limited so you need outdoor client devices (CPE) on roofs. Wires have to run from the CPE through walls to get bandwidth to the customer, just like the dish and set top box for satellite.  This requires capex, opex, labor, training and lengthens the payback time until a new customer becomes profitable if you bury the cost of all this into the service pricing.

WS devices when they exist should be customer installed, which relieves a huge burden.  The first forms of WS CPE devices will probably be WS to Wi-Fi protocol converters, another type of MiFi device.  As Tom Evslin describes in detail, the potential for innovation and increased performance for WS is an exciting prospect.

Because of the sophisticated radio and location techniques needed for WS networking, the power requirements for WS clients will tie them down to houses and vehicles that have electricity available.  If you think iPhones have battery issues, the power headaches with WS are migraine inducing.

The WISP problem that WS doesn't solve yet is bandwidth. Early WS devices probably won't be able to deliver the same kind of bandwidth that Wi-Fi devices can. That means a WISP needs to have more WS macrocells to solve the bandwidth problem in spite of the better signal penetration.    Established WISPs like my Fire Island Wireless needed to upgrade to 802.11N because the demands of customers are going through the roof, just like every other ISP.  Cable companies are (or should be) furiously spending on node splits, and FTTH providers are stringing glass like its going out of style.

Wireless,  perhaps especially in the white space model cannot yet deliver the bandwidth required to eliminate the average family's cable or telco video subscription.  If there was a capital period on my keyboard, I'd use it.  It can compete against DSL, but not cable or fiber.  It won't be able to step up its game anytime soon because of the current technology state and spectrum policy, along with the economic and local political barriers to new marketplace entrants.

What WS does, is allow rural WISPs to enter the macrocell game with a modest investment by acquiring a few distribution sites and starting to generate revenue in low customer density, yet high demand areas.  This revenue stream can be rolled into acquiring more sites to deploy smaller cells and adding higher bandwidth services like 3.65 MHz WIMAX to satisfy and upsell their high consumption customers.

As WISPs in rural regions begin to aggregate these cash flows from subscribers and invest in their outside plant, the smaller rural cable companies will start to feel this competition.  The cable and telco companies in high density regions don't have much to worry about from wireless on the technology front for a while yet.  In fact they are using Wi-Fi microcells in a big way as a retentive and competitive strategy.  Just look at Cablevision's OptimumWiFi and Comcast's XFINITY Wi-Fi networks.  Wi-Fi has firmly cemented its place as the initial device connection to the internet, but there's lots of new ways coming to feed those devices bandwidth.


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