Expansionary Institute

Michael Zey
futurist3000@aol.com

  March 19, 2001
           Alternatives Sought for Broadband
           By SIMON ROMERO
                 



What does the market for high-speed Internet access have in common
with soaring, the sport in which pilots glide along currents of air
in sailplanes without engine power? A healthy dose of risk, if Marc
E. Arnold's ambitions are any indication.

Mr. Arnold, an avid sailplane pilot, is the chief executive of Angel
Technologies, a St. Louis company that plans to provide high- speed
Internet access in an unusual way: using solar-powered,
high-altitude manned aircraft built to cruise at 51,000 feet, or
more than 10,000 feet higher than the altitudes normally reached by
commercial jets. Under Angel's plan, the aircraft would beam
high-speed Internet service to customers in large cities, who would
receive it on small cone-shaped antennas.

Pinning its hopes on what it views as a cheaper alternative for fast
Internet service than its primary competitor — the satellite
industry — Angel plans to test its network next year and provide
commercial service in 2003. The company has identified 200 cities
worldwide as potential markets.

In addition to the expense of building or acquiring three planes for
each metropolitan area, Angel's complicated plan involves using huge
quantities of jet fuel, hiring two pilots for each plane and making
three takeoffs and landings every day for each city where its
service is available.

"We believe the appetite for bandwidth will continue to grow as it
did for processing speed; that's why we're thinking so far outside
the box," said Mr. Arnold, 43.

Far outside, indeed. But then again, Mr. Arnold is someone who
escapes from the rigors of an Internet start-up by flying his own
sailplane on far-flung expeditions. His next soaring trip is planned
for later this year, above the semiarid steppe of Patagonia, in
southern South America. Mr. Arnold dreamed up the idea for
high-altitude fast Internet access after his experiences with
soaring in the early 1990's.

Though Mr. Arnold's broadband plan may be more blue-sky than most,
it is indicative of the restless energy gripping the industry. The
adventurous are seeking alternatives to the most common ways to
offer high-speed, or broadband, Internet access — namely, over cable
networks or on digital subscriber lines that use a phone company's
wires.

Much of the entrepreneurial energy is fueled by problems in the
digital subscriber line, or D.S.L., industry. Under the
Telecommunications Act of 1996, phone companies were required to
open their networks to independent providers of voice or data
communications to encourage competition.

But too often the result has been confusion for consumers and
companies. If someone chooses a small Internet service provider,
that provider often must go through a wholesaler, which in turn must
coordinate service with a local phone company.
That confusion was compounded by the technical intricacies of D.S.L.
service. Densely populated areas like Manhattan, for example, may
not have enough available phone lines for consumers to get D.S.L.
Consumers usually must live within a certain distance of a local
phone company's switching office — often, three miles or less — for
the technology to work. And installing and repairing D.S.L. lines
are complicated, requiring highly trained technicians.

Several small Internet service providers have gone out of business
in recent months, while some of the large D.S.L. wholesalers are
hardly better off. For instance, NorthPoint Communications and
Flashcom have filed for bankruptcy protection, while Covad
Communications and Rhythms NetConnections have recently announced
layoffs to stay afloat.

Largely because of problems at D.S.L. companies, the broadband industry as a whole has fallen short of once-grandiose expectations. Only about 7 million of 100 million homes in the United States had broadband access at the end of last year — 4.9 million of them via cable modems and 2.4 million through D.S.L.

Despite cable broadband's greater popularity, it, too, has drawbacks. Because cable networks operate on a shared basis, some users are concerned about the safety and privacy of their Internet data. Others complain of traffic jams when the systems are crowded. And it is too early to gauge the consumer impact of the Federal Trade Commission's requirement that AOL Time Warner open its cable networks to competitors.
With cable and D.S.L. companies facing problems and uncertainties, it is no surprise that several companies are seeking to provide broadband alternatives. But each of the new offerings involves its own risks.

Large communications companies like WorldCom and Sprint are already providing so-called fixed wireless broadband service, a type of wireless access for homes and office buildings that uses spectrum the companies acquired in costly auctions held by the Federal Communications Commission. Fixed wireless systems have the advantage of bypassing the existing local phone and cable networks.

There are an estimated 200,000 fixed wireless users in the United States, according to Cahners In-Stat, a technology research company. But the technology is not for everyone. Most fixed wireless systems require data to travel in a line-of-sight fashion, meaning that walls and even foliage can disrupt transmission. Moreover, their geographic reach is generally limited.

Another high-speed wireless alternative is offered by Metricom of San Jose, Calif., which built its own data network using different technology from that of fixed-wireless counterparts in cities like San Francisco and New York. But since Metricom's system began operating last year, its subscriber base has failed to grow beyond 30,000 or so after potential customers balked at the price — about $70 a month, compared with normal high-speed charges of about $45 a month. Its chief executive resigned last month, and its stock, which reached a 52- week high of $82.88 in March 2000, closed on Friday at $3.125.

Another bet is broadband satellite service, provided by companies like Tachyon, based in San Diego, and Hughes Network Systems, of Germantown, Md. The main draw of satellite broadband is that it can reach areas not served by cable or D.S.L., and there are about 100,000 households with satellite broadband service, according to Cahners In-Stat.

But satellite broadband systems can be expensive and complicated to install. And some customers have complained about "latency," a term for the delays caused by distances of more than 22,000 miles that signals must travel to and from satellites. Rainfall can also cause short delays.

And companies only recently began to offer two-way satellite service that does not require a phone line. For example, StarBand Communications, which began offering its service late last year, charges about $60 a month, while outlays for an antenna and software can run $400 to $900.

Some broadband approaches are even further afield. Main.net, an Israeli company, has developed technology that makes high- speed Internet access available over low- voltage electricity grids. The system is still under development but is expected to be available in Germany later this year.

Then there are optical service providers like IntelliSpace, which sells broadband services to businesses through its own fiber optic networks. IntelliSpace says it "provides the fastest connection to the Internet in the world," about 6,500 times faster than the high-speed Internet connections sold by local phone companies.
Where will it all end? Will the difficulties faced by D.S.L. companies like Rhythms and NorthPoint pave the way for a wider variety of high-speed Internet options to gain acceptance from consumers and businesses? Or are their troubles the first chapter in the bursting of a broadband bubble?

"It's too early to tell at this stage in the game," said Michael Harris, president of Kinetic Strategies, a broadband research company in Phoenix. "The only thing we know is that cable and D.S.L. have been highly inefficient in satisfying the demand for broadband."

Or, as Mr. Arnold, the sailplane pilot turned entrepreneur, put it: "There's a glut of capacity on existing networks but a shortage of possibilities for people in need of a connection. They don't care how crazy the solution is as long as it works."

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Siemans pulls out of powerline technology for now

 
FRANKFURT, March 20 (Reuters) - German electronics and engineering group Siemens AG said on Tuesday it has temporarily pulled out of the fledgling powerline technology, which offers internet access through electricity sockets.

It saw better business opportunities in high-speed telecommunications services via the traditional groundline telephone network, a spokesman for the Siemens business group ICN (information and communications networks) said from Munich.

Siemens has been one of the developers of the powerline technology, which a number of German utilities plan to launch commercially in small local markets this summer.

"Because of regulatory delays, there is no chance of an immediate mass market application for this technology," the Siemens spokesman said.

"At the same time, we see rapid growth in orders and sales of high-speed ADSL services."

"We decided to exploit those business opportunities and to shift staff into that area rather than waiting for uncertain growth opportunities (in powerline)."

Broadband ADSL (asymmetric dedicated subscriber line) services give customers fast and potentially unlimited internet access via fixed telephone lines.

The spokesman stressed Siemens had ready powerline products available and was keeping options open to enter that market at a later stage.

He also said technical problems with the adapter and repeater equipment used for powerline had been overcome.

"It was a political decision," he said.

Siemens' remarks came a day after its biggest powerline partner, utility EnBW, said it planned to equip 7,500 households in the south west German town of Ellwangen with the technology this summer.

But because Siemens had withdrawn from its powerline activities, EnBW said it would use technology from Swiss group Ascom.

Ascom last month already won an order for its powerline systems from Germany's largest utility RWE.

The EnbW news came ahead of scheduled press statements during the Cebit computer fair in Hanover later this week by both RWE and Mannheim utility MVV on their powerline ambitions.

MVV plans to bring the techology to 3,000 users in Mannheim in what it says will be the first commercial application in Germany.

Analaysts have pointed out the adoption of the powerline technology at large needs pan-European standards, which are years away.

But MVV said legal barriers would at be lifted at least in Germany with the anticipated passing of a new law in July (NB 30), which would set out the conditions for powerline use.

06:28 03-20-01

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